Bangladesh appears competitive in cell phone, sugar, cement sectors
Thursday, 18 March 2010
FE Report
Bangladesh appears competitive with more players and lower prices in the sectors of mobile phone, sugar and cement although the country does not have any competition law, a study has found.
The study, conducted by Overseas Development Institute (ODI) in association with the UK Department for International Development and titled 'Measuring the Economic Impact of Competition', also identified a number of potential competition problems which warrant investigation by a competition authority.
The provisional findings of the study were presented at a workshop jointly organised by South Asian Network on Economic Modeling (SANEM) and ODI in the city.
SANEM Chairman Bazlul Haque Khondker presided over the workshop, while ODI business and development programme leader Karen Ellis and her fellow colleague Rohit Singh presented findings on their research on Bangladesh's mobile phone, sugar and cement sectors compared to four other countries - Ghana, Kenya, Vietnam and Zambia.
The researchers said there are wider government policies that are undermining competition in the markets. "Government's involvement in sugar production, which is inefficient, represents a distortion of the market."
It said there are allegation that private refineries or the wholesalers were restricting supply in order to increase prices. This would be an issue that a Competition Authority could investigate.
On the cement markets, the study report said there is evidence of a high degree of price and non-price competition in the country's cement market although Bangladesh has the lowest prices among the countries surveyed.
"Overall, the cement industry in Bangladesh appears to be relatively competitive compared with the other countries we have studied, and generates little cause for concern from a competition angle, though further consolidation is likely going forward and coordination through the trade body represents a risk," Karen Ellis said.
In 2002, there were 70 cement companies in operation in Bangladesh, whereas in 2008 there were 34. This consolidation is likely to continue, the report said.
It said Bangladesh now has a relatively competitive mobile phone market, with more players than Kenya and Zambia.
A number of regulatory issues such as exchange operators, tariff regulation, termination charges, number portability, taxation of the mobiles sector and revenue sharing and universal access as have been identified which may be affecting competition within the mobiles market.
"Some regulatory concerns in the mobile telephony market, which may be undermining competition and wider rollout and thus constraining wider penetration of mobile services within Bangladesh."
The report said there seems to have been some opposition to the introduction of competition in Bangladesh from business lobby groups. "One way to tackle vested interests, who oppose reform, is to establish and facilitate coordination amongst other interest groups who stand to gain from reform," it suggested.
Bangladesh does not currently have a competition law and policy framework that is being applied, though the Monopolies and Restrictive Trade Practices Ordinance (MRTPO) enacted in 1970 remains on the legislative books.
The government has already prepared a draft Competition Act 2008, which is believed to be passed in parliament soon.
The report said competition in Bangladesh could be enhanced further through policy reform and establishment of a competition policy, law and authority.
"Appropriate competition policies and the establishment a competition authority can help ensure markets work efficiently and effectively deliver economic welfare and growth."
"Competition undermines corruption, facilitates international competitiveness, private sector development and employment creation and thus makes an important contribution to the wider economic growth that is needed to lift developing countries out of poverty," it recommended.
Bangladesh appears competitive with more players and lower prices in the sectors of mobile phone, sugar and cement although the country does not have any competition law, a study has found.
The study, conducted by Overseas Development Institute (ODI) in association with the UK Department for International Development and titled 'Measuring the Economic Impact of Competition', also identified a number of potential competition problems which warrant investigation by a competition authority.
The provisional findings of the study were presented at a workshop jointly organised by South Asian Network on Economic Modeling (SANEM) and ODI in the city.
SANEM Chairman Bazlul Haque Khondker presided over the workshop, while ODI business and development programme leader Karen Ellis and her fellow colleague Rohit Singh presented findings on their research on Bangladesh's mobile phone, sugar and cement sectors compared to four other countries - Ghana, Kenya, Vietnam and Zambia.
The researchers said there are wider government policies that are undermining competition in the markets. "Government's involvement in sugar production, which is inefficient, represents a distortion of the market."
It said there are allegation that private refineries or the wholesalers were restricting supply in order to increase prices. This would be an issue that a Competition Authority could investigate.
On the cement markets, the study report said there is evidence of a high degree of price and non-price competition in the country's cement market although Bangladesh has the lowest prices among the countries surveyed.
"Overall, the cement industry in Bangladesh appears to be relatively competitive compared with the other countries we have studied, and generates little cause for concern from a competition angle, though further consolidation is likely going forward and coordination through the trade body represents a risk," Karen Ellis said.
In 2002, there were 70 cement companies in operation in Bangladesh, whereas in 2008 there were 34. This consolidation is likely to continue, the report said.
It said Bangladesh now has a relatively competitive mobile phone market, with more players than Kenya and Zambia.
A number of regulatory issues such as exchange operators, tariff regulation, termination charges, number portability, taxation of the mobiles sector and revenue sharing and universal access as have been identified which may be affecting competition within the mobiles market.
"Some regulatory concerns in the mobile telephony market, which may be undermining competition and wider rollout and thus constraining wider penetration of mobile services within Bangladesh."
The report said there seems to have been some opposition to the introduction of competition in Bangladesh from business lobby groups. "One way to tackle vested interests, who oppose reform, is to establish and facilitate coordination amongst other interest groups who stand to gain from reform," it suggested.
Bangladesh does not currently have a competition law and policy framework that is being applied, though the Monopolies and Restrictive Trade Practices Ordinance (MRTPO) enacted in 1970 remains on the legislative books.
The government has already prepared a draft Competition Act 2008, which is believed to be passed in parliament soon.
The report said competition in Bangladesh could be enhanced further through policy reform and establishment of a competition policy, law and authority.
"Appropriate competition policies and the establishment a competition authority can help ensure markets work efficiently and effectively deliver economic welfare and growth."
"Competition undermines corruption, facilitates international competitiveness, private sector development and employment creation and thus makes an important contribution to the wider economic growth that is needed to lift developing countries out of poverty," it recommended.