Commerce Minister Khandaker Abdul Muktadir favours handing private companies direct control over soybean and palm oil pricing – a move that has raised fresh concerns about market manipulation and could deepen pressure on consumers already struggling with stubborn inflation.
The commerce ministry has already begun discussions with stakeholders over the proposed shift, moving away from the current system under which the government intervenes in fixing or revising prices of essential commodities.
The move comes as the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association has sought an increase in edible oil prices.
A former commerce secretary expressed concern over the proposal, telling TIMES of Bangladesh, “Since three or four companies dominate the market, government intervention is essential. If the government relinquishes its oversight, the market will become unmanageable.”
Under the Control of Essential Commodities Act 1956, the government can set prices for essential commodities.
Under the existing mechanism, the refiners’ association submits a price proposal to the government. The Bangladesh Trade and Tariff Commission then recommends a reasonable price based on international market prices and domestic production and import costs.
The commerce ministry subsequently sets the maximum retail price after discussions with the tariff commission and the refiners’ or traders’ association.
Whenever discussions over a price increase begin, shortages tend to emerge in the market. Companies reduce supplies after proposing higher prices, leaving consumers struggling to buy oil.
Traders complain about the companies, which deny the allegations. The ministry also generally does not announce a decision until reports of consumers facing difficulties appear in the media.
This time, supplies have again tightened after traders proposed raising soybean oil prices by Tk10 per litre and palm oil prices by Tk17 per litre. Even before any decision has been made, consumers are being forced to buy oil at higher prices.
Asked when a final decision would be made, Additional Secretary of the Ministry of Commerce Shibir Bichitra Barua told TIMES, “The commerce minister wants to leave soybean oil prices to the market. We have already held a meeting. At that meeting, the minister decided that we would no longer keep these prices in our hands. We would leave them to the market.”
He said the minister had instructed officials to develop a mechanism to ensure proper market management and regulation.
“On the ministry’s advice, the traders’ association has also submitted a framework to the Ministry of Commerce for proper market management,” he said.
Ministry officials said they were reviewing the proposed framework.
Asked why the minister wanted to move away from the existing price-setting mechanism, Bichitra Barua said, “I don’t know.”
TIMES could not obtain the commerce minister’s comments. He did not answer repeated calls, while questions sent to his personal WhatsApp number also went unanswered.
Former commerce secretary AHM Shafiquzzaman opposes handing businesses full control over the pricing of an essential commodity such as edible oil.
Now president of the Consumers Association of Bangladesh (CAB), he told TIMES, “If edible oil prices are left to the market, the companies will raise prices as they wish. This is because there are three to four oil refining companies. So three or four of them can simply sit together and fix the price. Now, because the government sets the price, they have to discuss it with the government and the price is reviewed. None of that will happen then.”
Shafiul Akhtar Taslim, a director of edible oil marketer TK Group, is, however, delighted with the commerce minister’s initiative.
He told TIMES, “A free-market economy operates across the world. In a free-market economy, for one person to do business while another sets the price is contrary to World Trade Organization agreements. I believe Bangladesh should operate in line with the global free-market economy.”
