|
Advocacy and Capacity Building on Competition Policy and Law in Asia
CUTS Centre for Competition, Investment & Economic Regulation (C-CIER) is implementing a two-year project entitled ‘Advocacy and Capacity Building on Competition Policy and Law in Asia’ (7Up2), supported by the State Secretariat for Economic Affairs, Switzerland (SECO), the Swiss Competition Commission (COMCO) and the Department for International Development (DFID), UK. The project endeavours to accelerate the process towards a functional competition policy and law for selected countries (Cambodia, Lao PDR, and Vietnam in Southeast Asia, and Bangladesh, Nepal and India in South Asia), and advance an enabling environment for the law and policy to be better enforced. The project is undertaken in partnership with renowned
institutions in each of the project countries. Details of the project
are available at
http://www.cuts-international.org/7up2.htm |
First Round of National Consultation in Bangladesh In order to ensure wider ownership of research findings on the competition scenario in the project countries, a group of diverse stakeholders is identified by the project partners as the National Reference Group (NRG) and regularly update the progress in the project countries. Suggestions for operationalising competition principles and practices are expected from these groups periodically, especially during the national consultation process – NRG meetings. The 1st NRG meetings in other project countries, i.e. Lao PDR, Vietnam and Cambodia, were organised on February 22, March 4, and May 24, 2005 respectively. The 1st NRG meeting of Bangladesh was held at Bangladesh Enterprise Institute (BEI) premises on May 30, 2005. The meeting’s primary objective was to seek feedback and comments from the participants on the findings presented in the Draft Country Report highlighting the competition scenario in Bangladesh. The meeting was attended by 46 participants representing key government agencies, departments and ministries, the business community (both local and multinationals), and civil society representatives including academics, NGOs and development partners. The meeting was chaired by Farooq Sobhan, President of BEI, and the keynote presentation was made by Iftekar Ahmed, Senior Research Fellow, BEI and the Country Project Manager for this initiative in Bangladesh. Dr. Fakhruddin Ahmed, Former Governor, Bangladesh Bank, was the Chief Guest at the meeting. Nitya Nanda, Policy Analyst, CUTS represented the Project Coordination and Management Unit of the overall project at this meeting. Release of Advocacy Document at 2nd National Meet in Cambodia A meeting entitled ‘Competition Policy and Legislation in Cambodia’ was organised by the country project partner, Economic Institute of Cambodia (EIC), on July 26, 2005 at Paññasastra University of Cambodia (PUC) as the 2nd meet of the National Reference Group in the country. The meeting was attended by about 165 people, from different backgrounds and organisations – academia, NGOs, press agencies, international organisations, government ministries, parliaments, etc. The Country Advocacy Document for Cambodia, prepared within the framework of the project, was released and discussed during the course of the meeting, which was covered widely by the Cambodian press in Khmer, French and Chinese. The meeting recognised the significance of adopting and implementing an appropriate competition law effectively in Cambodia in the context of the country’s economic reform and integration process. Ky Lum Ang, President of the 9th Commission of the National Assembly of Cambodia on Commerce, Investment and Industry, highlighted the roles played by competition law in ensuring all enterprises a fair deal in the market and promoting consumers’ right to quality products and affordable prices. The
detailed proceedings of the seminar are available on the project web
page at
BangladeshSME Growth Hindered "Credit sales average about 72 percent of the total sales in Bangladesh and are settled within an average period of seven months. Such delays are affecting the SMEs," he explained further in a seminar jointly organised by the Central Bank of Bangladesh and the South Asia Enterprise Development Facility (SEDF). Growing industrialisation is indeed making this problem even more serious as credit sales are essential in a buyer-dominated economy such as Bangladesh. The governor said in spite of their economic importance, SMEs suffer from acute shortage of working capital due to delayed payment of their receivables by large and medium-sized firms as well as public sector enterprises and government departments. Besides, reluctance of banks to extend credit facilities and lack of expertise within SMEs in financial management, in general, are also some of other factors that are hindering the growth of SMEs in Bangladesh. (The Daily Star Web Edition, Vol. 5, Num 374, 16.06.05)
Many essentials including rice, vegetables, oil, pulses, meat, fish eggs, and spices, have marked an increase from Tk to Tk 10 per kilogram. Products like soap and stainless blades have also increased by Tk 1 as the Bangladesh Finance Minister proposed to tax them in the new budget. Traders of the city’s kitchen market cautioned that many prices might experience a further rise in the coming time as the government did not have any control over the market. Traders said their sales saw a sharp decline as the prices of essentials has increased. “See, within the last ten years, the price of rice has almost doubled. How can we survive?” said one consumer in the Hatipool market. The government should always monitor the price of the kitchen market, but they never do it, he said. (The Star Daily Web Edition, Vol. 5, Num 371, 13.06.05) SingTel Buys 45pc of Bangladesh
