Saturday, June 18, 2005

Why do you need christine? or Big boys shouldn't cry

The World Bank makes for an easy target. The IMF or WTO are even better. Many "activists" in co-opted NGOs earn their reputation (and money) by regularly vilifying these institutions. They do deserve their criticism, no doubt about that. But it has become a kind of industry, very similar to the Anti-Apartheid movement of the eighties.

Sometimes, the World Bank may be merely an innocent partner.
One such example is the fracas over the imposition of a $20 tax on new SIM card connections to mobile phones. The Finance Minister, 70 year old Saifur Rahman, slapped this on in his latest budget. All he has done is reduce the exact same amount of tax from mobile phone handsets and levied it on SIM cards. In other words, a new customer should see no overall difference in cost of obtaining service.
The Minister complained that 70% of handsets are smuggled and so the government never received its revenue.
The big four mobile companies are all foreign owned or have significant foreign partnership stakes. They have made a killing by ripping off customers.
Shedding crocodile tears, they have no real answer to the charge they have over-charged on call charges and unfair conditions on prepaid cards for years. It is pretty simple to compare the costs of mobile bills in neighbouring India to prove that point.
What the Finance Minister has failed to do is to provide teeth to the hopelessly out-of-their-depth telecom regulator.

The operators have been crying to the press under the guise of concern for the customer. If they were so concerned (they aren't) they would submit themselves to an audit of their pricing behaviour over the last few years. they might have to explain why prepay cards were valid for 21 days (instead of 30 days and really as now 6 months) and charges at Tk. 7 per minute or 12 cents in a country where per capita income is $450 per year! The costs of investment and network rollout is low given the low rentals, low cost of labour and the ridiculously good deal in leasing a fibre optic network from Bangladesh Rail (a government entity). The latter should renegotiate the deal and invest in making the raliway tracks safer.

It is only with the entry of the Egyptian Orascom operator that charges are at last declining. The Egyptians have done more than the rest put together in bringing down the cost of owning a mobile.
so what about the World Bank?
Well, on thursday the Operator MDs all trooped in to see Christine Wallich, country Director of the World bank to complain!
In other words, they are asking that the World Bank intervene. Let's spell it out. They would like the Bank to lean on the government of one of the poorest countries of the world to withdraw the tax!
Persuasion followed by blackmail, perhaps?
We rightfully complain that the International financial Institutions meddle too often. This is an instance of where they are being dragged into an issue that belongs in the domestic realm.
What will Christine do? I hope she thinks there are far more important matters at hand and tells the operators to fight their own battles. As the phrase goes, "big boys shouldn't cry". We shall see.


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