Regulation Or Retribution

Failure to deliver regulatory action Often creates wrong perception.

Bangladesh's inflation in general still remains elevated, above 9% for April. Though food inflation declined from 8.93% to 8.63% , this reduction means little as the heat of inflation gives a heavy blow to the people. Meanwhile, chief advisor's special economic assistant in a program made it clear that govt may unsubscribe the ongoing IMF credit program if the IMF [stresses] on continuing the reforms set by it.

The May 6 meeting between the two fell through as a last ditch attempt. The bone of contention is the free exchange rate. Currently, Bangladesh follows a crawling peg system (I have serious doubt about calling it a crawling peg), but the IMF wants it to be fully aligned with the market.

The IMF program started during the time of a govt that deemed corrupt and dysfunctional but it wore the attire of a "democratic regime". Current govt lacks the popular mandate and should not unsubscribe the credit program. I personally think the IMF credit program is more important and beneficial to us than any corruption-prone climate fund arrangement. Our banking act was overhauled, the central bank got back its sovereignty, journey of true reporting of economic data has began, exchange rate was liberalized, current account balance improved, pension fund got secured, abuse of social security spending declined, revenue collection increased manifold, loss-making public and private entities' balance sheet improved because of higher interest rate, NBR is likely to get more revenue from them, fuel price adjustment leads to lowering fuel prices, improvement in revenue governance and many more things since the IMF started the credit program.

Undoing it is a step towards going back to old days of unwarranted spending, costing the welfare of mass people and efficiency.

This kind of retributive stance over regulatory supervision should be discarded. When regulation requires proper attention , retribution casts shadow over it and derails the true objective of regulation.

Last week homicidal charges were brought against two directors of a leading advertisement agency, which has a significant market share in the industry. One of the directors were a former ruling party politician and minister and accused of killing 4 people. The other director is an actor and accused of a murder during the uprising in July. The latter's well-wishers denied the accusation as trumped-up charges and claimed he was a supporter of July movement. In addition, they claimed the two were targeted as the agency holds significant market share of the industry ( some say over 80%), sharing the social media post of another PR firm owner.

Now political vendetta should not be mixed up with market malpractices. If anyone is involved in market malpractices then the matter should be brought to the attention to proper regulatory authority ( in this case Bangladesh Competition Commission and the High Court). Rather, the political vendetta only validates the earlier malpractices in future years.

Bangladesh in 2012 introduced the Competition Act that 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 and oligopoly, combination or abuse of dominant position or activities adverse to the competition."

There are many business groups and media outlets whose ventures like streaming platform owns more than 70% market share, paper mills that control significant market share of toilet paper, broadsheet newspaper and exercise book. Even the dominant market player of the ceramic industry holds important portfolio of this govt. If govt is committed to true reforms, then they should be subject to BCC's scrutiny. So far we see that BCC gets more inactive under this regime.

There are things called brand reputation and brand loyalty. If a business group engages in controversial, unlawful act, then let the market and consumers do their act. Director of one of country's leading conglomerates was accused of killing a model. Later its brand in sanitary napkin , toilet paper market lost significant market share. Its consumer items met similar fate. Its shopping mall draws less crowd after the incident. It pays a hefty toll after the incident. Rumor has it that a party even extorted the group while the govt remained muted.

Govt should underscore regulatory stance instead of retribution. Regulatory action, which this govt is yet to deliver regularly,is the routine work of a normal and functional govt. Any malpractices deemed breaching regulatory environment should be dealt through regulatory actions. Retribution dampens the regulatory spirit and does not improve the business environment in the long run.