Anarchy In Kitchen Market

Anarchy in kitchen market
Swells pockets of the few.
Duality in dealing the issue
Makes the debate renew.

There has been anarchy in kitchen commodity prices. Edible oil prices garnered lots of attention and causing most worries to a typical household. I still remember more than a year ago I bought soybean oil at a price Tk 105/liter. Later the price rose to Tk115/liter. And now it is being sold at the retail shop at Tk 173/liter. Situation is so dire that head of a consumer rights protection body under the Ministry of Commerce even accused that a vested group plundered Tk 1000 crore from the market in a matter of a week by raising the oil prices¹. His accusations have gained some attention as edible oil production ,import and distribution are done by handful of groups. Moreover, it is found that on too many occasions edible oil at wholesale and retail level is being sold without furnishing any money receipt. Authority suspects hoarding and business malpractices. Government has even set the factory gate price at Tk 143/liter². Despite all the efforts, soybean oil prices show no sign to go back to Tk 105/liter or below level.

I have not seen before that head of department of consumer rights protection expressed his concerns about malpractices in kitchen commodity market.

The price increase came at a moment when Minister of Commerce assured the countrymen of a stable edible oil market during the fasting month of Ramjan,which will begin two weeks later³. As people here consume more fried items at break-of-the-fast time, edible oil prices soar at that time. Many like me suspect this price hike is deliberate to keep the promise made by businessmen to the Minister of Commerce so that oil prices remain stable during the month of Ramjan. Moneymaking from high edible prices during the fasting month is only scheduled ahead. And government may later take credit for containing the situation and keeping the market stable.

Malpractices and fraudulent activities in the business already costing Bangladesh economy dearly. Despite many corona incentives and ease in regulatory restrictions, ailing banks did not get back on track.Loan scams,corruption of management board and frauds almost plundered the Bangladeshi banks. Government’s review of policy on loan rescheduling and incentives to the businesses did not improve the situation. The result is 10 banks suffer from capital shortage.Of them,two specialized banks borrowed at a high interest but lent at a lower interest in a bid to comply government agricultural policies⁴.

During the corona outbreak, e-commerce scam did a tremendous blow to government,which has been reeling from a series of financial scams. It is assumed there will be less fraudulent incidents. But there is hardly any pause in such crimes.

Last week police nabbed a man for swindling Tk 400 million from 300 contractors giving fake work contract in a railway bridge to be constructed over river Jamuna. He even opened an office at posh residential area of Baridhara⁵.

Just two weeks ago Police caught a group of thieves who took care of the ATMs of a private bank. They regularly stole clients money by manipulating ATM machines.

Many fear that part of the soft credit and incentives distributed after the pandemic were misused and laundered abroad. According to Bangladesh Bank, bank deposits increased by TK 869 billion in 2020(November-July). But in 2021(November-July), bank deposits increased by TK 463 billion⁶. That means growth in bank deposits declined in post-pandemic period when economic activities were resuming. Moreover, high demand for US dollar last year supports the belief. Even government used the Forex reserve to supply dollar,$7 billion approximately, to the banks to ease the high demand. Later IMF raised serious objection about such use of Forex reserve and not reflecting it on the actual figure of Forex reserve⁷.

These are indications that govt is not at ease with the economy. The ongoing war in Ukraine further worsened the situation. Each year Bangladesh exports $420 million worth of garments to Russia.Due to war,that stream of revenue is stopped abruptly,causing worries to Bangladeshi exporters[**]⁸. And the country is also a major source for wheat procurement. Ensuing high fuel prices require that government raise subsidy to ensure its energy and food security.

It appears that kitchen market has become a lucrative source to make windfall gains for some quarter. And it is happening right under government’s nose. Onion price hike still rankles the Bangladeshis. Despite being perishable and hard to store, onion registered a high price. The unusual hike already raised serious questions about functioning of our market and government failure to deal with it. Recent edible oil price hike again brought to surface those questions.

Notes And References:

1 “Soyabean Teler Barti Dam Niye Ponero Diney Ek Hajar Koti Taka Hatiye Neya Hoyechhey: Bhokta Odhikar Songrokkhon Odhidoptor(TK 1000 Crore Pocketed During Soybean Oil Price Hike : Department Of Consumer Rights Protection)”,Kadir Kollol,BBC Bangla, March 09,2022. For more read at https://www.bbc.com/bengali/news-60680866

2 “Teler Dam Beshi Rakhae Dokan Silgala(Shop Closed For Charging High Oil Price)”,Daily Prothom Alo(Page 6),March 06,2022.

