The West to \\\'tame powerful firms\\\', we take a journey backward

Western multinational corporations (MNCs) have been criticised for years for their notorious role - corrupting the political system and even overthrowing elected regimes - in the Third World countries. Recently, the US Department of Justice has investigated a few companies for paying huge bribes in Bangladesh. Disturbed by corporate inversions, Washington has initiated to frame laws to plug 'unpatriotic tax loopholes'. Now that socialism, which challenged the hegemony of the market forces, is otherwise dead, the free world feels that MNCs have emerged really as giants curtailing its freedom and that they need to be tamed.
Such a conviction has been reflected in the citation of the committee responsible for announcing this year's Sveriges Riks bank prize in economic sciences in memory of Alfred Nobel - popularly called Nobel Prize in Economics. France's Jean Tirole, who has made invaluable academic contribution  to underscore  the necessity of regulating large firms to prevent consumers being damaged by their monopolistic behaviour, has been chosen for the award.
However, sitting in the periphery of the global system, we still may have to face at least a three-fold challenge from the dominant MNCs. Firstly, as we need imported goods, services, technology and advice and also foreign direct investment (FDI), their game is yet to be over - big players may show their political prowess in a nexus with corrupt and 'not-so-qualified' politicians holding power. Secondly, due to technological revolution and globalisation, companies such as Google and Facebook may come up with all-pervasive influence to control various businesses in our part of the world as well. Thirdly, we may lose in the competition for establishing patent rights of our products, traditions and indigenous knowledge to relatively stronger and more advantageous players and nations. As a result, consumers in countries like ours may suffer and the national governments could be subservient to MNCs.
Domestically, our governments do not and cannot properly regulate even the smaller firms including trading houses. The adulteration of foods with substances hazardous for human health like formalin and carbide, suggests the operations of a completely unregulated market. With the whole nation exposed to unsafe foods, the government - the most powerful institution in the country -has developed no capacity and promoted no a national culture, to maintain transparency for public welfare. Smugglers and black marketers are not brought to book for their malpractices, where good companies and honest individuals are struggling to do business ethically.
Apparently keeping Western perspective in mind, the Economic Sciences Prize Committee of the Royal Swedish Academy of Sciences has observed that since the days of Adam Smith, economists have realised that firms with market power may try to restrict competition in their industries, whether by collusive agreements, predatory behaviour, or other means. Tirole has been appreciated for offering a unified framework for designing regulation or competition policies applicable to a number of industries, ranging from telecommunications to banking.
Cartel is still relevant to Bangladesh as it is also the West where the private players have become monopolistic in place of state monopolies in earlier ages. In a deviation from the century-old policy of laissez faire, the US government wants the MNCs registered in America, create more jobs and pay due tax at home. The financial crisis of 2008 exposed the weaknesses of a greed-based system, giving a wake-up call for correction. Bureaucratic and political establishments in Bangladesh which began its journey with an almost state monopoly over major businesses in the 1970s, still have the mindset of controlling the companies but they have lost the  capacity to do so for two reasons - inefficiency of the government machinery and growth of the private sector beyond its control, if not regulation.
The most commonly used term we have come across in recent years is 'syndicate' (of a handful of market players). 'Syndicates', as many people believe, control the prices of a number of items such as cooking oil and consumer goods. During the break of a recent talk-show, a business leader was speaking out his mind that it should and could be tamed for the sake of fair-play and consumer welfare. But once the television channel went on live, he said, "Syndicate is an imagined entity." Such an 'imagined' syndicate, too, could never be broken by any government.
Banks in Bangladesh are generally accused of charging high lending rates, a practice which, according to many entrepreneurs, would not help future industrialisation and business growth. Interestingly, a senior minister argued, a businessman in manufacturing sector, who is also a director of a bank, does not advocate the lending rate-cut while addressing the bank\\s board meeting. Practically, the government fails to ensure a tolerable rate of interest so that new businesses could flourish. The state of regulation in the financial sector has been manifested in a number of scandals and share market crash. In telecom sector, the regulators struggle with illegal VOIP (voice over internet protocol) business and the fiscal policy often leaves ample scope for criticism by the operators.
In the early 1980s, Dhaka drew attention of international drug manufacturing companies, especially of giant players, when the government banned about 2,000 items of medicine in view of their hazardous effects on public health. This was done at the initiative of Dr Zafrullah Chowdhury who was assigned to prepare a national drug policy. Most of them threatened to fold up their operations in Bangladesh and then authoritarian ruler HM Ershad was about to bow down to the pressure. Ultimately, scientific arguments won the debate, none of the companies left and the country later witnessed the growth of local pharmaceutical companies manufacturing drugs even for the export market.
Many things seemed to have gone wrong with the regulatory affairs even after we had introduced economic liberalisation and joined competitive, globalised market since the early 1990s. A political economy which supports and promotes extortion as practised as the means of doing politics, campaign financing or holding of socio-cultural programmes without transparency can in no way accommodate the rule of law and justice. The government can neither apply its legal authority to regulate the companies and business entities instilling in them a corporate culture, nor do the business houses and genuine entrepreneurs find a proper environment for doing business smoothly.
The Prime Minister has, of late, announced that the government would take back properties, especially land of privatised enterprises which were earlier owned by the state, in case the private owners failed to resume production. It is hardly likely that such an announcement could be translated into a reality, given the lack of policy consistency and political nexus in the disinvestment process. She also made another statement that means a policy shift: No state-owned mills and factories would be privatised in future. This indicates that the government, despite depletion of its capacity and hefty losses incurred by public entities, wants to keep some sort of monopoly over business for doling out benefits to its men from the taxpayers' money.
We, in Bangladesh, are, in fact, yet to come out of the shadow of monopolistic behaviour of leadership in different sectors.
The West has come to the conclusion that firms need to be regulated in a variety of ways and Tarole's insights, as the Swedish committee acknowledged, might help governments to encourage the firms to become more innovative and productive, lowering production costs and also stop them from eating up competitors and making the customers hostage.
In our case, unfortunately, the king in the market - the consumer - is widely treated as the subaltern character in society of service providers. It is an issue of culture that needs to be changed whereas the voice of the consumers is still missing. We have not yet begun the process of regulation proper for doing justice to all stakeholders - businesses, consumers, regulators, political actors and citizens in general. To be precise, governance crisis is at the centre of all crises in this country.

The writer is Executive Editor at ICE Business Times. khawaza@gmail.com