Prices: Minister Blames 'Mafia'
Wednesday, 24 February 2010

Experts on Tuesday warned of rising inflation in wake of spiralling food prices, while the finance minister blamed "syndicates" for the continued hikes.

Unable to explain the recent rocketing price of rice, finance minister AMA Muhith on Tuesday blamed it on collusion of market players.

Speakers at a discussion on the state of the economy, meanwhile, agreed that prices kept rising despite consecutive good harvests and sufficient government stocks.

The finance minister openly admitted to the existence of 'syndicates', not unlike a number of his predecessors, and said they were essentially responsible for abnormally high food prices.

"A monopolistic force is controlling the market...there is no logical reason for the current price-level," Muhith told the seminar organised by Bangladesh Institute of Development Studies (BIDS) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

Looking back at the cause of sustained double digit inflation during the better part of the past two-year tenure of a caretaker government, speakers identified food prices as one of the overriding concerns today.

Food prices remain the pivotal point in determining inflation, they said.

"Overall inflation in Bangladesh generally follows the trend of food inflation which has a weight of nearly 65 percent at the national level," said a report presented at the seminar by BIDS director general MK Mujeri and research director M Asaduzzaman.

The report also identified lack of healthy competition in the market as a major factor in determining food price.

FBCCI president Annisul Huq, not directly disagreeing with the finance minister, said that the issue of collusion of traders needs to be proved, however, but that the business community agrees the reason behind such abnormal price hike should be properly identified.

"The finance minister has more information than me and I am not disagreeing with him but there are thousand of players in the rice market and collusion is not possible," he told bdnews24.com.

The president of the country's apex trade body focused instead on the need for tuning up the legal framework to prevent hoarding.

BIDS researcher director M Asaduzzaman, the co-author of the report, however, directly disagreed with the finance minister.

"I personally believe it's quite impossible for a syndicated move in the rice market as there are thousands of traders," he told bdnews24.com.

So-called 'syndication' may occur in case of imported goods, where importers can go for a concerted effort to control price, said Asaduzzaman.

According to Qazi Kholiquzzaman Ahmad, president of Bangladesh Economist Association, however, rice cartels are possible too.

Market monitoring on a regular basis as well as specific law regarding stock piling is much needed to disable the cartels, he said.

"The most important thing is to mobilise the TCB ... it needs a total renovation, the present format of the organisation is of no use," Ahmad told bdnews24.com.

He stressed a fast decision on the TCB along with promoting new importers and small-scale producers to increase competition.

TCB, or the Trading Corporation of Bangladesh, is the government wing to facilitate steady supply of essential commodities, which has failed to create any impact in the market by its recent sporadic activities.

Source: bdnews24.com

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