Kazi Zahidul Hasan :
Bangladesh has largely benefited from the recent turndown in global commodity prices, but its consumers have been deprived thereof due to lack of an effective market and supply chain management, economists said on Friday.
They said, the global commodities alongside oil and gold prices continue to fall on account of their increasing supply and a weakening economy. But the consumers of Bangladesh find no gain because of market manipulation by big traders
and the government’s inaction in fuel price deregulation.
The Food and Agriculture Organization (FAO) said on Thursday that the price of international food commodities slumped in August to their lowest level in almost seven years.
“Ample supplies, a slump in energy prices and concerns over China’s economic slowdown contributed to the sharpest fall of the global commodity prices,” it said in a statement.
Commenting on the issue, Dr Zahid Hussain, lead economist, the World Bank’s Dhaka Office, told the New Nation on Friday that the falling commodity prices will have a positive impact on Bangladesh economy as the country is a large importer of food.
“Food import constituted about 13.9 per cent of Bangladesh’s total imports in the fiscal 2014-15. The international price decline means large terms of trade gain for it,” he added. He said, if we consider its benefit to the economy as a whole, it will be seen that importers pay less for imports which help improve the Balance of Payment (BOP) and narrow the country’s trade deficit.
Dr Zahid further said that the extent of pass through to domestic consumer prices takes time. All the declines may not be passed on to consumers because of inadequate competition in our markets and rigid administered prices.
“Government must not dictate market prices. It has to promote better competition in the supply chain. Our markets are hostage to few large suppliers who are protected by their political patrons. Cost of doing business need to be reduced to allow more players in this field,” he said.
When asked, he said, there may be some impact on NBR revenue but these are relatively low duty items. Pressure for appreciation on the exchange rate will increase which means Bangladesh Bank will continue buying dollars.
Regarding the oil price deregulation, he said, “This is a golden opportunity. Many countries, including India, Indonesia, Malaysia and Egypt, have already done it to pass its benefit to their consumers.
This is the time to link administered prices to international prices and to break BPC monopoly on fuel imports. There is no economic rationale behind government setting fuel prices on a discretionary basis. BPC is a very inefficient institution. Why should consumers bear the burden of BPC’s operational inefficiencies and wastes? There are also allegations of corruption in BPC petroleum procurement process. Deregulation is the need of the hour.
“The falling commodity prices have been a boon for Bangladesh economy. Bangladesh being a major commodity importer sees lower import payment and it reduces pressure on the country’s current account balance,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) governor told The New Nation on Friday.
But the local consumers are not getting the benefit as commodity prices are not falling fast here due to market manipulation by a section of businessmen, he added.
“Only an effective market and supply chain management by the concerned authorities can pass the benefit to the local consumers. But unfortunately it fails to do so paving the way of price manipulation by the dishonest traders,” he noted.
Bangladesh has largely benefited from the recent turndown in global commodity prices, but its consumers have been deprived thereof due to lack of an effective market and supply chain management, economists said on Friday.
They said, the global commodities alongside oil and gold prices continue to fall on account of their increasing supply and a weakening economy. But the consumers of Bangladesh find no gain because of market manipulation by big traders
and the government’s inaction in fuel price deregulation.
The Food and Agriculture Organization (FAO) said on Thursday that the price of international food commodities slumped in August to their lowest level in almost seven years.
“Ample supplies, a slump in energy prices and concerns over China’s economic slowdown contributed to the sharpest fall of the global commodity prices,” it said in a statement.
Commenting on the issue, Dr Zahid Hussain, lead economist, the World Bank’s Dhaka Office, told the New Nation on Friday that the falling commodity prices will have a positive impact on Bangladesh economy as the country is a large importer of food.
“Food import constituted about 13.9 per cent of Bangladesh’s total imports in the fiscal 2014-15. The international price decline means large terms of trade gain for it,” he added. He said, if we consider its benefit to the economy as a whole, it will be seen that importers pay less for imports which help improve the Balance of Payment (BOP) and narrow the country’s trade deficit.
Dr Zahid further said that the extent of pass through to domestic consumer prices takes time. All the declines may not be passed on to consumers because of inadequate competition in our markets and rigid administered prices.
“Government must not dictate market prices. It has to promote better competition in the supply chain. Our markets are hostage to few large suppliers who are protected by their political patrons. Cost of doing business need to be reduced to allow more players in this field,” he said.
When asked, he said, there may be some impact on NBR revenue but these are relatively low duty items. Pressure for appreciation on the exchange rate will increase which means Bangladesh Bank will continue buying dollars.
Regarding the oil price deregulation, he said, “This is a golden opportunity. Many countries, including India, Indonesia, Malaysia and Egypt, have already done it to pass its benefit to their consumers.
This is the time to link administered prices to international prices and to break BPC monopoly on fuel imports. There is no economic rationale behind government setting fuel prices on a discretionary basis. BPC is a very inefficient institution. Why should consumers bear the burden of BPC’s operational inefficiencies and wastes? There are also allegations of corruption in BPC petroleum procurement process. Deregulation is the need of the hour.
“The falling commodity prices have been a boon for Bangladesh economy. Bangladesh being a major commodity importer sees lower import payment and it reduces pressure on the country’s current account balance,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) governor told The New Nation on Friday.
But the local consumers are not getting the benefit as commodity prices are not falling fast here due to market manipulation by a section of businessmen, he added.
“Only an effective market and supply chain management by the concerned authorities can pass the benefit to the local consumers. But unfortunately it fails to do so paving the way of price manipulation by the dishonest traders,” he noted.
