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Advocacy and Capacity Building on Competition Policy and Law in Asia
CUTS Centre for Competition, Investment & Economic Regulation (CUTS-CCIER) 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 |
Project
Mid-term Review Meeting The Mid-term Review meeting was organised on August 16-17, 2005 in Hanoi, Vietnam, providing an opportunity of the Project to take stock of progress to date and review the research findings of the Phase I. It was principally a forum for the Project team, the country partners, the donors and other national and international stakeholders to sit down together and assess the extent to which the Project was able to achieve the goals it had set out to accomplish, to identify bottlenecks, and chalk out a future plan of action for the Phase II. The meeting was inaugurated by the Vice Minister of Trade of Vietnam, Dr Le Danh Vinh, who highlighted the role of ‘a fair, equal and non-discriminatory competition environment to support and promote enterprises doing business and to attract more foreign investors to Vietnam.’ Representatives of the Project donors, leading civil society organisations (CSOs), research institutions and consumer associations from the six Project countries, as well as renowned experts on competition, representatives of inter-governmental organisations, and representatives of competition authorities, participated in and contributed substantially to the discourse triggered thereinafter. Competition issues in several sectors, such as telecommunications, electricity, pharmaceuticals, and agriculture, as well as the issues related to the application of competition principles in the overall economic policy-making process also featured among the topics for deliberations. Further details of the meeting, along with the presentations, can be retrieved from the Project web page at http://www.cuts-international.org/7up2/FinalAgenda.htm. M&As
Investigative Skills Training As gathered from the feedback of the participants, the workshop was very useful in accentuating the need for enforcement of the newly enacted Competition Law 2004 of Vietnam. The training sessions, designed as a blend of theoretical analyses and hypothetical case studies, drawing upon the varied experiences of experts, were said to have successfully helping to equip the VCAD staff with the necessary know-how to deal with future M&As review and investigation. Further details of the workshop, along with the presentations, can be retrieved from the Project web page at http://www.cuts-international.org/7up2/Finalagenda-MAs.htm. Consumer
Representatives Training: Competition and Consumer Protection CUTS, in collaboration with the Vietnam Standards and Consumer Association (VINASTAS), organised a training workshop for Vietnamese consumer representatives on issues related to competition and consumer protection in the country on August 22-23, 2005. The workshop aimed at sensitising representatives from consumer groups non-governmental organisations (NGOs)/activists on competition and consumer protection issues, so that they could identify various unfair and anticompetitive practices prevailing in the market, and seek redressal. It was also to help to foster public acceptance and support to aid the effective implementation of the Competition Law 2004 of Vietnam by inculcating the spirits and content of the Law among widespread consumers. About 30 participants, including officials from the Competition Administration Department, Ministry of Trade, Vietnam, attended the workshop.
BangladeshMonopoly Removed: Bangladesh Expects Boom in
PSTN WorldTel obtained a license from the Telecom Ministry of Bangladesh in 2001 to run a fixed-line network in the capital on a co-exclusivity basis with BTTB for a period of four years. Dhaka city was kept out of the open licensing regime as the WorldTel Bangladesh Ltd, a fully owned subsidiary of the UK-based Worldtel Holdings Ltd, served a legal notice to the Telecom Ministry last year pre-empting any move to open its area of operations to other companies. The move was taken when the Bangladesh Telecommunications Regulatory Commission (BTRC) took the initiative to award about two dozen licenses under a new PSTN (Public Switched Telephone Network) licensing regime. The BTRC, however, refrained from awarding license for the central zone comprising of Dhaka and adjacent areas and gave about two dozen licenses to interested companies. The BTRC has segmented the country into five zones for private-sector landline telephone services. Bangladesh, which has over five million cellular phones, has tremendous potential for growth in fixed-line telephone services. The country has a population of more than 140 million, as against only 0.9 million people using landlines currently in use. It is the only South Asian country with a teledensity of less than one. “The fixed telephony market can have 10 percent penetration by 2007 if the market is truly liberalised,” said telecom analyst Abu Saeed Khan. He also insisted that the state-owned BTTB’s monopoly over the international voice gateway must end. “The new entrants in PSTN cannot survive unless they are allowed to set up independent international gateways. Besides there is no regulatory focus on universal service obligation (USO) and its funding.” (www.telecomasia.net, June 10, 2005) Dangerous Dose
of Fake Medicines Counterfeiters are cashing in on demand as patients
struggle to pay the high cost of genuine drugs. Most fake drugs are
substandard in quality, and are usually of no therapeutic value. The
