CUTS Centre for Competition, Investment &
Economic Regulation (C-CIER)

Advocacy and Capacity Building on Competition Policy and Law in Asia

 

CUTS Centre for Competition, Investment & Economic Regulation (C-CIER) 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 News

 

POLICY DIALOGUES IN BANGLADESH

Two parallel sessions of policy dialogue were organised in Dhaka, Bangladesh on January 2, 2006 by the project country advocacy partner, Unnayan Shamannay (http://www.shamunnay.org/index2.htm), in collaboration with the project country partner, Bangladesh Enterprise Institute (http://bei-bd.org/). The policy dialogues were attended by a total of 40 participants, which included several members of parliament (MPs) and officials from the various relevant ministries of the country.

The project partners presented the findings that ensued in a lively discussion among all participants. Present among the participants were Syed Sujauddin Ahmed, Chairman, Bangladesh Tariff Commission; Dr. Zafarullah Chowdhury, President, Consumers Association of Bangladesh (CAB); and Amir Khosru M. Chowdhury, MP, Former Commerce Minister of Bangladesh.

TRAINING WORKSHOP ON ABUSE OF DOMINANCE FOR CLV COMPETITION AUTHORITY OFFICIALS

A training workshop on technical issues related to abuse of dominance was organised during January 13-14, 2005 in Quang Binh, Vietnam. It drew the participation of 20 officials from various government agencies relevant to competition law enforcement in the Mekong region, including those from the Competition Administration Department of Vietnam (VCAD), and the Ministry of Commerce of Lao PDR. Renowned experts from the UK, Taiwan, and Korea were invited as resource persons for the 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 legislations in both Vietnam and Lao PDR. The training sessions, designed as a blend of theoretical analyses and hypothetical case studies, and gathered from the varied experiences of experts, were said to have helped, successfully, to equip the participating competition authority officials with the necessary acumen to deal with future case review and investigation.

Further details of both the policy dialogues and the training workshop, along with the presentations, will soon be made available from the Project web page at http://www.cuts-international.org/7up2.htm.

News Briefs from Project Countries

 

Bangladesh

Farm Subsidy Doubles

The Bangladesh Government doubled subsidy and assistance to the agriculture sector, raising it to Tk 1,200 crore – in a bid to push up, further, the agricultural growth. The total allocation proposed for the sector has been Tk 2,213 crore for the 2005-06 fiscal year (FY), marking a rise of Tk 436 crore from the original budget for the current FY.

Finance Minister of Bangladesh, M Saifur Rahman, said that the interest on agricultural loan – being provided for the production of minor crops like pulses, mustard seeds, spices and maize – would be reduced to two percent from the existing eight, from July 1, 2005.

Introduced in the outgoing fiscal year, the programme for providing 25 percent subsidy on the import of Urea, DAP, MOP, and TSP fertilisers would continue in FY 2005-06, he said. The 20 percent subsidy on electricity bills of the Palli Bidyut Samities (PBS) for the use of electricity in irrigation would also continue.

To encourage the export of agricultural products, the 30 percent cash subsidy introduced for the export of agricultural commodities, vegetables and fruits would continue in the next FY.

The Finance Minister said that the Bangladesh Agricultural Development Corporation (BADC) would be restructured in the next FY and its work of seed production, preservation, and distribution would be expanded further.

(The Daily Star, June 2005)

Bangladesh, Pakistan Seek Enhanced Trade

During two days of deliberations at the Eighth Joint Economic Commission, Bangladesh and Pakistan agreed, on September 13, 2005, to enhance two-way trade to the level of US$1bn by 2007, via a reinforced bilateral trade, economic co-operation, and facilitation measures.

Agreement was also arrived at in the other areas of economic co-operation, including enhancing flights between the two countries and duty-free market access to 15,000 metric tonnes of Bangladeshi tea. Both countries also agreed to encourage trade fairs and single country exhibitions along with a specialised products fair, an establishment of direct shipping links, an exploration of possibilities in tourism investment, fisheries and livestock, the creation of a joint fund to undertake investment promotion activities and institutional linkages between export processing agencies of the two countries.

(The News International, 14.09.05)

Cambodia

ASEAN Should Adopt Radical Measures for Economic Co-operation

Cambodia feels that the Association of South-East Asian Nations (ASEAN) should embark on radical measures in key sectors to accelerate regional economic integration and collaboration.

The Cambodia Minister of Commerce, Cham Prasidh, said that these should include increased elimination of intra-ASEAN tariffs, harmonisation of external tariffs, elimination of non-tariff barriers to trade, and free cross-border flows of investment. He felt that ASEAN was at great risk of being marginalised, economically, if it failed to make rapid progress in regional co-operation.

ASEAN has the opportunity to re-establish itself as an integrated, market-oriented and investor-friendly market despite the perception that China was far more attractive, Prasidh said in his presentation at the ASEAN Business and Investment Summit, 2005.

This is because China is perceived as a large integrated market, while ASEAN is viewed as a fragmented collection of 10 separate markets, he added.

