Consumers feel the bite, as govt fails to control inefficiency, corruption

LAHORE: Inefficiency and corruption are direct taxes on the consumers, as both the private sector and the state pass on the impact of these two menaces to the general public.

It is unfortunate that the consumers remain at the receiving end, irrespective of the state of the economy. The state continues to formulate trade policies that please the investors.

The principle of open market economy is not applicable in Pakistan because the cartels in all fields determine the rates at which any product is made available to the consumers. Fair trade practices force the private sector to compete and offer their products and services at reasonable rates.

Exploiter number one is the state itself. It enjoys monopoly in power and energy.

In power sector, all the inefficiencies, corruption and flawed sovereign guarantees are passed on to the consumers. The huge theft of natural gas does not bother the gas distribution companies, as the regulators allow them to recover the theft loss from the consumers.

Though industry and business in Pakistan is operating under the principle of open market economy, consumers however remain at the receiving end due to weak state regulations and unholy cartels.

There is no effective consumer protection institution in the country. There are no effective consumer protection laws.

Look at cement rates that are regularly on the rise and the rates of all brands remain almost in the same range plus or minus two percent. Some of these mills are highly efficient, while some have lower efficiencies that increase the cost of cement they produce. But since the retail rates are kept high through the connivance of efficient producers, they are able to survive. The profits of efficient producers thus are much higher when the retail rates are kept on higher side to help the inefficient producers survive.

Sugar industry is another example. The mill owners have been claiming that they have got huge sugar surplus.

The government even allowed them to export the commodity. But since the state did not approve any subsidy, they did not export sugar even after 31 percent devaluation of rupee.

Despite huge sugar surplus, the sugar prices in the market are at historic high. Barring utility stores, sugar prices have reached historic peak. One international chain is selling it at Rs90/kg.

There is no check on irrational increase in prices. The rates of milk, wheat flour, vegetables, pulses, edible oil, mutton, beef, chicken meet, egg, tea, now register a regular increase.

At the start of this century, a new entrepreneur class emerged that engineers the rates of most of these commodities through hoarding. These hoarders ensure that the supplies of hoarded items remain short so that they can charge more.

Thus, the better-organised sectors like flourmills, ghee manufacturers and sugar producers, manage to shield themselves in over-supply situations through their respective associations and maintain higher prices that ensure high profit.

The News found that most of the food related industries were catering to the local needs, but yet their production capacities were higher than the local demand. They have no export market, but even then they have registered mushroom growth.

Flour mills have the capacity to produce at least three times the wheat flour needed in the country, yet there is no competition between them. Efficient and inefficient flour mills are thriving because there is no competition between them. Wheat flour prices have recently been increased by the flour mills.

Consumers in Pakistan pay higher price for steel because the state protects the steel monopoly of the Pakistan Steel Mill. Soda ash is costlier for many value-added industries, as a multinational enjoys duty protection.

Health services in the country are exorbitant as the government fails to enforce transparency in public sector health, and due to its inability to regulate the private sector.

Rates of medicines in Pakistan are irrational due to over regulation by the Health Ministry. Rates of relatively common and cheaper drugs are fixed low, while the rates of third-generation medicines are out of reach of common man.

Substandard candies and chocolates are openly sold in the market. Regulation of fares in public transport is lopsided.

The auto-rickshaws and taxis operate without meters that are fixed by the government to charge the approved per kilometre fare. In short, the state is not fulfilling its responsibilitytowards the public.