Extortion behind persistent commodity price hikes: Finance adviser

• 3 groups of extortionists control market prices
• Corruption, regulatory failure increase market inefficiency
• Economic relief needed for public support of reforms
• Immediate economic actions crucial before upcoming polls
• Govt aims to reduce production-consumer cost gap

Finance Adviser Salehuddin Ahmed today (15 December) said despite the government reducing import duties, market prices for daily commodities remain high due to the persistence of extortion facilitated through negotiations.

"Achieving consensus among political parties is a highly challenging task, whereas negotiating extortion is comparatively easier," he said while speaking at the annual conference of the International Business Forum of Bangladesh (IBFB) at Gulshan Club in the capital.

Distinguished Fellow at the Centre for Policy Dialogue (CPD) and head of the White Paper drafting committee Debapriya Bhattacharya was the keynote speaker. Director of US International Development Agency (USAID) Reed J Ashliman spoke as special guest at the event, and the opening remarks were given by IBFB President Humayun Rashid.

Finance Adviser Salehuddin Ahmed pointed out that extortion is widespread in markets, with three main groups involved – some are from the previous government, others could be part of the next government, and some are local residents. 

"These groups often establish an understanding among themselves to extort businesses," he said.

Speaking about his own observations, Salehuddin said, "I personally visited the Karwan Bazar kitchen market and witnessed extortion being divided into these three segments. Each group operates through some form of negotiation, yet I am being asked to break the syndicate."

He emphasised the government's primary goal of narrowing the gap between production costs and consumer expenses.

"There are legitimate middlemen who facilitate the supply of products, but extortionists are entirely different. For instance, when a truck carrying goods worth Tk5 lakh enters the market, extortionists demand Tk500 each at various points. By the time the goods reach their destination, the value inflates to Tk7 lakh," he said.

Reflecting on corruption during the Awami League regime, Salehuddin noted that while corruption exists in many countries, in Bangladesh, it has become so pervasive that it defies imagination. 

"This is a clear case of regulatory failure. Institutions have been dismantled, and policymakers, bureaucrats, and businessmen alike have blatantly violated the rules," he added. 

'No patience for reforms without economic relief' 

Debapriya Bhattacharya, the keynote speaker at the event, said unless the government can provide economic relief to the people, there will be no patience for the reform initiatives taken by the interim government. 

He emphasised the need for a coordinated, effective, and confidence-building program before the upcoming budget.

He noted that the interim government has undertaken the correct reform initiatives, but these reforms must be completed before the election. Among various reforms, the most important is the immediate action being taken in the economic sector.

Bhattacharya further said, "Politicians are seeking a roadmap for how to conduct the election. But how much we can smooth the political roadmap and deepen the reforms will depend entirely on how much economic relief we can offer to the people. If we cannot provide economic relief or ensure law and order, no matter how much the public loves the reforms, their patience will run out," he added.

'Workers' migration costs hiked due political corruption'

Political corruption has increased the cost of sending workers abroad, says Dr Debapriya. 

He emphasised the need to strengthen relations with countries that provide foreign aid, priority market access, and those sending remittances. 

He said while sending a worker from Nepal costs a certain amount, in Bangladesh it costs three times more, with political corruption involved. 

"Over the past two years, more than 300 recruitment agencies have been licensed, including 68 linked to members of parliament and their families, with no connection to labour export but solely for profit. Additionally, $2 billion has been illegally sent abroad via hundi for worker migration costs."

He added that those who fail to learn from history are greater fools, and if lessons are not learned, history will repeat itself. 

He hopes the advisory council, formed by wise individuals like Professor Yunus, Dr Salehuddin, and Dr Wahiduddin Mahmud, will learn from history.

USAID Mission Director Reed J Ashliman said changes have occurred in Bangladesh over the last 5-6 months. 

"Economic uncertainty increases anxiety, and the rule of law is crucial. If ensured, both domestic and foreign investments will flow, and USAID will continue to assist in building a new Bangladesh and its economic development," he added.