3 “Soybean Oil Price Won't Be Hiked In Ramadan: Commerce Minister”,The Business Standard, for more read at https://www.tbsnews.net/economy/bazaar/soybean-oil-price-wont-be-hiked-ramadan-commerce-minister-377818

4 “Muldhono Hariechhe 10 Bank(10 Banks Lose Capital)”,Daily Prothom Alo(Page 9),March 11,2022.

5 “Tinsho Thikadarer Chollish Koti Taka Atmasat(TK 400 Million Embezzled From 300 Contractors)”,Daily Prothom Alo(Page 6),March 11,2022.

6 “Korona-Poroborti Bank Babosthapana(Post-Corona Bank Management)”,Mueed Rahman,Daily Jugantor,February 06,2022. For more read here[*]

7 “Forex Reserves Overstated By $7.2 Billion: IMF”,Jebun Mesa Alo,The Business Standard, October 23,2021. For more read at https://www.tbsnews.net/economy/forex-reserves-overstated-72bn-imf-319909 [*]

8 “Bangladesh Garment Exports To Russia Stuck”,Maritime Gateway,March 10,2022. For more read at https://www.maritimegateway.com/bangladesh-garment-exports-to-russia-stuck/

[Note:This piece has been updated first on March 13,2022 at 10:03 AM and later on March 15,2022 at 10:30 AM Bangladesh Standard Time(BST).
*First updates include references to stalled garment exports to Russia and IMF concerns over misuse of Forex reserves.
**Second update include inclusion of a phrase on stalled Bangladeshi export to Russia.]

E-commerce Industry Under Scanner

Another e-commerce company in trouble,
Image of the industry is reduced into rubble.
No honor for gentleman’s agreement,
Hardly brings any foreign investment.

Bangladesh’s e-commerce once again is marred by scam. Another e-commerce platform eorange is on the brink of bankruptcy after consumers filed complaints of Tk 11 billion embezzlement.The owners and officials of the platform had appeared before the court for bail but the court sent them to jail.Angry and deceived clients formed human chain in front of the press club and even blamed an inspector of Banani Police station as he is brother of the owner of eorange¹.

Authorities are already dealing with the complaints of evaly,which does not have enough resources to meet the orders of its clients and clear the bills of its vendors. Its Ponzi-like business model is even rebuked by association of e-commerce platforms.The association disclosed to an online news platform that it would revoke membership of 8/9 platforms out of 19 platforms operating in the country at this moment². This captures the anarchy going on in this sector.The head of Department of Consumer Rights Protection admitted to the online news platform that highest number of complaints was lodged against evaly(4932),followed by eorange².Unlike the two,complaints against other platforms are resolved quickly.

According to Statista,size of Bangladesh’s e-commerce market will become $1.95 billion by the end of this year³.

Evaly scam already shook the industry and eroded consumer trust on such platforms. Bangladesh Bank did a probe and unearthed that evaly had taken advance payments of Tk 213.94 crore from consumers and failed to meet the orders and it owed Tk 189.85 crore from vendors as of March 14,2021⁴.

Following an instruction from Ministry of Commerce,evaly disclosed its total equity and liability is Tk 5.44 billion, of which current plus tangible asset is Tk 1.05 billion and total liability is Tk 4.38 billion⁴.

Many Mobile Financial Services(MFS) stopped providing services to evaly,eorange and others alarmed by too many complaints and due bills⁵. Most of the troubled e-commerce platforms took money in advance from the clients,gave eye-dazzling discounts and then just shrank in the face of overwhelming demands.

It turns out from the online news portal's report that many clients opened multiple accounts to take advantage of huge cash discounts². Back in last year, I wrote a piece titled “Ponzi or E-commerce”  on https://rezaulhoque.WordPress.com to discuss true motive of such platforms.Many compared their operations with multilevel marketing company or running a Ponzi scheme. In the past,such companies ruined millions of people and owners of the companies are serving prison terms or fled abroad.

