The prime minister once said that the TCB needed to be strengthened to free people from the clutches of trade cartels. She blamed the former government for the destruction of the TCB and said no one could have manipulated market prices through cartels if the TCB had been active.
It is obvious that in a democratic country, when the price of commodities goes high, people consider the government to be responsible. People who are running that government have to make decisions as well as take effective measures to keep the prices at a desired level. Indeed, the present government could not effectively control prices of commodities and arrange adequate supply. Most people are disappointed by the government regarding this issue.
In fact, the government of Bangladesh has no effective organisation to control price and ensure supply of commodities. The TCB, a statutory body and public enterprise, could not play its desired role owing to prevailing government executive orders and rules and regulations on purchase and sale involving public fund. At present, the Cabinet Purchase Committee is the approving authority for any purchase that crosses Tk10 crore.
Indeed, strengthening the TCB is not contrary to open market policy. In the present world, the government must have some mechanism to control prices of essential commodities. However, to compete with the commodity traders at the private sector, the TCB has to act promptly. But the prevailing decision-making procedure of the government does not allow any prompt action. It can only be overcome by converting the TCB in to a public limited company (plc) under the Companies Act 1994.
Ministries can subscribe 60% of the paid-up capital of the proposed plc initially and later the 40% share could be offered to the public by initial public offering method. The ministry of commerce may contribute 20%, and the ministries of agriculture, food, industries, and finance may contribute 10% each to the paid-up capital of the plc.
The paid-up capital of the plc could be Tk1,000 crore divided into 100 crore shares, Tk10 each. The initial paid-up capital may be Tk400 crore. If the proposal is accepted, the ministries have to contribute Tk 240 crore in aggregate. As the plc would be a reasonably profitable plc, with 100% premium (Tk160 crore multiplied by 20) or Tk320 could be collected from capital market-selling share of nominal value Tk160 crore (that is 40% of the paid-up capital) to the public.
The shares may be grouped into two categories. A total of 60% shares can be restricted for the government ministries or divisions, and the rest would be open for the public. First group shareholders will nominate six directors to the board of directors and the second group shareholders will nominate four amongst themselves. The commerce ministry will nominate two directors and one of them will act as Chairman. Other ministries or divisions concerned will nominate one director each.
The board will appoint a management professional as managing director, who will be ex-officio director of the board and chief executive officer of the plc. He or she will be appointed on a contractual basis for three, four, or five years as the board deems fit. To comply with the corporate governance regulation of Bangladesh Securities and Exchange Commission, three independent directors are to be included in the board.
The plc will be able to act promptly and fulfill the desire of the government to procure commodities and distribute them in to the local market. It will ensure an influential role of the government in supplying commodities and to control price levels. Prompt decision is, prerequisite to make an impact on price levels in the market.
The proposed plc will be able to make prompt decisions, as the board of directors will be the final decision-maker. It would not require the very time-consuming process of approval of the ministry or the carbonate purchase committee. It would be an administrative structure of the government to control the price as well as the supply of commodities at reasonable price to please consumers. The government has to choose the right people from time to time as directors of the plc who would materialise the government’s goal of price control and adequate supply of commodities to please public consumers.
Veteran politicians and the incumbent commerce minister should take initiatives to convert the TCB into a public limited company having majority share of government as described above.