Opening the market

  • Government move to break transport cartels is welcome but it needs to sustain its campaign

Apr 12, 2018-

The existence of syndicates and cartels in almost all fields of entrepreneurial activity has hampered economic growth and posed major challenges to the population. And nowhere are syndicates as prominent as in the transport sector. In almost every area of the country, the movements of commercial vehicles are dictated by committees of transport entrepreneurs. These committees collude to fix prices, often at exorbitant rates. They also collude to allow only specific types of vehicles on routes, and often these are sub-standard and prone to accidents. Furthermore, these committees take strong measures to prevent competition from more capable companies. Anyone trying to provide better services at lower prices is intimidated into submission. Similar modalities exist in a wide range of other fields.

The government has long known that measures need to be taken to break up syndicates or at least weaken their power if entrepreneurial activity is to flourish in Nepal and if the population is to enjoy better service delivery. Yet, so far very few efforts have been taken to regulate cartels. There have been a number of reasons for this. First, the state has been quite weak for much of the past decade. Syndicates have demonstrated greater staying power than short-lived governments. Whenever governments have tried to take action against cartels, they have been forced to back down in the face of protests by the cartels themselves. In addition, powerful people in government have protected many syndicates. Many lawmakers themselves have been business people and with vested interest in the cartels. This has prevented any decisive move against collusion and profiteering.

Given this context, it is highly laudable that the current government is now taking active steps to break up syndicates in the transport sector so as to ensure greater competition. When Mayur Yatayat was recently granted a permit to ply the Araniko Highway, 11 local transport committees rose up in protest. But instead of fulfilling their demands like it has often done in the past, the government threatened to cancel the permits of the transport committees. This forced them to back down.

The government is now planning to take far-reaching measures against collusion in the transport sector. The Home Ministry has proposed not to renew the registrations of transport committees. This could over time lead to the effective dissolution of the syndicates. Moreover, there is also a proposal to amend the relevant regulations so that entrepreneurs no longer have to take the permission of syndicates to ply their trade. Of course, the syndicates have come out strongly against these proposals and have threatened major protests. In the longer term interest of the population, the government would do well not to back down. And sustained drive against the syndicates is long overdue.

Published: 12-04-2018 08:11

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