In our country, surveillance on the misuse of public fund is not adequate. Even automation at public enterprise is delayed to let continue such misuse. Back in September 2019, I wrote a piece where I highlighted the repercussions for holding long such money from public system by citing a news report on delay in launching the planned automated payment system of Bangladesh Petroleum Corporation(BPC). BPC is country’s biggest company with annual turnover of TK 500 billion. The planned automation is supposed to cut the payment time to 4 days from 10 months. BPC faced stiff resistance from a certain quarter that does not want to see BPC receives revenues from its oil sales from state-run petroleum products marketing and distribution companies in such a short span of time^{7 8}.

If payments take as long as 10 months to reach BPC coffer, then it is pretty understandable that those who benefited from this delay will leave no stone unturned to strew the road to automation with all kinds of hurdles. Holding BPC’s payments for 10 months , they can invest it to somewhere else and make lots of money. Frankly speaking, they can open 3-month or 6-month-long deposits at banks and earn huge interests. Or they can erect a whole new multi-storey building at any part of Bangladesh. In addition, such time lag also raises the possibility of leakages in the system. A news report revealed that a local company already developed the payment software, but it could not proceed with the scheduled launching due to the resistance from this vested quarter.

By the same token it will not be an exaggeration to insinuate that clients’ money of this upstart company may be misused as it is shy to disclose its details and to advertise widely its services⁶.

It is indeed interesting and puzzling the meteoric growth of these e-commerce platforms.Over the past few years, unemployment rate, cost of living increased and salary in real terms decreased. Pandemic brought to fore a great deal of uncertainty about the future.Meanwhile, there has been few ads of consumer loans offered by the banks.All the sectors except real estate are battered by Corona. Provision of legalizing black money tremendously helped the real estate sector.While consumers hold back their expenses,why is there a buying spree on online e-commerce platforms? There may be something fishy going on here. Government also opened the IT sector as a possible destination of melting the black money. Except evaly,which managed to bag an investment offer of Tk 2 billion from Jamuna Group,no other companies attract such investment. Consumer online commands and outstanding liabilities also raised the suspicion as this money managed to get into the balance sheet.No matter which side of the balance sheet it stays,this money is pretty much in the mainstream now. One knows evaly has to pay Tk 438 crore. It is like valuation of damaged goods in the burning warehouse, a sum like say Tk300 crore(this was exactly what happened in the case of destroyed lighting equipments of a construction company ,renovating the Intercontinental Hotel,in a fire accident in Jessore few years ago).Fate of Tk 300 crore or Tk 438 crore is sealed.

Another thing I noticed that such platforms and covered van service providers do not keep track the weight of goods they are carrying.But the courier companies and postal service record the weight of consignment. Most of the platforms have their own delivery services,may be that’s why they do not keep track of weights. I think regulator authority should make it mandatory for delivery providers to keep records of identity of the good and its weight.

Our financial sector is in limbo partly because of the weird regulations authority introduced and nepotism in the management board. Now we are witnessing it in the e-commerce sector.Clandestine wealth has corrosive effect. It should not be allowed to melt in IT sector. Rumor has it that many platforms expect foreign investment in this sector. In a country where gentleman’s agreement is violated on every occasion and one is judged by his ability to do harm such foreign investment may remain out of reach. Who will come to “Anarchistan”?

Notes And References:

1 “1100 Koti Atmasater Obhijog(Complaint Of Tk 11 Billion Embezzlement)”, Daily Prothom Alo,August 18,2021.

2 “E-Commerce: Ponno Kenar Hiriker Por Ekhon Obhijoger Pahar(E-commerce: Complaint Deluges After Buying Spree)”,Faisal Atik,bdnews24.com,August 19,2021.Link here

3 “E-commerce: Bochhor Sheshe Akar Darabe 16000 Koti Take(E-commerce: A Tk160 Billion Market By The End Of This Year)”,Daily Prothom All,August 08,2021.

4 “Evaly’s Actual Debt Higher Than BB’s Findings”,Abul Kashem,Business Standard,August 19,2021.Link here

5 “Evaly,AleshaMart shoho 10 E-commerce e Lenden Bondho Bikshe(bKash Stops Transaction With evaly,aleshamart and 10 Other e-commerce Platforms) “,bdnews24.com,July 17,2021Link here

6 “Ponzi Or E-commerce?”,Rezaul Hoque,September 09,2020.https://rezaulhoque.WordPress.com.Link here

7 “A Campaign Far From Complete Success”,Rezaul Hoque,September 26,2019 Link here

8 “BPC's ‘Payment Automation' Launch Hits Snag”,Financial Express, June 24,2019.Link here