Address Market Imperfections

Few firms with dominant market position, Consumers need regular BCC intervention.

For some strange reasons, we seem more concerned about monopoly as main source of market imperfections. Other more pressing market imperfections issues like price fixing, bid-rigging, tie-in sales,market allocation, creating entry barriers etc often go unnoticed. Two or more firms fixing prices, firms in collusion let a firm win a bid, firm selling different product with its main product and firms dividing the market among themselves deeply influence competition and profitability. Reduced competition, in turn,let few firms gain more market share.

Regulatory intervention is therefore needed to stem concentration of market share into the hands of few firms. True reporting of the sales figure by firms in their annual report often leads to determine market share of a firm in a particular industry. Unfortunately this information is not available as many firms do not publish regularly annual report or audit report. However, regulatory bodies have means to determine size of a market in a particular industry and market share of each individual firm in that industry. If this is the case, then they know the way to eradicate the market imperfections that are detrimental to both consumer welfare and competition.

Determining true market share of a firm is important for another reason. Nowadays, revenue shortfall has become a recurring phenomenon for the govt. This year govt revenue collection target is Tk 7 trillion, which many believe quite impossible to achieve. Extra revenue may come from unearthing the true market share of a firm. Often significant market share allows a firm to abuse its dominant position in an industry. This is when intervention of regulatory body is needed. We have examples too in this country.

Bangladesh Telecom Regulatory Commission (BTRC) introduced significant market player clause that allows it to impose restrictive measures to curb influence of a dominant market player. The matter created widespread debate when BTRC slapped punitive tariffs on two leading mobile operators for hiding information on new subscribers.

Drawing this lesson from BTRC, Bangladesh Competition Commission (BCC) may introduce and apply significant market player clause for other markets too.Firms having significant market share caught abusing their dominant position in the market through malpractices like price fixing, collusive bidding, market allocation can be subject to punitive/corrective tariffs.

Determining true market share of a firm in an industry can lead to potential new investment in that industry. Removing the entry barrier is a precondition to attain that reality. In some markets even 50% market share of a firm may not be a significant market share if entry is free and arrival of new entrants drive price lower to competitive market. So prevailing markets have new business opportunities due to concentration of market share into the hands of few firms. This is particularly true for kitchen market.

So determining the market share of a firm has become vital from the point of view of competition, revenue, consumer welfare and investment.

Share of the market is an indirect measure of market power, which is the ability of the firm to set price above market level. So it is the job of BCC to determine what should be called the dominant market power in an industry, scrutinizing nature of that industry. For some industry, 25% or 30% market share can be considered dominant if huge capital investment is not required.

Concentration of market share is not bad when quality output is produced efficiently at a much lower price and consumer can get it cheaply than before. If the opposite happens, then regulatory body should step in for the sake of consumer welfare and competition.

Antitrust issues are least concerned matters from the perspective of our policymakers. That is why market imperfections are so prevalent here. In various markets,we see markets are dominated by few firms. There are rooms for new entrants in these markets. What is missing is the regular intervention of BCC. As we have laws and institutions to check market imperfections, it will be a good thing to make good use of them.

Alternate Financing For Future Liability?

Hike in public spending tests NBR's ability, Issue of foreign bonds increases govt liability.

Govt seems determined to issue sovereign dollar bond by December this year. The size of the debt will be between $500 million and $1 billion. Government's alternative financing committee is working on the size and terms of the issuance. The initiative to explore foreign capital market for raising funds will come into reality within two to three months.The govt also has plans to issue Panda bond in China. The size of the Panda Bond will be initially $50 million. In addition, govt is also contemplating samurai,sukuk,infrastructure and diaspora bond as alternative financing means.

Leaning towards issuing foreign currency bonds underscores govt's desire to diversify financing sources to meet the budget deficits. Growing non performing loans (NPLs) in the banking sector, low private sector credit due to high public borrowing from banks and less access to soft credit after LDC graduation induce govt to explore foreign capital market.