In reality, Prasidh said, ASEAN is unique because of its diverse and rich pool of natural resources and skilled labour. Cambodia is one of the four new members of the 10-member ASEAN, along with Laos, Myanmar, and Vietnam.

(www.bernam.com, 10.12.05)

Investment in Cambodia Reaches All-Time High in 2005

Approvals of new business investment in Cambodia went at a record pace in 2005. A preliminary report on investment on October 31, 2005, showed approvals for projects approaching US$1bn in fixed assets. According to data, recently obtained, from the Council for the Development of Cambodia (CDC), US$976mn worth of investments had been approved, unofficially, by the body, with US$621mn of that coming in as foreign direct investment (FDI). The potential for job creation from these investments was pegged at 82350, according to the CDC.

An official of the CDC said that through September 2005, US$631mn had been approved in projects, including US$442mn in FDI.

“I have seen that FDI increased 2.7 times compared to the same period last year”, the official was quoted as saying of the September 2005 figure.

In the October 2005 report, China remained the top investor with US$442mn, followed by Thailand with US$66mn, and Chinese Taipei with US$41mn.

The report listed 14 garment factories investments this year; a sign of increased confidence in an industry that only a year ago contemplated the end of worldwide garment quotas with dread. The official said 19 of the investments were expansions.

Though economist Kang Chandararot warned that some approved projects often fell through in Cambodia, he also acknowledged that 2005 had turned out to be a very positive one for businesses.

(People’s Daily Online, 03.12.05)

India

Can’t Bank upon Policies

The World Bank held various policies of the Indian Government responsible for a highly inadequate supply of finance to the rural poor in a report titled ‘Scaling-up Access to Finance for India’s Rural Poor’.

High fiscal deficits, the Government’s domination of rural finance institutions, persisting weaknesses in the regulatory and legal framework, and populist policies had resulted in the distortion of risk/return signals and a dilution of the credit-creating role of rural banks.

The report also pointed out that the Reserve Bank of India (RBI) restricted the entry of new non-service area bank branches into the service area, by requiring them to obtain a no-objection certificate from the service area branches, which was not easily forthcoming.

(Business Line, 19.09.05)

The Fight over Mother Dairy

Gujarat Co-operative Milk Marketing Federation (Amul) and the National Dairy Development Board (NDDB) are locked in a bitter tussle over the coveted ownership of the prized brand, Mother Dairy.

Once the erstwhile ally to Amul, NDDB was miffed when the latter had stormed into its bastion — the lucrative Delhi market — with the Mother brand of milk, which NDDB had been marketing as its own for well over a decade. Amul had likewise, scotched NDDB’s plan to launch Mother Dairy milk in Gujarat, by getting an injunction from the Ahmedabad High Court. As a result, NDDB had to forgo Mother Dairy, and subsequently launched its milk under the Sugam brand, in Gujarat.

For NDDB, the fight was crucial in that the co-operative had branched out into various businesses under the Mother Dairy brand in Delhi, notching up sales of over Rs 1,200 crore . At that stage, the brand was sacrosanct for NDDB.

Though Amul head B M Vyas has declined to comment, insiders have said that Mother Dairy as a concept represents the interest of farmers. “We have registered the Mother Dairy brand as a GCCMF trademark and have the right to sell it anywhere in the country,” an Amul source said. Mother Dairy’s CEO declined to comment.

According to some sources, Amul had applied for the ownership of the Mother Dairy brand on August 1, 2000, with the Registrar of Trade Marks, Government of India. Against this, the NDDB application made for the same was put up only on August 14, 2000.

(The Economic Times, 28.12.05)

Lao PDR

Lao, Chinese Investors to Produce Tobacco for Export

Representatives of Hong Kong’s Huangchao Tobacco Group Limited, and the Lao Economic Development Committee have signed a shareholder agreement to operate the tobacco plantation investment project in Vientiane.

The total cost of the project is about US$200mn with the overseas investor holding 80 percent of the share. The project will be in operation for 50 years.

The investors expect to grow tobacco in central and southern provinces of Lao. Initially, the tobacco will be grown in the central areas, including Vientiane and Savanakhet provinces.

Aixinjueluo Yuhao, president of the Lao Economic Development Committee, said that the project would use Chinese tobacco seeds.

The investors also plan to build a tobacco factory in the Vientiane industrial zone, in the future.

(Vientiane Times, 02.12.05)

The Many Faces of Development

On the occasion of Lao National Day, Lao’s Prime Minister Bounnhang said that, over the last 30 years, the country had witnessed enormous progress in its development.

While briefing on the nation’s progress, Bounnhang stated that since the introduction of the renovation policy in 1986, economic growth had averaged six percent, annually while the GDP per capita increased from US$76 in 1975 to US$438 in 2005.

There are now over 15,000 irrigation systems throughout the country, which have the potential to boost agricultural production. Infrastructure relating to telecommunications, electricity, water and roads has also expanded. Modern technologies, especially the Internet, are being employed to facilitate local and overseas communication.

Electricity and mining industries have grown rapidly since national liberation. The government welcomes foreign direct investors to develop mining projects and hydropower schemes in the country. The mines are boosting the local economy and providing thousands of jobs for local villagers.

