ANALYSIS
Ministry bastardises bid process
When a firm wins an auction, it is pressed for more
Although the Commerce Ministry often conducts auctions it seems to misunderstand the criteria and never follows the rules, reports Petchanet Pratruangkrai.
The ministry conducts auctions for agricultural goods such as rice, shrimp, tapioca and corn, to release government stocks, which are built up mainly from its price-intervention scheme. In the auction process, the highest bidder wins and the process should be completed the same day. However, the ministry has never concluded any bidding in one day but drags out the bargaining process until it gets the price it wants. Despite good offers from bidders, the ministry sets the most desirable price in its own mind, and will bargain for higher prices from bidders. Bidders who have dealt with the ministry share the same view that it is intent on bargaining for its own benefit. The ministry should not refer to this process as 'bidding' but should call it a 'special offer' or 'bargaining process', bidders say. An auction or bidding is defined as a process of offering an item, taking bids, and then selling to the highest bidder. In economic theory an auction is a method for determining the value of a commodity that has an undetermined or variable price. Some bidders who have participated in the ministry's bidding process have been frustrated, and complain of having to pay more than the offered (and accepted) price. Bidders have asked the ministry to clarify the bidding process for areas like e-commerce so they don't waste time with the government's long bargaining process. A major bidder who participated in the recent rice bidding said that his company had considered many factors such as risk, market price and transportation costs before making its offer. "We have to make sure that we will have reasonable costs to get a good export price and profit," the bidder said Bargaining with the government means that bidders have to cut their profit margins, he said The ministry held a jasmine-rice auction late last month, but the process concluded after a week due to the government's "special bargaining" process. The highest bidder should win the contract. But every time, the ministry asks the winning bidder to boost the price. Questions have been raised about whether the bids really reflect market prices, push up local prices or cut trader's export margins.
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