The document discusses the problematic transport syndicate system in Nepal, highlighting how associations control bus operations, limit competition, and manipulate fares, which ultimately harms consumers. Despite government attempts to prohibit such practices, the syndicate continues to persist due to political support and the inefficacy of regulatory measures. The situation leads to higher transportation costs and decreased service quality for the public.

2. Presented By
Group CMBM
Nepal Commerce Campus
Presented to:

3. Recently green-coloured Sajha buses made their comeback after 12
years of stoppage. They charge reasonable fares and provide good
services to the passengers. But, the private transport entrepreneurs
put an arm to stop Sajha buses citing that they snatched their
profits........
Source: Transportation Syndicate: Burden on Consumers www.Econ-ity.com

4.  Every body of us puts a constant struggle to
grab yourself a seat in Nepal Yatayat. isn’t
it???
 Has anyone wondered why the number of
buses on this specific route is limited despite
of high demand????
 Why aren’t people investing in this industry
despite such profitable prospect it offers????
 We thus thought of inquiring of this question
that seeks an answer..........

5.  One of our group member got a chance to seat
beside the driver and through casual
conversation got opportunity to ask why is it
so???
 Driver replied, “Our bus association determines
the number of vehicles that are allowed to ply
this route”.
 He further added that operating a bus on this
specific route would cost four times the actual
amount of buying a bus. The association
charges this three-fold fee to permit a new bus

6.  Based on Dialogue and Our personal
experience, it was crystal-clear that
transport entrepreneurs were operating:
Syndicate

7.  Recently in 2013 in Pokhara, some youths
challenged the monopoly
 The monopoly was of the Pokhara Bus
Entrepreneurs Committee
 Youths opened another competitive
transportation committee (Bindabasini Bus
Sewa)
 Even though it had acquired necessary
permissions to do so

8.  The new committee was not allowed to bring its buses
into operation by the existing committee as a Result
Bindabasini Bus collapsed
Factor Behind this:
Syndicate
Source:
reportersnepal.com

9. History of the syndicate practice
in Nepal
 First association of transport entrepreneurs was
the Purbanchal Motor
 Association established in 1974, Min bahadur
Suwar
 Afer this, there were a series of associations
that opened up across the country
 Prithvi Highway Syndicate opened in Pokhara
 Arniko Yatayat in Kathamndu
 Seti Mahakali in the Western region
 Paschim Nepal in Butwal
 Narayani Yatayat in Hetauda
 Later in 1982, all these associations joined hands and lobbied with the
government to form first ever national federation under the name

10.  Prime example of the most-hit
sector by cartels and syndicates
 Make a hefty profit through the
application of syndicates
 Bond together within the umbrella
of their associations
 Culminates into the federation
redoubling the institutional
strength
 Thus protect and persuade the
vested interest of transport
operators around the country

11. Process of Syndicate In Nepal
 Barrier to entry
 Route permit
 Quota
 Barrier to expansion
 Barrier to full scale operation
 Price fixation
(Road permits from the government are only provided on recommendation of the
transportation syndicate and the dealing with association if route is not permitted
cost NRs. 400,000-500,000)
Source:(United Nations World Food Programme [WFP]& Nepal Development Research

12.  Resulting to dominant positions in the market
collectively and abuse of such position
 Carteling and Syndicate practice in
transportation:
 Price fixation on minor and some major
roads
 Application of higher charges on services
 Queue and rotational system in operation
 Use of old and worn out vehicles
 Overload in cargo transportation
 Restrict new entry by putting heavy
syndicate charges or physical threat

13. What Fosters these practices?
 Traditional microeconomics: describes cartels
as inherently unstable organization pointing out
game theory strategies that demonstrate better
pay-offs for cheating (Rubinfeld & Pyndick, 1998)
 Cartel enforcement is stronger when
government policy is to implicitly support cartels,
usingJapan as a historical example.
 When the expected cost of punishment is
greater than the expected benefit from cheating,
cartels sustain

14. What Fosters these practices?
 Nepalese fosters these practices just for few
reasons: to have cost benefits like “trip fee”,to
have insurance claim in a easiest way, ticketing,
staff monitoring and even maintenance of the
vehicle in some cases
 To gain monopoly and to have good return on
investment

15. Where syndicate exists:
 Almost in all part of Nepal
 With different faces and organization
 Different faces of the syndicate system are:
 Rotational system
 Queue system
 Dial system(wait time to operate as decided by
the Association)
 Odd-even number plate system

16. Where syndicate exists:
 System has now been imposed on major
transport routes, including routes of:
 Itahari-Kathmandu
 Biratnagar-Kathmandu
 Dhangadi-Kathmandu
 Bhairahawa-Kathmandu
 Nepalgunj-Kathmandu, and others

17. Some Association responsible
for Syndicate
 The Federation of Truck Tanker and
Transport Entrepreneurs Nepal: Had
formally decided to impose the odd and
even number plate system on cargo
vehicles, announcing the resumption of
syndicate system
 Seti-Mahakali Truck Entrepreneurs
Association: has been imposing
syndicate system in the Far West, saying
that they are finding it hard survive amid
stiff competition
 And many more associations