In addition to the economy, the government has also focused on social issues such as education, health, and the protection of the nation’s traditional culture. The education sector has grown strongly. Currently, 70 percent of the population is literate.

The outstanding achievements in the health sector include an increasing number of hospitals, the efficient tackling of disease outbreaks and the elimination of polio. The average life expectancy is about 61 years old, up from a mere 40 years in 1975.

The Congress resolution on December 2,1975, had declared the establishment of the Lao People’s Democratic Republic. This historic event ushered in the beginning of a new era, an era of genuine independence for the country, and true freedom for the Lao people.

(Vientiane Times, 25.11.05)

Nepal

Barriers to Bangladesh-Nepal Trade

In Bangladesh, there are currently 13 joint ventures with Nepal in the areas of medicine, restaurants, garments, construction, mineral, banks, and finance companies. Some of these joint ventures are fully operational, while the Bangladesh Government only recently approved some others. There are huge business prospects between the two countries in the areas of education, tourism, health, pharmaceuticals, housing, ceramic, garments, and vegetable production.

Despite the Bangladesh Government welcoming Nepali investors to invest in their country, there has been no progress in the export processing zones. The biggest hindrance to the expansion of trade ties between the two countries is the lack of a smooth transportation channel. Although, South-Asian Association for Regional Co-operation (SAARC) was established in 1985, the volume of trade among member countries is still insignificant.

(Financial Express, 28.12.05)

Talks to Promote Sino-Nepal Trade Held

Officials of the Confederation of Nepalese Industries (CNI) had an interaction with an economic consular at the Chinese embassy in the capital Kathmandu on bilateral trade, investment, and tourism promotion.

During the programme, CNI officials pointed out the need to resolve problems faced by Nepali traders while doing business in China especially, in the Tibet Autonomous Region They also discussed ways for setting up joint ventures between Nepali and Chinese enterprises, taking into consideration opportunities created by globalisation and economic liberalisation.

Aatma Ram Murarka, Acting President of CNI, urged Chinese investors to invest in infrastructure development in Nepal.

Liu Yinan, the economic consular, replied that political stability is essential for Chinese entrepreneurs to invest in Nepal.

“There is no outstanding problem, but friendship and co-operation between Nepal and China”, Liu said, and added: “We will continue to be Nepal’s good neighbour, friend and partner”.

(People’s Daily Online, 30.12.05)

Vietnam

VAMA Might Face Fine for Price Hikes

The Vietnam Automobile Manufacturer’s Association (VAMA) said that prices for locally-assembled cars would increase as of January 1, 2006. But according to Ms Pham Chi Lan, an analyst, member of the Vietnam Prime Minister’s Research Committee, the new Competition Law 2004 of Vietnam banned members in associations uniting to influence markets. Said Chi Lan: “For producers to increase prices together would be anti-market and VAMA may be fined under the Competition Law”.

It would be necessary to have a consumer association, or to draw up petitions against VAMA for submission to the Ministry of Trade’s Competition Administration Agency, said Pham Liem Chinh, from the Hanoi Lawyer’s Association. The Agency would then require auto producers to explain their prices. The Competition Administration Agency may also investigate, if it feels that the interests of consumers are not being served.

An official from the Ministry of Industry said that auto prices in Vietnam were already high compared to other countries in the region, but only consumers suffered losses while the State still collected taxes.

Though analysts have cited differing scenarios for the market in the case of price hikes, they have all agreed that it was very difficult to investigate whether or not, VAMA violated the Competition Law 2004 of Vietnam. The Ministry of Finance has conducted an investigation as to why auto prices in Vietnam have skyrocketed in the past three years, but results have been fleeting.

(VNExpress, 12.08.05)

Nortel Awarded CDMA Contract

Hutchison Telecommunications (Vietnam), and Hanoi Telecommunications Joint Stock Company, managers of Vietnam’s largest mobile business cooperation contract (BCC), have chosen Nortel to build the country’s first nationwide wireless broadband network for its CDMA system.

Construction is expected to take eight months and conclude in March 2006, with work scheduled to span 35 provinces and cities in Vietnam. Once completed, the network will enable the delivery of an advanced broadband mobile service that can compete with wire-line broadband data speeds throughout the country.

Contracts signed by the two parties indicate that Nortel would be responsible for supplying the infrastructure for the network, utilising CDMA2000 1X and 1xEV-Do (evaluation-data optimised) technology.

The BCC is scheduled to commence operations by early 2006, hoping to secure 20 percent of the domestic market in the next two to three years, or around 10 million subscribers.

Under the investment licence, the foreign partner in the BCC will bring in the entire US$656.9mn cash investment, with the implementation process being phased out during two or three successive stages.

It is anticipated that close to US$300mn may be funnelled into the investment within the first two years of operation.

The investment licence, additionally, stipulates that pre-tax profit will be divided equally between the two partners, and after 15 years, the BCC will expire and be transferred on a non-refundable basis to Hanoi Telecom, the state-owned shareholder.

(Vietnam Investment Review, 07 Nov 05)