Mobile Firm The acquisition is the first in Bangladesh for SingTel, which owns nearly a third of India’s top listed mobile phone company, Bharti Tele-Ventures Ltd, and is bidding for a stake in a Pakistan telecom firm. "SingTel believes that there will be rapid telecommunications growth in Bangladesh for years to come, as has been experienced in other regional markets which SingTel has invested in," SingTel CEO Lee Hsien Yang said in a statement. Facing a mature and tiny home market, SingTel has spent S$17bn (US$10bn) in recent years buying operators in high-growth Asian nations with fewer cell phone users, and in the bigger Australian market. It now derives about 75 percent of revenues and two-thirds of pre-tax earnings from operations outside Singapore, where more than nine in 10 of the 4.2mn people own a cell phone. (The News International, Pakistan, 03.06.05) CambodiaCambodia to
Set up Own Cement Plant Phallaboth, the president of Khaou Chuly Group (KCG), together with principal investor Siam Cement from Thailand, planned to manufacture at least 850,000 tons per year at the new factory. He said it was dangerous for Cambodia to rely 100 percent on imports as it does presently with cement. Adding that every other country in the region has their own cement plants. Cambodia has not produced cement since the late 1960s, when civil unrest forced the closure of a 50,000-tonne capacity Chinese cement plant also in Kampot. Phallaboth said it would be the largest single investment in Cambodia once the two phases – totalling US$200mn – of the project are completed. Siam Cement will invest 80 percent, and KCG 20 percent. (Phnom Penh Post, Issue 14/13, 11.07.05) Cambodia’s Pathways to International
Trade (Maylee Thavat, Asian Analysis Newsletter August, 2005) IndiaCompetition and the UPA Regime Civil aviation has been one of the active sectors on
the policy radar. The restructuring of Delhi and Mumbai airports is
under way. Private airlines have been allowed to fly to foreign destinations,
providing a platter of choices, and competitive prices, to consumers.
However, the lucrative Gulf sector continues to be reserved for the
public sector. Furthermore, domestic airlines with less than five years
of experience have been kept out. The proposal to establish a civil
aviation regulator has not seen the light of the day. As promised in the NCMP, the National Manufacturing
Competitiveness Council (NMCC) is preparing a draft strategy paper to
suggest measures for enhancing competitiveness in certain sectors. However,
there are several competition concerns, which affect the competitiveness
of manufacturing sector. For instance, Reliance is a dominant player
in polyester staple fibre (PSF) with a market share of 85 percent while
IndoRama produces the rest. Together, they are following an ‘exploitative
pricing policy’, which affects the competitiveness of textiles, a huge
growth area. (Pradeep Mehta, The Economic Times, 19.08.05) Lao PDRLao’s Opportunities and Risks
of Closer Sub-regional Integration The integration of Laos into a sub-regional transport network is a collaborative regional project, supported by multiple national and international actors: the Asian Development Bank (ADB), the World Bank, Laos' Southeast Asian neighbours (Thailand, Vietnam, Cambodia, Myanmar) and China. The Greater Mekong Sub-region (GMS) Programme, in particular, plays an essential role in the process of regional integration. Launched in 1992, this initiative involves the participation of six countries - Cambodia, China (Yunnan Province), Laos, Myanmar, Thailand and Vietnam - as well as the strategic support of the ADB. A key issue is the need for more studies to improve understanding of the complex relationship between mobility and HIV risk. Some specialists have argued that more than movement of people, it is new forms of social practices and behaviours between mobile and non-mobile groups that contribute to increases in HIV transmission. In other words, movement itself does not mean vulnerability to HIV: a correlation between better transport networks and higher HIV risk does not necessarily imply causality The issue, therefore, is not so much whether Laos will become 'land-linked' but, rather, how the country will negotiate the new socio-economic opportunities and risks that a greater opening of her borders will inevitably create. (Vatthana Pholsena, Asian Analysis Newsletter June 2005) Export Growth Means New Challenges Lao export is recently showing progress, however the
progress is accompanied by new challenges. The Government of Lao (GOL) considers exports as a
key to poverty reduction. According to the draft Socio-Economic Development
Plan for 2006-2010, Lao GDP will grow at 7.2 percent annually from 2006
to 2010. To achieve this, exports are expected to increase 10 percent
per year. Khenethong stressed that people were the most important component to help develop exports. “We need quality businessmen to do exports and skilled labour to produce quality goods. We also need patriotic people to buy and support Lao products to increase the confidence for exports,” he said. “People are the key to success in achieving export as well as national targets,” he added. Currently, Lao PDR exports far less than other ASEAN member states. According to the Ministry of Commerce, exports rise from US$330mn to US$380mn respectively between 1998 and 2003. Thailand and Vietnam are the major export partners of Laos, receiving 70 percent of its export. Lao exports to the EU have increased annually since receiving trading privileges in 1996. Besides, there is no longer any barrier to exports to the US since normal trade relations has been established between the two countries. According to a UNCTAD report early this year, world trade has been expanding at a rate of nearly 5 percent a year, but gains in trade tend to be concentrated in a few nations. Over 80 percent of all world exports are produced by only 10 countries in the world. (Vientiane Times, 07.07.05) NepalAgro-machinery Dealers Unite About the bank finance, the dealers demanded the banks
to follow uniform policy while providing finance for agricultural machines
