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Exporters take on syndicate

4 November 2009

In a recent meeting held in Phuentsholing, Bhutanese exporters expressed their concerns over importers in Bangladesh forming a syndicate to manipulate price levels and monopolizing the market during the mandarin season. According to Lungpa Tandin, the Secretary General of Bhutan Exporters’ Association (BEA), by forming a syndicate, Bangladeshi importers stagnate the price level.
He said, “There are a few influential importers in Bangladesh who stop the smaller importers from dealing directly with the exporters, thereby paralyzing the exporters.” He said, “They take all the smaller importers under the syndicate by giving them small commissions so that they don’t deal directly with the exporters, and then, they fix the prices at a certain level and even refuse to take the produce at a higher price.” Exporters said that the syndicate bought the produce at lower prices from Bhutanese and sold it at higher prices in Bangladesh. Although the association does not have confirmed evidence on the syndicate, Bhutanese exporters complained that they had been victimized earlier.
Pemba, the owner of Peling Export, said, “In 2006, I ended up doing business with a syndicate of Bangladeshi importers for two weeks.” He said that the syndicate had fixed lower rates and even rejected the produce because of which he had to bear huge losses. “Within two weeks of business with the syndicate, I had to bear a loss of around Nu one million,” he said, adding that after two weeks, he had to find other parties to deal with.
“I managed to find parties in Calcutta and sent 28 truckloads of mandarin to them,” he recalled. Pemba said this year too, the importers from Bogora in Dhaka were trying to form a syndicate. “I am now planning to go to Dhaka myself and look for parties to make sure that I don’t fall victim to another such syndicate.”
Pasang Dorji of Khandum Export said that, for instance, if the price of a box of mandarin was 15 dollars, the syndicate paid them only 13 dollars. He said, “If there is no syndicate, there will be a lot of competition which will lead to better prices.”
Lungpa said, “On October 22, the association enquired about the syndicate with the importers’ president in Bangladesh who said that there was no such thing and that each importer would come individually this season.”
In order to resolve the syndicate problem, the association has now resolved that it would advertise the season with the newspapers and news channels in Bangladesh that only genuine licence holders would be allowed and that the importers would be required to produce all relevant documents and register with the BEA only from the date of registration.
Lungpa said the advertisement would keep the other importers well-informed, which would help curb the activities of the syndicate. “There are importers who are unaware of the export business and the syndicate has apparently misinformed them saying that the Bhutanese government has decided to supply the entire produce only through the syndicate.”
Exporters also suggested that the floor price of mandarin be increased to stop any syndicate. “Once the floor price is fixed, exporters hope to set a benchmark below which the prices cannot be manupulated,” an exporter said, adding that the floor price for importers from a syndicate should be higher than usual.
The association also discussed that all the importers needed to be present during the exporters-importers meet to discuss such issues. “We have good ties with the embassy and other authorities in Dhaka which will play an essential role in preventing such practices,” said Lungpa.

In a recent meeting held in Phuentsholing, Bhutanese exporters expressed their concerns over importers in Bangladesh forming a syndicate to manipulate price levels and monopolizing the market during the mandarin season. According to Lungpa Tandin, the Secretary General of Bhutan Exporters’ Association (BEA), by forming a syndicate, Bangladeshi importers stagnate the price level.

He said, “There are a few influential importers in Bangladesh who stop the smaller importers from dealing directly with the exporters, thereby paralyzing the exporters.” He said, “They take all the smaller importers under the syndicate by giving them small commissions so that they don’t deal directly with the exporters, and then, they fix the prices at a certain level and even refuse to take the produce at a higher price.” Exporters said that the syndicate bought the produce at lower prices from Bhutanese and sold it at higher prices in Bangladesh. Although the association does not have confirmed evidence on the syndicate, Bhutanese exporters complained that they had been victimized earlier.

Pemba, the owner of Peling Export, said, “In 2006, I ended up doing business with a syndicate of Bangladeshi importers for two weeks.” He said that the syndicate had fixed lower rates and even rejected the produce because of which he had to bear huge losses. “Within two weeks of business with the syndicate, I had to bear a loss of around Nu one million,” he said, adding that after two weeks, he had to find other parties to deal with.

“I managed to find parties in Calcutta and sent 28 truckloads of mandarin to them,” he recalled. Pemba said this year too, the importers from Bogora in Dhaka were trying to form a syndicate. “I am now planning to go to Dhaka myself and look for parties to make sure that I don’t fall victim to another such syndicate.”

Pasang Dorji of Khandum Export said that, for instance, if the price of a box of mandarin was 15 dollars, the syndicate paid them only 13 dollars. He said, “If there is no syndicate, there will be a lot of competition which will lead to better prices.”

Lungpa said, “On October 22, the association enquired about the syndicate with the importers’ president in Bangladesh who said that there was no such thing and that each importer would come individually this season.”

In order to resolve the syndicate problem, the association has now resolved that it would advertise the season with the newspapers and news channels in Bangladesh that only genuine licence holders would be allowed and that the importers would be required to produce all relevant documents and register with the BEA only from the date of registration.

Lungpa said the advertisement would keep the other importers well-informed, which would help curb the activities of the syndicate. “There are importers who are unaware of the export business and the syndicate has apparently misinformed them saying that the Bhutanese government has decided to supply the entire produce only through the syndicate.”

Exporters also suggested that the floor price of mandarin be increased to stop any syndicate. “Once the floor price is fixed, exporters hope to set a benchmark below which the prices cannot be manupulated,” an exporter said, adding that the floor price for importers from a syndicate should be higher than usual.

The association also discussed that all the importers needed to be present during the exporters-importers meet to discuss such issues. “We have good ties with the embassy and other authorities in Dhaka which will play an essential role in preventing such practices,” said Lungpa.

By Pushkar Chhetri

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Posted by Bhutan Observer · Filed Under Economy, News 

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