Meanwhile, Moody's latest revision of credit rating outlook for Bangladesh from "Negative" to "Stable" may help Bangladesh in the endeavor of exploring the foreign capital market. The consistent growth of foreign exchange reserve and remittances inflow contributed to this revision. However, Moody's credit rating for Bangladesh remains B2, which was downgraded from B1 in 2025.

Earlier, S&P Global Ratings had revised Bangladesh's outlook on long-term sovereign credit rating from stable to negative. The agency attributed reasons for the revision to weak banking sector, poor revenue collection, external factors and high likelihood of delayed recovery.

The agency observed that non performing loan in the banking sector reached about 40% of total loans, govt revenue collection accounts for 8%-9% of GDP and interest payments represent 30% of govt revenue.

That means revenue collection is still inadequate and more than a quarter of that revenue goes for paying up the the interest of government debt. In this backdrop, the government is pondering to draw money from foreign debt market.

Government is not increasing the pace of domestic revenue collection to meet the existing debt servicing obligation but embarking on issuing bonds that will require more revenue money to pay the interest/ coupon.

Moody's revision for Bangladesh's credit outlook will have a positive impact on future revision of outlook by other credit rating agencies. But fiscal and governance challenges remain and have the risks to worsen economy.

Foreign investors are often more [concerned] about the fiscal policy, monetary policy and how the money raised through bonds is being spent. I highlighted the issue in the piece "Foreign Currency Bond: The Cart Before The Horse" published here on July 28,2026 (see https://hoquestake.blogspot.com/2026/07/la-semaine-derniere-mes-yeux_01602077096.html?m=1).

Govt recently implemented wage hike for public officials. The decision will cost the govt Tk 1.05 trillion annually. This is a permanent increase in govt spending. Besides, the decision will also hike the minimum urban wage for the private sector. Together the wage hikes will increase the inflationary pressure.

In addition, govt has to increase its revenue collection, which fails to meet the desired target, to finance the added increase in public spending. Is it realistic to expect that NBR will add $8.53 billion worth of extra revenue to govt coffer in the next couple of years? This indicates that govt will borrow more from domestic and foreign sources.

Moreover, recent fuel price hike may further aggravate the inflationary pressure. Particularly increase in diesel price by Tk 20 will push up the prices everywhere. But good thing is that it will either slash the subsidy on fuel prices or remain it same.

If inflation deteriorates due to wage hike and fuel price hike , then central bank will augment the policy rate. As a consequence, government spending on interest will rise. Instead of tight fiscal discipline, what we are seeing is [rising public spending and govt borrowing]. At the same time interest spending is rising with growing govt borrowing. And future increase in revenue collection will go for meeting such spending.

Foreign investors prefer that budget deficits remain at a low level so that it will not have impact on their return on investment.Many countries legally keep budget deficits low. Indonesia after the 1997 financial disaster passed a law requiring govt keep budget deficits below 3% of GDP. Such fiscal prudence made foreign investors confident in investing in Indonesia, including its foreign bonds.

In our [country], transparency of our institutions and projects is not impressive. Newspapers are replete with reports on how infrastructure projects are marred with corruption, inflated costs and cost overrun. Question remains about return on such spending. Apart from that nitty-gritty of the activities (like earning, spending) [is] not regularly published in annual report. Many institutions do not publish regularly annual report or audit report. For instance, few years ago an NBR investigation revealed that BPC made huge profits by depositing money meant to pay as VAT into several bank accounts while leaving NBR in [the] dark. Had there been regular annual reports of BPC ,this thing would never have happened.

Regular reporting of projects,institutions gives investors an idea about the projects, risks and future returns. It also exposes management and return issues. And to make regular reporting credible ,independent and objective auditing is a must.

