The role of TCB in free market economy

Syed Ejaz Ahsan Price control is the one of the macro-economic objectives of the government. Specially, control of food price is more important than that of other non-food items in an economy where everything is controlled by the government so that it has full control over the price level. In a free market economy, price is determined by demand and supply. Whenever there is a shortage of supply, the obvious consequence is price hike. In a country where a large number of people live below the poverty line, food inflation triggers consequences like social and political unrest. So the government always tries to control the price level, especially that of food items. Even in most cases, the election manifestoes of political parties promise to keep prices under control after the election. But according to the theory of economics, controlling price level depends on how much control one has over supply. If the government does not have control over the supply chain, then there is no way the government can check price inflation. In our country, there is a tendency of restricting supply of essential commodities by a group of traders who control the supply, particularly of the items that are imported from other countries, and the prices are increased gradually. Verbal reminder or request has nothing to do with controlling the price level in a market, if one doesn't have any control over supply. The solution lies in the control of stocks of essentials and establishing a sound distribution system to reduce the demand-supply gap that is created artificially. With a view to controlling the price level, the government just after the liberation established the Trading Corporation of Bangladesh (TCB). Initially, it was successful and its most significant achievement is the initiative of exporting garments in 1975-'76. Since then the garments sector has never looked back. The sector is now considered the lifeline of the country's economy. Now let us have a look at the organisation and its track record. The TCB is an autonomous state trading organisation under the Ministry of Commerce. After the liberation in December 1971, Bangladesh inherited a devastated economy, a disrupted system of communication, and damaged ports. This necessitated urgent import of essential consumer goods and industrial raw materials. In this backdrop, the TCB was created in 1972 under the Presidential Order No. 68. To start with, it took over all the assets, liabilities and manpower of the East Pakistan offices of the Trading Corporation of Pakistan. The TCB's main functions were: to import commodities according to the requirements of the government, to distribute the imported commodities at fair prices to keep the market stable, to create overseas markets for traditional and non-traditional products of Bangladesh and export those products, to keep a watch on the supply and price situation of the essential goods and to engage in trading and related activities as directed by the government. During any import crisis, the TCB often acts as the saviour. In emergencies, it imports onion, lentils, salt, dry chilies, dates, ginger and medicines. During the period from July 1972 to June 1998, the TCB imported goods worth Tk 19,923.7 million and distributed those through its appointed dealers, agents, sales centres and licensed persons or organisations. During that period, it earned a substantial amount of foreign exchange by exporting jute, jute goods, molasses, tea, hides and skins, leather goods, readymade garments, urea, frozen fish, handicraft and fine rice. TCB has four departments: a) administration, b) finance, c) trading and sale/distribution, movement of goods, and d) clearing/forwarding and storage. The TCB Secretary heads the administration while the directors head the other departments. The TCB head office is located at Karwan Bazar in Dhaka. It has regional offices at Dhaka, Chittagong, Khulna and Rajshahi and a branch office in Barisal. Owing to the operation of the open market policy since the 1990s, the scope of TCB's state trading has greatly been squeezed with its manpower and the number of offices reduced. The story starts from here. In the name of open market economy, the power and activities of state-owned corporations are being squeezed so that they allow other players to dominate the market or, in other words, satisfy their profit motive whenever they like. But in the developed countries, which vigorously advocate open market, free play and reduction of government subsidy, their governments do not hesitate to provide state support whenever there is a problem. One example is the recent recession in the US. Though the US is the main promoter of the idea of free market economy, the US government did intervene in a big way to tide over the crisis. This underscores the importance of government's involvement in adjusting macro-economic factors of a country. The time has come to revitalise the TCB and secure economic interests of the country. There is also a wide scope for the TCB in the area of expanding export market and establishing distribution channels. Where the government is operating a large number of corporations despite losses, there is no reason of not expanding the TCB, which has every prospect of earning profit. The problems with the TCB at present are as follows: * Fund shortage, * Red-tapism, * Narrow distribution network, * Narrow range of activities, * Market monitoring, * Shortage of manpower, * Research and development of our export market alongside the Export Promotion Bureau. The first and foremost problem of the TCB is the fund shortage. To operate trading, the organisation needs an adequate amount of funds in time, but in most cases it becomes difficult. Due to red-tapism, managing, disbursing and arranging funds are difficult. Another problem is the narrow distribution network and range of activities. Nowadays the TCB is less concerned about export and market expansion and related activities, but we know that the TCB was behind the first garment export. The same way the TCB can play its role in re-establishing our worldwide market for jute and jute goods. Due to awareness about environment, the use and demand of jute are once again increasing day by day. Though the Export Promotion Bureau (EPB) is there for promoting exports, the TCB's function is more important. They can take an initiative to export non-traditional items. For promoting export of these items and taking an initiative to enter the export market as it happened in case of garments, the TCB can play a vital role to take our economy to a new height. But to perform these functions, the TCB needs to expand its manpower base along with developing a research wing. Market monitoring activities of the TCB appear to be very poor nowadays. For example, within a few days the price of onion increased from approximately Tk 43 to Tk 73 due to a shortage of supply and the increase in prices of imported Indian onion. But newspapers report the TCB is going to import onion from other countries like China and Myanmar. But proper market monitoring and forecasting by the TCB could bring the situation under control and keep the onion prices low. Timely action of the TCB could have enabled the government to earn profit. It is difficult to narrate in a short space all the possibilities and scopes where the TCB can work and contribute to our economy. The functions of the TCB are vital and there are wide scopes in different areas. In addition to its main duties of assuring the supply of essential commodities and fair prices for the consumers and keeping the price level under control, the TCB can expand its activities in the export market, new product development and introduction of more non-traditional export goods. Not only in case of essential commodities, the TCB can also establish a network of distribution of agricultural goods and protect the farmers from the clutches of wholesalers and middlemen who always try to deprive them of fair prices for their products. These activities can generate a significant amount of profit for the TCB whereas many government organisations have been incurring accumulated losses for years. The writer is a PhD researcher, Department of Marketing, Dhaka University. seahsan@gmail.com