and other vehicles. This was due to the fact that, while financing other
vehicles such as truck, bus, car and motorcycles, the banks do not ask
for any collateral other than the vehicle itself, but in case of financing
on tractors and power tillers, they ask for additional property, such
as real estate, as collateral. (New Business Age, May 2005)
The two draft ordinances have provided for, among others, unbundling of the Nepal Electricity Authority (NEA) and further opening power generation and distribution for private investment while setting up a regulatory authority (National Electricity Regulatory Commission or NERC) for tariff fixation and a National Electricity Transmission Company (NETCo) for operating and managing the national electricity transmission grid. The private sector power developers and distributors are promised open, unrestricted and non-discriminatory access to the national power grid on payment of a wheeling charge prescribed by the NERC. Commenting on the draft ordinances, the Nepal private sector representatives pointed out that power trading – both internal and external – should be recognised as a legitimate activity in the objectives of both the EO and the NERC Ordinance. Power trading will introduce competition in the market leading to overall improvement of the quality of electricity and service delivery. Section 20 of the EO – Restructuring of the Corporate Body – is totally impractical for the private sector, they said. If the intent of the draft ordinance was to restrict monopoly in the sector, the private sector’s suggestion was to grant the NERC the authority to define the scale of a Corporate Body that needs to be “unbundled”. Regarding the draft NERC Ordinance, the private sector welcomed the idea of forming a National Electricity Regulatory Commission (NERC) as it is expected to provide a more transparent and level playing field for Independent Power Producers (IPPs) and public sector utilities. But objection was raised due to the absence of a clear definition of “reasonable return” promised to IPPs while fixing the royalty and electricity tariff by the NERC. The Electricity Act 1992 of Nepal had provided for a 25 percent return on equity, while the NERC Ordinance is silent on this issue. In another objection, the private sector said that the draft provisions have imposed a lot of limitations on the NERC’s autonomy. For example, the sources of funding for the NERC are the government and donor agencies and international organisations, the tenure of the NERC members are limited for an interim period and the procedure for removing the NERC members from their positions do not let them function autonomously. These issues would adversely affect the working of the NERC as the government and the donors may impose conditions and covenants which would render the NERC’s activities far from being that of an “independent” regulator. Opportunities for such interferences must be removed from the Ordinance, the private sector representatives said. (New Business Age, May 2005) VietnamViettel Mobile Faces Bankruptcy Due to VNPT’s Monopoly However, despite VNPT’s temporary measures to increase
Viettel’s connection capacity, the military-owned operator is still
not happy. Deputy Minister of Posts and Telematics Le Nam Thang, in a media interview, expressed the same idea, saying that; “there must be a market-driven mechanism responsible for connections.” The Competition Administration Department under the
Ministry of Trade of Vietnam, the State agency designated to oversee
competition issues in the country, did not take any action or make any
comment.
The Ministry of Transport of Vietnam has made a proposition to the Government to set up more airlines besides the existing Vietnam Airlines and Pacific Airlines, which currently have a monopoly on the 80 million potential customers in Vietnam. The country's demand for air transport has been increasing and the private sector is now able to join the air industry's development, said Mr. Sam. He emphasised that the managing board's knowledge and experience related to air activities play a vital role in ensuring safe flights and profitable business because of the air industry's specific features. Le Van Trung, a former member of the lobbying board,
said the air business is very challenging but it is very possible to
make a profit. It has been suggested that a level playing field in the
monopolised air industry should be created to encourage competition
among the carriers, thus improving the quality of service. Regulation to Stabilise Drug
Market Insiders expect that the bidding regulations, which have been ratified by the Ministry of Finance and Ministry of Health of Vietnam, will benefit patients as they contribute to making drug prices offered by public health clinics more reasonable. Drug prices currently provided by public health centres in Vietnam are higher than that offered by private pharmacies. Under the new circular, all public health clinics at central, provincial and district levels, which get annual funding of at least VND200mn , VND100mn, and VND50mn respectively from the State budget to buy drugs, will be required to organise open bidding for their medicine purchases. Other public health clinics, which get funding of less than the above figures, are allowed to apply the measure of competitive order or to purchase by themselves using bidding results set by other public health clinics in the same locality. Drug prices used in bidding will be based on retail prices in domestic market and reference prices set by the Ministry of Health’s Pharmacy Management Department. The Department, every six months, will publicise its reference retail prices of import drugs as well as manufacturing and retail prices of Vietnamese-made medicines, which is expected to help increase the use of locally drugs as the health clinics will have the opportunity to make a comparison of quality and prices of domestic and imported drugs. (Vietnam News, 17.08.05) |