Issuing of foreign currency bond is being considered. But true foreign investors will observe alignment of fiscal and monetary [policies],reform in the banking sector, transparency in public institutions and projects, regular reporting on performances, independent auditing, distinct role for distinct entities and well defined investment policies from govt while buying those bonds. Without improving governance, without checking the public spending, issuing foreign currency bond will not attract genuine foreign investor and will only increase liability of the govt.

La Semaine Dernière A Mes Yeux

(19 septembre --- 25 septembre)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
19	Paratha,Pomme de terre,Œuf	Riz,Pigeon,Piranha,Yard long beans, Soupe aux lentilles	«Payesh»,Riz gonflé	---
20	Pain,Pigeon,Œuf	Riz, Pigeon,Petit poisson,Feuilles de citrouille, Soupe aux lentilles	---	Gâteau à palme dattier
21	Pain,Œuf,Lentilles	Riz,Petit poisson,Purée de sec latya	«Payesh»,Riz gonflé	---
22	Paratha,Pomme de terre	Riz,Pomme de terre,Gombo,Petit poisson,Purée de citrouille, Soupe aux lentilles	Riz,Petit poisson,Gombo,Soupe aux lentilles	---
23	Pain,Œuf,Papaye-Citrouille	Riz,Petit poisson,Épinard d'eau ,Purée de citrouille, Soupe aux lentilles	Pois chiches,Riz gonflé	Goyave
24	Pain,Papaye-Citrouille,Œuf	Riz, Piranha,Épinard d'eau,Yard long beans, Soupe aux lentilles	Pois chiches,Riz gonflé,«Sticky rice»,Mangue,Yaourt	Goyave
25	Pain,Œuf,Yard long beans	Riz, Piranha,Épinard d'eau,Yard long beans, Soupe aux lentilles	Pois chiches,Riz gonflé	Goyave,Mqngue

La Semaine Dernière A Mes Yeux

(12 septembre --- 18 septembre)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
12	Khichudi,Œuf	Khichuri,Gombo,Petit poisso	Pain,Banane	--
13	Pain,Pomme de terre	Riz, Tengra,Gombo,Pomme d'éléphant	Riz gonflé, Pois chiches	---
14	Gâteau à palme dattier	Riz,Tengra,Gombo	---	--
15	Pain,Pomme de terre ,Œuf	Riz, Poulet,Gombo,Purée de crevette, Purée de sésame, Soupe aux lentilles	Riz gonflé, Pois chiches	Goyave
16	Pain,Œuf,Pomme de terre	Riz,Pomme de terre,Soupe aux lentilles, Yard long beans,Purée de crevette,Purée de sésame	«Payesh»,Riz gonflé	Goyave, Gâteau à palme dattier,«Singara»
17	Pain,«Payesh»,Œuf	Riz, Feuilles de jute, Piranha,Tige de taro	Riz gonflé, Pois chiches	Goyave
18	Pain,Œuf	Riz,Soupe aux lentilles, Piranha,Tige de taro,Banane	Pois chiches,Riz gonflé	Goyave

Wake Up BCC

Anti competition practices are on the rise, BCC should wake up and listen to the cries.

Despite having so many imperfections in various markets, few regulatory interventions have been taken by the govt. Consumers are paying a hefty price, emptying their pockets in daily transactions. It is indeed interesting that there are laws and institutions to address market imperfections and erosion in competition. Yet regular functioning of those institutions has not been noticed since the new govt took office.

Bangladesh in 2012 passed Competition Act 2012, which aims "to make provisions to promote,ensure and sustain congenial atmosphere for the competition in the trade, and to prevent, control and eradicate collusion, monopoly, oligopoly, combination or abuse of dominant position or activities adverse to the competition". It also entailed creation of Bangladesh Competition Commission (Source: Bangladesh Competition Commission,Wikipedia).

