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Download PDF A cartel of five importers, who control eight most essential commodities, have the ability to control the retail prices of these commodities, said a study conducted by the Centre for Policy Dialogue (CPD).
As the essential commodities have relatively inelastic demand, such cartels may get away with this restrictive business practice and make supernormal profit, it said.
Up to March of the current fiscal year (FY), the top five importers’ share of importing raw sugar is 96 per cent, refined sugar 46 per cent, crude soya bean oil 67 per cent, crude palm oil 60 per cent, wheat 49 per cent, rice 37 per cent, lentil 31 per cent, and onion 31 per cent, the study revealed.
The existence of a higher degree of concentration in importing essential commodities gives rise to the possibility of syndication at importer’s level, said the study.
The CPD recently conducted the study based on National Board of Revenue data and handed it over to Finance Adviser Mirza Azizul Islam.
The study recommended that the government should encourage the commercial banks to facilitate groups of small-scale importers to import essential commodities so that they may take the benefits of economies of scale (bulk import).
“If a significant number of small-scale importers enter the market, the popular speculation of syndication may be removed.”
The government should monitor international prices of imported essential products on a regular basis through its global mechanism and disseminate it to the concerned authorities to prevent price fixing and supply manipulation through syndication, it suggested.
According to the study, up to March of the current fiscal year, onion worth $18.67million was imported by 156 importers while the share of the top five importers was 31.33 per cent and 28.85 per cent respectively in terms of customs import value (CIF) and assessed value.
The assessed value of onion import increased to $20.28million up to March 2007 from $3.96million in 2005-06FY.
The share of top five importers in importing lentil was 30.55 per cent and 28.61 per cent in terms of CIF value and assessed value.
The total number of importers of lentil, rice, wheat, crude oil, crude palm oil, refined sugar and raw sugar is 123, 98, 45, 12, 22, 107 and 13 respectively.
The study said that the number of actual importers could be even less as an importer can import by using different agency names. Some agencies are not found in the specific addresses. Some agencies used two or more different addresses.
The study also found some differences between CIF import value and the assessed value.
Citing an example, it said assessed value of crude palm oil was $20.7million (or 4.25%) higher than the CIF value and for wheat the assessed value was $15.3million (or 5.74%) higher than the CIF value in 2006-07FY.
These differences indicate the presence of mis-invoicing, in most cases under-invoicing, the study said.
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