side effects, however, can be extremely harmful. The leaders of the Druggists and Chemists Association pointed out that the Government was not doing enough to control the illegal manufacture and trade of drugs, and that many officials had been bribed to allow fake drugs onto the market. One source cited officials from the Drug Administration as the main culprit in the counterfeit trade. (Daily Star, Vol. 5, No. 374, web edition) CambodiaInflation
Sends Food and Fuel Prices Soaring In the 18 months prior to June 2004, inflation did not rise above 3 percent and the average inflation rate in 2003 was 1.15 percent over the average rate in 2002. The new report showed price increases in all sectors. But the highest increases recorded were for rice, beef, pork, chicken, prahoc, egg, fuel and construction material. The price of prahoc, the major source of protein in Cambodia, was up 59 percent over last April, chicken 27 percent, chicken eggs 33 percent, gasoline 22 percent, diesel 29 percent, and lumber 44 percent. According to Khin Song, Director of the National Institute
of Statistics of Cambodia, the price hike was due to the shortage of
goods in the market, as said businessmen there when they were asked
about the reasons behind such high prices. Sok Hach, Director of the Economic Institute of Cambodia, agreed that the drought contributed to April’s higher inflation rate but noted that rising fuel prices were also a factor. Drought directly contributed to a 14 percent increase in rice prices, he said. While little can be done in the short-term to reduce the price of food, Sok Hach said the RGC could do more to lower gas prices, for example by lowering taxes, which made up around 26 percent of fuel prices. According to Sok Hach, lowering the tax could increase revenue by decreasing smuggling, which, in turn, could lower the distribution costs of gasoline companies. (The Cambodia Daily, 24.05.05) Auto
Sales Driven by Burgeoning Middle Class According to the 2004-released figures from the Ministry
of Transport and Public Works of Cambodia, there were 126,446 registered
car-owners in Cambodia. Of these, 15,520 were registered in 2004, up
62 percent from 9,549 in 2003 and up 171 percent from 5,717 in 1990. Roux cited, as an example, the case of ‘accident cars,’
many of which are imported from the US, sometimes at the price of scrap.
Considered beyond repair or not worth repairing by drivers in the US,
they are sold to distributors who export them en masse to Cambodia and
other developing countries. (The Cambodia Daily, 19.07.05) IndiaIn the current draft Amendment Bill on the Competition Act 2002, the Government of India (GOI) has proposed mandatory consultation for regulators with the competition authority, as against the earlier provision of `may' consult. A welcome move, but better would have been an unambiguous coverage of behavioural problems in the domain of the competition authority. A debate is on in India over the conflict between the to-be-set-up competition agency and the sectoral regulators. India still does not have an active competition authority, other than the inadequate MRTP (Monopolies and Restrictive Trade Practices) Commission. However, speculation abounds on the overlaps between the two types of agencies – the competition authority and the sectoral regulators, which are highly likely due to various factors. First, the competition agency will be under the Ministry
of Company Affairs, while the sectoral regulators are under different
ministries, such as the electricity regulator is under the Ministry
of Power and so on. This can lead to turf battles between the ministries
and come in the way of applying competition principles. (Pradeep Mehta, The Hindu Business Line, 16.09.05) Lao PDRNo Barrier on Transport of
Goods “The Lao and Vietnamese Governments have chosen the border at Dansavanh-Lao Bao to be a starting point for the agreement. This makes the border very significant for both countries because it highlights the special relationships between Lao and Vietnam and the ongoing cooperation between the two countries,” said the Lao Vice Minister of Communications, Transport, Post and Construction, Sommad Pholsena. (Vientiane Times, 12.07.05) Handicrafts Crucial for Lao
Economy (Vientiane Times, 02.08.05) NepalWhy is Colgate-Palmolive Leaving
Nepal? While the direct impact of the permanent suspension of CPNPL toothpaste production is in itself large, it can also scare away a substantial amount of foreign investments in Nepal. This recent development has highlighted that not only the conflict but also the loopholes in policies are posing equally formidable disincentives to business. (New Business Age, August 2005) A
Phoney Business: Nepal Telecom Sacrificed Of the 173,000 mobile phone lines that were cut off on February 1, only 40,000 post paid lines in Kathmandu, Pokhara and Biratnagar have been reconnected. Some 111,000 pre-paid mobiles were out of action for more than six months and Nepal Telecom has started activating about 12,000 of them per day in Kathmandu in late August. Other 20,000 post-paid lines in Kathmandu and other metros are still out. Nepal Telecom has been allowed to issue only a limited number of new mobiles, and it has been forced to delay its plans to launch a CDMA wireless phone network in the Kathmandu Valley. To be sure, as a Government monopoly, Nepal Telecom
always treated its customers shabbily. Its technology was behind demand
leading to poor service, high cost and lack of innovation. But employees
of the company are convinced that after February 1, the Government was
delaying full resumption of Nepal Telecom’s services in order to favour
Spice Nepal Pvt Ltd (SNPL), in which King Gyanendra’s son-in-law Raj
Bahadur Singh owns a stake. “On the one hand, they have given SNPL another three
months, but they have told us not to re-start our CDMA Project till
November,” says Tanka Lal Shrestha of the Nepal Telecom Employees’ Union,