Lack of competition can be conspicuously traced in the kitchen market. Consumers feel the heat. Take for instance, the pilaf rice market. The price of packed pilaf rice soared. Some shop owners alleged that big brands elevated the price in unison. Govt intervened by curbing the export quota of the pilaf rice so that price at the domestic market stabilized. The measure has yet to bring any fruit. BCC's intervention is required here to investigate whether any unholy collusion is taking place among the pilaf brands. Unfortunately, no such action is visible from this regulatory body , which was in fact a little bit more active during the interim govt.

Dairy market is another area where the market is concentrated into the hands of few brands. In a bit of surprise, one brand raised the price of milk by Tk 10 per litre last month. Other brands followed suit. Had there been too many brands in the dairy market, this price hike would not have happened. BCC may probe the matter and look into how much market share each brand possesses. In case of mobile operators,we notice how significant market share clause was applied to them by BTRC to curb their influence in the market. Such clause may also apply to the dairy market and a level playing field should be created for new entrants. Unless huge capital investment is required in entering a particular industry, a 25% or 30% market share by a company should set off the alarm bell for BCC. Based on the type of the industry, significant market share may be different for different industry. It is up to the BCC to determine the exact level of significant market share for a given industry.

Mobile Financial Service (MFS) is another market which is dominated by only two operators. MFS has been playing a key role in financial inclusion at the grassroot level. However, lack of competition in the sector clips the benefits and possibilities of new opportunities. BCC can initiate a study on what hinders new MFS operators to expand their operation. Based on the findings of that study, BCC can take steps to remove the obstacles. Since MFS spread to remote areas,ensuring fairer competition and welcoming new operators are major tasks that the BCC must take onus.

Another crucial area that created storm in the press is the oil refining business. Bangladesh Petroleum Corporation (BPC) usually imports,refines, stores and markets petroleum products in the country. Recently two conglomerates step in oil refining business. BPC under the instruction of Energy and Mineral Resource Division of the govt drafted a framework titled "Private-Sector Refined Fuel Import,Storage, Transportation, Distribution and Marketing Policy 2026" in haste. In that framework firms are required to have at least 1.5 million tonnes refining capacity and turnover of at least Tk 50 billion in each of the last three years. Critics allege that such requirements in the draft framework are deliberately customized to provide opportunity to only few big companies, shutting the door for smaller firms. This is a serious allegation that the BCC should pay heed and it should probe whether such arrangement allows participation of few. It is evident from this allegation that such arrangement violates "congenial atmosphere for competition" and allows "abuse of dominant position adverse to competition". So far BCC remains dead silent.

Duties laid out for BCC clearly spell that BCC can initiate probe on competition-killing practices and activities on its own without waiting for any formal complaint. However, BCC [has] not played any active role in addressing adverse policy to competition in the incidents mentioned so far.

Eradicating market imperfections is important for two reasons. First, fairer competition addresses supply side constraints,checks unusual price hike and insulates consumers from the inflation. Consumer welfare is best ensured in a competitive market that is justly watched by bodies like BCC.

Second, govt revenue collection target [is] best attained when there is perfect competition. Revenue shortfall is becoming recurrent incident while govt spending is on the rise. Imperfection and collusion in the market contribute to revenue loss. A fairer market may alter the situation by filling the govt coffer to the desired level. A level playing field for all the firms can attain that goal.

We have institutions and budget for them to function. Yet they fail to act when their action is needed most. When various institutions inside the country function to address people's woes, people get some platforms to make their concerns fall to the right ears. People want to see equal opportunities are created for all. This is common in a democratic society. People witness competition-killing incidents on the trot. BCC should wake up and act to make the markets more fairer.

Nano Loan For Fighting Inflation

Nano loan is used to pay bills and fees, Longer duration could make life at ease.

Bangladesh Bank launched an initiative to provide a maximum of Tk 10000 credit to interested [people] in order to pay utility bills, various fees, mobile recharge and to make bank deposit payment. The loan can be disbursed through apps of commercial banks. It can only be used [for] these selected services through mobile phone. No cash withdrawal of the loan is available for the moment. Banks' clients can take loan starting from Tk 50 to a maximum of Tk 10000. There will be 7-day,15-day and 30-day duration loans for now.