18. Current scenario in Nepal
 Deputy Traffic Inspector Ganesh Rai says:
 Bus drivers receive lower fines than ordinary
users of the common road.
 If their license are confiscated they are
allowed to send their union representative to
retrieve it rather than attending the station in
person
 License are never suspended
 Main reason for reckless driving
 Driver joke that the “driving license is license
to kill”

19. Current scenario in Nepal
 Encouragement allowance paid to the officer is
15% of fine collected
 Politician have strong control over carteling
 24 truck syndicate controlling road trade,
carried out through Birgunj (country’s principal
custom point)
Source: The Rising Nepal – 2012, 14 December

20. Is Syndicate legal???

21. Competition Promotion and Market
Protection(CPMP) Act 2009
Consumer Protection Act, 1998
Traffic and Transportation Management
Act, 1992
Anti-Syndicate Legal Provisions

22. EFFECT OF SYNDICATE
 Consumers condition is worse
 Need to pay higher transportation
charges
 Meet with frequent road
accidents
 Travel in crowded sitting positions
in the buses
 Rise in product prices
 Rewards inefficiency and
discourages firms to provide
services in an environment of
open and healthy competition

23. EFFECT OF SYNDICATE
 According to FNCCI transport fares being
charged by truck tanker transport
entrepreneurs have gone up by 50 percent
over the normal fare

24. What has Government done?
 The government has prohibited the syndicate system in the
transportation sector few years ago
 When Madhav Kumar Nepal was PM, had directed the Home
Ministry to put an end to the syndicate system at the earliest
 The government in its budget for 2009-10 and 2010-11 also
termed the system ‘unlawful’, saying that the registration of
associations found to be imposing this system will be
scrapped
Source: nepalnews.com/The kathmandu post

25. Contd..
The government so far has fixed the maximum fare on four routes –
 Bhairahawa-Kathmandu (Rs 16,280),
 Bhairahawa-Pokhara (Rs 14,500),
 Birgunj-Kathmandu (Rs 15,850), and
 Birgunj-Pokhara (Rs 14,000)
 However, the fare that the transporters are charging is much higher
than what the government has fixed.
 Nepal’s supreme court had directed the government to break all the
existing syndicate systems in public utilities
 Supreme Court’s order against transport syndicates has not yet
been translated into any form of action
Source: nepalnews.com/The Kathmandu post

26. Why doesn’t the Law work?
 Associations often exert pressure through
◦ Means of strikes
◦ Lock-outs
◦ Interruptions in services
◦ Force government accept their demands
 Demands based on such unlawful means of threat
and violence by the associations and its members
◦ Reduce the efficiency of the economy
◦ Harm the interests of the common consumers
 The government has failed to end syndicate as
political parties are protecting those who are
imposing the system

27. Why doesn’t the Law work?
 CPMP has provision of 11 board members
from different groups of stakeholders
 Entrusted with
 Investigation
 Monitoring
 Observing and taking other necessary measures
 It includes ex-officio members
 They are busy with their own offices

28. Why doesn’t the Law work?
 CPMP has provision of hiring employees of
Nepal government as market protection officer
 Purpose: case against anti-competitive activities
 It lacks institutional back-up for implementation
 Government sustained anti-Competitive practice
(only 8000 taxis are registered in Kathmandu)
 Institutional reform: Since syndicate in transport
are rooted to deepest corner of Nepal, District
Development Officers should be allowed to
apply CPMP Act.

29.  In order to end syndicate of all sorts:
 Democratic space should be created for all
to exercise their legitimate rights
 Unethical politics is the root cause of many
ills, root it out
 Political solidarity to fight against the
pernicious syndicalism imposed
 Civil society members, consumers’ rights
groups and conscious people must rise up
to bring an end to this
How can we Contribute

30. Conclusion
 What syndicates do is limit the resources
 Kills quality and stifles innovation
 Syndicates allow for market monopolies to
firmly set themselves into the system and
 We, the consumers, are made to pay
exorbitant prices for low quality goods and
services in the wake of lesser options being
available to us.

31.  www.newbusinessage.com/Economy%20And%20Policy/730
 www.economist.com/blogs/banyan/2012/08/public-transport
 Competition Promotion and Market Protection(CPMP) Act, 2009
 Consumer Protection Act, 1998
 Traffic and Transportation Management Act, 1992
 Ahmed, F., & Regmi, P. P. (2009). Study on Transport Constraints
in Western Nepal. Kathmandu: Department for International
Development; World Food Program.
 Nepal, A., Rijal, P., & Sapkota, S. (2013). Compitition Watch in
Key Growth Sectors of Nepalese Economy. Kathmandu:
Samriddhi, The Prosperity Foundation.
 Salvatore, Dominic, ‘Managerial Economics in a Global Economy’
Irwing/McGraw Hill, USA
 www.investopedia.com/articles/financial-theory
 Nepalnews.comews report