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The super-woes of supermarkets

  • Published at 01:14 am March 7th, 2018
  • Last updated at 04:55 pm March 7th, 2018
The super-woes of supermarkets
Supermarket chains say they are facing difficulties and struggling to expand their business due to what they feel is a lack of coordination among monitoring authorities, and limited information on related laws. Owners of retail grocery chains are worried about non-stop harassment by mobile courts - in the name of food safety - conducted by the state-run Bangladesh Food Safety Authority (BFSA), Dhaka North City Corporation (DNCC), Dhaka South City Corporation (DSCC), Dhaka Deputy Commissioner Office (DC office) and others. Massive eviction drives in residential areas including Gulshan, Dhanmondi, and Mirpur by the Rajdhani Unnayan Kartripakkha (Rajuk), and a sales-based VAT set by the National Board of Revenue (NBR), have also been a huge strain on the supermarket business, adding to their costs and making it difficult to continue operations. According to the Bangladesh Supermarket Owners’ Association (BSOA) General Secretary Zakir Hossain, there are around 40 supermarket chains in Bangladesh, running more than 130 outlets around the country along with the e-commerce bandwagon. The BSOA claims that there is no coordination among the concerned authorities, making the whole crackdown very chaotic and confusing for supermarket owners.

Endless food safety drives

Niaz Rahim, chairman of the superstore chain Agora, was sentenced by a Dhaka court to one-year imprisonment in two cases filed against him back in 2008 for selling “Baghabari Ghee.” Niaz, is also the president of the BSOA and one of the directors of Rahimafrooz Group. BFSA and other authorities continue to carry out such drives in the name of food safety and pure food. Speaking to the Dhaka Tribune, Meena Bazar Chief Executive Officer (CEO) Shaheen Khan said: “Superstore chains stock products from various certified national and multinational companies after checking markers of quality and safety like the manufacturing and expiry dates. However, most products are already packaged. “What can a superstore do if a company certified by the Bangladesh Standards and Testing Institution (BSTI) supplies adulterated products?” he asked. Supermarkets cannot open every sealed packet, bottle or container to test for quality, he pointed out. When asked about the case against Agora’s chairman, Shaheen said: “Niaz Rahim's harassment is a big concern and a threat to the supermarket business in Bangladesh.” “If the ghee was adulterated, the concerned authorities should take steps to stop malpractice at the factory itself,” he added. BSOA General Secretary Zakir Hossain said: “Previously in Bangladesh, products had no manufacturing or expiry date; we asked all suppliers to use the dates, and now we are being unfairly penalized with fines, jail-time and more.” “Basically, supermarkets are retailers; the government authorities are responsible for detecting malpractice and adulteration in food factories,” he argued.

Eviction fears

The supermarkets began in the capital’s major residential areas and flourished there due to the patronage of the residents, who found the proximity and organized service a welcome relief from the chaos of regular markets. But in the last two years, the city planning authority Rajuk has been on a relentless and rampant eviction drive against business establishments in Dhaka’s upscale residential areas. In addition, the government has increased the fees to convert land category from residential to non-residential in these areas by 750% over the last few years, apparently to discourage commercialization of the neighbourhoods.

Unfair taxation

The National Board of Revenue (NBR) levies a 4% Value Added Tax (VAT) from supermarkets based on their sales. Other shops including departmental stores only pay VAT annually, based on their shops’ locations and sizes. “Supermarket owners have to import expensive equipment to store frozen foods; we also have to pay a 65% tax on those equipment, pushing our prices over the general market price and discouraging our customers,” said Shaheen. Traders in other markets do not have to pay such taxes, which makes it much harder for supermarkets to compete. “Our commerce and finance ministries should review this matter,” suggested the chief executive officer of Meena Bazar.

‘We’re doing our jobs’

BSOA General Secretary Zakir said the organization has requested authorities to monitor producers rather than retail outlets. “Moreover, many of these products are exported overseas and various products are imported too, so our port authorities should ensure the quality of these products. It is not possible for the retailers to test the quality of all packets and container foods,” he added. Supermarkets say they met with officials from the NBR, Ministry of Finance and Ministry of Commerce, and provided proposals to review the 4% VAT and 65% tax set on importing equipment and foods, but their efforts have not produced any positive results so far. “We observed strikes at all superstore outlets around the country demanding to review the VAT enforced by NBR,” BSOA General Secretary Zakir said. “We even offered to take steps to test quality of all foods at the Science Laboratory, but BSTI says the Science Laboratory is not authorized to do that. So what can we do?” If the government designates someone to check quality of food, the supermarkets are willing to ask suppliers to test their food from there, he said. According to Meena Bazar CEO Shaheen Khan, meat, fish and other produce are tested for quality by supermarkets themselves before being stored in their own freezing facilities. The BFSA chairman declined several requests to be interviewed for this story. However, DNCC Chief Executive Officer Mesbahul Islam told the Dhaka Tribune: “The city corporations carry out drives on all types of city markets to ensure pure foods for consumers - we have no specific target.” “If anybody stocks unhygienic, expired or adulterated food, they have to pay the penalty,” he added.