This latest initiative highlights the popularity of nano digital loan as well as govt's keen interest to make a cashless society. In recent weeks, govt took various campaigns to make popular the Bangla QR, a unique QR system that renders useless having multiple QRs. The idea is to make more and more people interested in digital payment method while doing the retail transaction. As the society becomes cashless, the digital economy offers more digital documentation and record of daily transaction. It will make future policy decision more realistic and give an idea on true impact of a policy at the ground level.

Central bank's latest utility bill loan has to be seen in this perspective. Digital nano loan is nothing new to Bangladesh. Earlier mobile financial service (MFS) providers had offered such loan with a ceiling of Tk 50000 in association of commercial banks. MFS apps on the mobile phone led the way to popularize the nano loan. Later commercial banks offer the loan through their own apps too. More than 95% of the disbursed loan is recovered while a tiny percent remains defaulted. A leading bank distributed Tk 50 billion among 1.5 million clients through the app.

However, popularity of such nano digital loan also invites fraudulent activities. Bangladesh Bank in one of its circular cautioned people about 31 nano loan apps which do not follow rules and regulations for operating such financial services. Such illegal nano loan apps charge exorbitant rate of interest and impoverished many innocent users who fell victims to their lure.

Now there are individual apps for nano loans offered by commercial banks. The MFS apps remain exception. If there is one dedicated app for digital nano loan where information of all nano loans will be available , then more people will get clear information about it and will have easy access to such loans. Bangladesh Bank can take the initiative.

Such nano loan can be thought of as providing extended credit to inflation-battered consumer. Problem with such loan is its smaller duration. Nano loan as an instrument against inflation requires longer duration. Say an individual can take a nano loan of Tk 10000 in a high inflation year to purchase food items or protein. He must at least have 1 or 2 years to repay the loan. Repayment period of 4 or 5 years will be even better. It will help him to cushion the adverse effects of inflation. It will not create extra burden on private employee with limited income during inflation. People seek such inflation assistance can get such loan against a registered id.

We have seen increasing use of nano loan for various purposes, from paying utility bills to paying children's educational expenses. However, shorter duration of such loan [makes] it an ineffective tool to fight inflation. Bangladesh Bank can alter this situation by making the duration longer for inflation-battered lower income group. This kind of digital nano loan should be viewed as a mean to regaining the lost purchasing power during high inflation.

La Semaine Dernière A Mes Yeux

(05 septembre --- 11 septembre)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
05	Pain,Pomme de terre,Œuf	Riz,Petit taro chinois avec sec latya,Aïr poisson	Riz,Poulet,Sec latya,Latya,Ruhi,Poulet,Crevettes, Courge amère,Prunier tchuney	Gâteau, Laccha semai,Banane,Kalojamun, Sondesh,Yaourt
06	Pain,Pomme de terre, Œuf	Riz, Petit taro chinois avec sec latya,Aïr poisson	Paratha,Banane,Lait	---
07	Pain,Lentilles avec citrouille	Riz,Anguille en zigzag,Soupe aux lentilles,Pomme d'éléphant	Riz gonflé,Pois chiches	--
08	Pain,Citrouille, Œuf	Riz,Taro ,Citrouille,Anguille en zigzag,Soupe aux lentilles	Riz gonflé, Pois chiches	---
09	Pain,Pomme de terre,Œuf	Riz,Petit poisson,Courge amère avec haricot rouge	Pain,Courge amère avec haricot rouge	--
10	Pain,Pomme de terre	Pilaf,Petit poisson, Épinard	Pilaf, Épinard	---
11	Pain,Œuf	Riz,Tengra,Aïr,Courge amère	Paratha,Banane,Lait	--