“this is a strategy to keep us out of the competition till SNPL comes
into the market.” One official at the Ministry of Information and Communication revealed: “Spice was obviously worried that Nepal Telecom would have captured 90 percent of the market with its new mobiles and CDMA even before it launched its service, and it used all its political clout to delay Nepal Telecom’s plans.” He admitted Nepal Telecom’s monopoly had resulted in poor service to customers, but added competition must be clean and fair. (Nepali Times, Issue 262, 26.08.05) VietnamForeign Banks Eyeing Vietnam Domestic Market (VietnamNet, 01.09.05) Duckling Monopsony The duck-breeding households’ complaints were against the decision of the Long An Veterinary Department forcing them to sell their ducks only to the Huynh Gia Huynh De Co. According to the decision, farmers would not be given transportation permits if they wanted to sell their ducks to any other businesses. Huynh Gia Huynh De Co, therefore, could impose any price level for their purchases on the sellers. Tran Thi My Le, owner of the Tan Thanh duck-breeding farmhouse based in the Tan An Commune (Long An), said, “The decision of the of the Long An Veterinary Department instructing us to sell our ducks only to the Huynh Gia Huynh De Co has caused us great price losses. We got around VND5000-10000 less for each kilogram of duck sold to this company, as compared to the selling prices to other businesses.” Other farmhouse owners in Tay Ninh province also lodged the same complaints, saying that the decision had bestowed monopsonistic power on the Huynh Gia Huynh De Co, resulting in price loss for farmers. The current selling price on the market was VND32000 per kilogram, while the Huynh Gia Huynh De Co only purchased ducks from farmers at the rate of VND18000-20000 per kilogram. Therefore, for each duck whose weight ranges from 2.9 kilogram to 03 kilogram, the farmers would lose around VND30000-40000. The decision also resulted in more than 50 duck slaughterhouses in the Binh Hung Commune, Binh Chanh Dictrict (Ho Chi Minh City) not being able to get any supply from two of their major former supply sources, Long An and Tay Ninh provinces. A slaughterhouse owner in Binh Chanh said, “We have given loans to some duck-breeding farmhouses in Long An and Tay Ninh, so that they can expand their production, with agreements that we will get a stable supply of ducks from them. However, these days, even when the ducks are ready for being put into the markets, having been tested for bird flu, the Veterinary Departments in these two provinces would not give the farmers the permits to supply to our slaughterhouse, and only to Huynh Gia Huynh De Co. Without their supply, we have had to close for more than 20 days, with loss amounting to nearly VND70mn.” Whose evil? “We, however, cannot allow transportation of poultry to Ho Chi Minh City without the consent of the City Veterinary Department,” added Han. Answering the questions why allowing the farmers to sell their ducks to only the Huynh Gia Huynh De Co, Mr. Han told the reporters that any company which had applied would be granted permits. However, until then the Tay Ninh Veterinary Department had received only the Huynh Gia Huynh De Co’s application. Han also said that in a recent meeting, the Veterinary Department of Ho Chi Minh City had suggested that the Huynh Gia Huynh De Co did good business and should be given permits. However, when asked whether the Veterinary Department of Ho Chi Minh City had sent them any official letter giving consent for the permit to be given to the Huynh Gia Huynh De Co, Han said there was no such letter and the suggestion had only been made verbally. On the other hand, Huynh Huu Loi, Head of the Veterinary Department of Ho Chi Minh City, said, “We did not playing any role in giving the Huynh Gia Huynh De Co their current monopsony position. Issuance of permits is solely under the authority of provincial authorities, depending on the safety level proven. Price fluctuations are to be decided by the markets.” In the face of the strong complaints made by farmers as well as other slaughterhouses, the Veterinary Departments of Tay Ninh and Long An provinces have withdrawn the permits given to the Huynh Gia Huynh De Co, disallowing altogether the sale and transportation of ducks to Ho Chi Minh City. (VietnamNet Bridge, 01.09.05)
On July 19, 2005, Chau bought a block of IZZI milk cans, product of the Lysine Milk Company (under the Hanoi Milk Company) at a retailing shop. After scratching the silver portion on the promotional ticket, he saw that he was qualified for ‘a scholarship worth VND30mn’ within the promotional period from April 15, 2005 to August 15, 2005. The next day, Chau contacted the branch office of the Lysine Milk Company (at No. 172, Nguyen Tri Phuong Str., Da Nang City, Vietnam) for the award. He was told by the branch staff that, “The promotional ticket is not in conformity with the company regulations. It must be due to technical mistake. You can wait for us to contact the headquarter or can consult the company headquarter directly.” Consulting the Da Nang branch office of the Hanoi Milk Company, Chau was told by the branch head, Truong Ba Chau, that, “You should contact the Hanoi Milk Company headquarter directly. We are not aware of the regulations since we are just a branch office.” According to Trung, the Hanoi headquarter had also just contacted them to take picture of Chau’s promotional ticket for further consideration. Vu Hanh, Marketing Manager of the Hanoi Milk Company, told the media that Chau’s promotional ticket was not qualified, since it had not been registered with the Ministry of Trade for this promotion programme. (The Vietnam Labour Magazine, 29.07.05) |