Incentive packages: Govt urged to follow competition law

The Bangladesh Competition Commission (BCC) has urged the government to follow competition law in allocating and spending incentive packages worth more than Tk 1 lakh crore meant for recovery from Covid-19 financial fallout.

BCC Chairman Md Mofizul Islam said in a letter sent to the finance Secretary Abdur Rouf Thaludar, “The government should follow competitive neutrality rule under Competition Law 2012 for the implementation of big incentive package loans.”

Competitive neutrality means, state-owned and private businesses compete on a level playing field. This is essential to use resources effectively within the economy and thus achieve growth and development.

The letter also said, BCC will provide technical facilities to those who seek assistance against anti-competition activities among firms and financial institutions.

If the government wants to ensure sustainable GDP growth, market developers and market regulators should follow Competition Law 2012.

Additionally, the letter said, if the government follows the competition law, the country’s GDP growth can increase 2-3 percent per year, the letter reads.

During the ongoing coronavirus pandemic, Bangladesh Bureau of Statistics declared the country’s growth rate slump down to 5.28 percent from projected 8.2 percent.

The letter said, “In theory, competition places pressure on firms how the entities increase their efficiency instead of playing fouls. Firms under such environment aim to innovate new products and services, which ultimately increase the size of business

Moreover, the letter emphasized the government should ensure as to whether the farmers are getting fair prices of their produce.

Former finance adviser Dr AB Mirza Azizul Islam said on the matter, “The government has been asking companies to follow competition law but allowed dying Navana Company Ltd to get low-interest loan under the incentive package. People should get bailouts, not companies.”

Navana has political connections but other financially-troubled companies without strong political connections are in dire straits during this crisis, he added.

The government has agreed to provide Tk 1,200 crore loan to Navana as it faces a severe financial crisis. In the first loan tranche, four state-owned banks including Sonali Bank will provide Tk 500 crore to Navana.

The government is now providing 19 stimulus packages worth over $12.11 billion (Tk 1,06,957 crore) to offset the Covid-19 shock on various sectors and minimise the sufferings of the people hit hard by the nationwide shutdown imposed to curb the spread of the deadly virus.

The highest amount of Tk 300 billion (Tk 30,000 crore) has been allocated for providing working capital facility to the affected industries and services sector organisations.

BCC official said the commission has not started its full functions yet for many reasons, including the lack of adequate rules and regulations.

The government formed the Commission in 2016 after enacting the Competition Act in 2012.

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