Distributorship to replace notorious 'DO' system

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The government plans to introduce distributorship system for selling food items scrapping the traditional 'Delivery Order' (DO) mechanism to stop 'syndication' and prevent unusual price hike of essential commodities, a top official in the commerce ministry said.
The proposed distributorship will be made compulsory for private sector, particularly for large importers and millers of food items. Initially, supply of edible oil and sugar will come under the proposed new system, which will be broadened later, commerce secretary, MD Ghulam Hossain said.
"We are planning to scrap the DO system and replace it with distributorship formula to protect the common people from the unholy alliance formed by a group of unscrupulous traders," Ghulam told the FE.
"We are now working on a draft in this regard and private sector will be involved in the process of finalising the regulation."
The Ministry of Commerce (MoC) has recently held an inter-ministerial meeting, where the draft was discussed elaborately, sources said.
Trade officials said they are now examining the distributorship system of a number of multi-national companies like British American Tobacco Company and Unilever Bangladesh to fine tune the draft regulation, prepared by them.
According to the draft regulation, the distributors have to take delivery of the goods from the millers within 10 days from the date of allocations are made against their names.
The distributors, under any circumstances, will not be allowed to store the goods above 15 days from the delivery date, the draft elaborated.
The distributors will not be allowed to sell their allocation letters to others, which are rampant in the case of DO system.
The distributors are barred from imposing any condition on retail sellers, the draft said further.
The distributorship may be awarded one in each ward under City Corporations and Pouroshobhas and one in each district. A distributor must have a warehouse to store at least 50 tonnes of commodity. The millers will not select any trading firm as a distributor if the latter fails to provide a minimum bank solvency certificate of Tk 0.20 million, the draft said.
The government machineries will not be involved in the process of appointing distributorship of companies as they are free to appoint their own distributors according to their choice, but the same must be in conformity with the set regulations of the government, the draft said further.
However, the state trading agency-Trading Corporation of Bangladesh -- is fully authorised to cancel a distributorship if the set regulation is violated, according to the draft regulations.
Each and every district and ward under the city corporation and pouroshova will have a monitoring committee for overseeing the supply system.
The distributorship will be given for a calendar year, while the draft regulation has barred any single individual from becoming distributor of more than one company.
"The proposed system is expected to come into effect within a couple of month as the traditional DO system makes small traders and consumers hostage,' a top Moc official told the FE.
When asked, Mostafa Kamal, Chairman, Meghna Group of Industries, who is a large importer of food items, said they will cooperate with the government in the process of formulating any new system.