A report published in the FE this week said the state-owned Trading Corporation of Bangladesh (TCB) has sought around Tk 16 billion to cover losses incurred in the first half of last year due to selling key essential commodities at subsidised rates among 10 million low-income families. The report adds that last month the TCB submitted a proposal to the commerce ministry for taking required steps to make up for its losses. The money would be required to repay bank loans accrued to procure commodities like soybean oil, sugar, lentil, gram, and dates from local and foreign sources, and sell those at subsidised rates among the card-holder families. The state entity last month sought around Tk 100 billion from the government to help lessen its reliance on costly bank borrowing. Currently, the TCB is conducting its sales operations of essentials almost every month, though with no visible impact on the price situation.
As a state trading agency TCB barely has any success story in stabilising the market of essential commodities, so far. With the mandate of market intervention when necessary, it has no tools to undo the bolts that so frequently tighten the market fences in favour of vested quarters. Asking the TCB to intervene the market, particularly of essential consumer commodities against irrational price spirals is thus bound to be self-defeating. This has been the case many a time in the past and there is no reason to believe that the market mechanism would be least affected by TCB's 'interventions' unless it is made capable of such tasks.
TCB was neither groomed nor empowered with the resources and freedom to do miracles as the successive governments have vainly tried to project it. Given its status as a public sector enterprise, there has not been any mechanism in place so far to see it emerge as a business entity-an essential character it was to assume long back. A quick reference to organisations like this in neighbouring countries, especially India, will reveal that similar agencies there are strong enough to neutralise undesirable price instabilities because of their freedom of operation and financial and professional resources. Initially provided with endowment funds by the government, they operate entirely on their own income just like private sector business houses, engaged throughout the year in bulk imports and exports, and intervention of the domestic market, when necessary. To provide the much required dynamism to the operational challenges, the CEOs of these agencies often come from the private sector.
The key issue is the strength to affect successful market intervention. It needs to be innate in a well-planned and calculated process. The very capacity to do so calls for strong legal, institutional and financial backups. Market syndicates will obviously be the big rivals and breaking the oligopoly and monopoly of organised market syndicates will require the TCB to be thoroughly professional in the first place. So, allowing it to function independently with sufficient resources is a foremost prerequisite.
It has been learnt that the government is thinking of substantially raising the authorised capital of the TCB. The enhanced financial strength is believed to help it maintain a sizeable stock of price sensitive commodities such as edible oil, sugar, pulses and onion through imports round the year. However, it remains to be said that alongside the increase in authorised capital, the critical factor that needs to be addressed is a smooth procurement device that only can ensure quick importation of commodities and make those readily available in the market, when necessary. In this connection, it has been found that the proposal for exempting the TCB from the government's conventional procurement procedures and rules has been objected to by the Central Procurement Technical Unit (CPTU) on the ground that it might create bad precedent for other government agencies to be exempted likewise. This argument is not tenable for the simple reason that denying the TCB to skip the lengthy procurement procedures is clipping its wings that otherwise would equip the organisation with the required strength to make its presence felt in the marketplace. The question of other government agencies trying to follow suit is beside the point as the very mandate of the TCB to neutralise market instability calls for such exceptions as a tool to prevail upon the market. It is thus crucially important that this issue is looked into in due earnest by the authorities.
According to observers, trying to strengthen the TCB will not require the government to start from the scraps. Unlike many state owned agencies, the TCB has resources in terms of unused land and structures that can be made use of as a starter. With appropriate manpower in place and a sizable authorised capital added to its existing financial resources, the TCB can be expected to operate on small-to-medium scale trading round the year, and in the process attain the strength to make its presence felt in the marketplace.
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