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Trading Corporation of Bangladesh (TCB) has long been hamstrung by capital shortfall, making it difficult for the agency to carry out timely market intervention, officials said.
Supply of key essentials by the government’s trading arm when prices go up on the open market, especially during the holy Ramadan, is seriously hampered for the shortage of required working capital, they said.
Currently, the government has raised the authorised capital of the state-run agency to Tk 10 billion. But it did not pay the capital to the entity.
TCB had sought Tk 10 billion from the government to increase its capacity on July 11, 2019. It also sought Tk 3.0 billion as working capital on January 12, 2020.
The government has provided subsidy amounting to over Tk 3.93 billion to TCB from fiscal year (FY) 2010-11 to FY 2017-18, according to the annual report of TCB.
In the case of taking loans against trust receipt (LTR) from banks, TCB has to pay interest at a rate between 11 per cent and 12 per cent. Such borrowing increases the import/purchase costs, said a high official concerned.
As a result, the prices of essential items go up and the corporation has to take subsidy from the government.
But the state-run trading agency could not make any visible impact with regard to keeping the market of essentials stable and at a tolerable level for common consumers despite getting a large amount of deficit financing every year, said the official.
The cost would become much lower and the consumers would be able to buy goods at an affordable rate if the commodities are imported through cash payment, he added.
A TCB official told the FE that sufficient working capital is required for the agency to buy commodities for open-market sale at subsidised rates.
Besides, required manpower, fund for construction warehouses are badly needed for strengthening the capacity of the state-run agency, he added.
TCB is passing hard times for storing of different key essential items due to lack of necessary warehouses. Currently, TCB’s product sales activities are being conducted in two shifts through the existing manpower.
Market-intervention activities of the state entity could be carried out smoothly if TCB had adequate working capital, he added.
A senior TCB official said the entity borrows from the banks against government counter guarantee. In FY 2012-13, TCB was given Tk 8.0 billion as counter-guarantee from the government, against which it imported different commodities.
As TCB sells commodities at subsidised rates, the organisation counts huge financial losses every year.
Despite repeated efforts by the state-run corporation, no tangible impact could be seen in respect of market intervention due to procedural delays, manpower shortage and lack of necessary warehouse, sources concerned said.
Around 3,000 dealers are registered with the corporation across the country, according to a source of TCB for rationing its goods.
TCB has been selling different essential goods using trucks and dealers across the country. The stock of such items is ten time higher than the previous year, according to the commerce ministry.
(FE)
