In a democratic country, when prices of goods continue to increase, most people tend to hold the government responsible. They reason that it is the government's responsibility to control the fluctuation in prices while also ensuring adequate supply of goods in the local market.
It is a reality that many times in the past, the government of Bangladesh has failed to effectively control prices of commodities and arrange adequate supply. In fact, the government has no administrative structure to control supply and price of commodities.
In this regard, the Trading Corporation of Bangladesh (TCB) can be of some help, if some changes can be made.
In the past, the TCB, a statutory body and public enterprise, could not play its desired role due to existing government procedures like executive orders, rules and regulation related to procurement and sale involving public fund.
At present, the ministerial cabinet is the approving authority for any large purchase (estimated involvement of Taka 500 million or more), though TCB is the implementing agency. Prior to procurement, tenders are called as per Public Procurement Rules (PPR) and Public Procurement Act (PPA) by TCB. The body evaluates and submits the proposals to the commerce ministry. The ministry, following its procedure, forwards the proposals to the Cabinet Purchase Committee, where the decision is finally taken.
But the problem lies in the fact that in each of the above mentioned offices, it takes more than a month for the documents to pass from one office to the next. As such, it often takes a few months before a decision is made. In case of any confusion, any of the offices can seek for clarification from subordinate offices, further delaying the final decision and the procurement.
In order to be able to compete with the commodity traders of private sector, TCB needs to be more prompt. But the decision-making procedure of the government is not commensurate with the situation. This problem can only be overcome if the TCB is converted to a public limited company (plc) under the Companies Act 1994.
In the proposed plc, ministries of the government concerned can subscribe to 60 per cent of the paid-up capital. Ministry of Commerce as the leader can own 20 per cent, while associates like Ministry of Agriculture, Ministry of Food, Ministry of Industries and Ministry of Finance can each have 10 per cent of the paid-up capital of the plc. The remaining 40 per cent can be offered to the general public through an initial public offering (IPO). The higher ownership of the government in the public limited company will allow the government to materialise its desires to control price and supply of commodities in market.
The authorised capital of the plc may be Tk 10 billion divided into 1 billion shares worth Tk 10.00 each. Initial paid-up capital may be Tk 2.0 billion. The ministries together can contribute Tk 1.2 billion. With 100 per cent premium, the remaining 40 per cent can be distributed among the public to raise Tk 1.6 billion.
While government shares can be placed under Group A category, the 40 per cent remaining shares of the company can be placed under Group B. The board of directors of the company can have directors from the two groups, who will represent them in the board. The number of directors can be in the same ratio as the total number of shares of the company of 60:40.
The Board of Directors can appoint a management professional as Managing Director who will be Ex-officio Director of the Board and will be the Chief Executive Officer of the plc. He/she will be appointed on a contractual basis against compensation for three, four to five years as the Board deems fit. To comply with the directive of Bangladesh Securities and Exchange Commission there must be provision for Independent Directors (ID). Number of IDs must not be less than one-fifth of total number of Directors. The IDs will be appointed by Board of Directors and the decision can be approved at the general meeting of shareholders.
If the TCB is made a public limited company (plc) it will be more prompt in its operation. It will be able to fulfil the desire of the government by efficiently procuring goods and distributing consumers to the same. It will also be able to control prices of essential goods.
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