On 14 November last year, the Biratnagar Appellate Court passed an interim order to the Nepal Truck and Freight Federation to not implement the syndicate system which it had started from 28 October 2006. The order has not been followed. Acting Secretary of the Morang Business Association, Shyam Bhandari, complains that, despite repeated requests, the district administration has not stopped the syndicate system.

Arjun Kumar Bhattarai, general secretary of the Morang Truck Entrepreneurs' Association, says the system is not really a syndicate, and is designed to streamline the transport order process.

The syndicate system, which is widespread in western Nepal, was also implemented in the east after a federation decision, and one of the first steps was the establishment of centralised 'information centres'. Morang's entrepreneurs say that though the information centre has been taken down, the syndicate remains. Four of the 17 truck and tractor operator associations are in
the east.

The business community says that the high rates fixed by freight operators has negatively affected competitiveness as well as reduced production of food and construction materials. Bhandari claims that the syndicate system ensures that there is no reliable freight facility, saying,"After this system was implemented, freight costs have risen by 20-100 percent."

The Mechi Highway is an example of how unhealthy competition has become among transport operators. Some entrepreneurs have even hired muscle to stop the competition. Two transport associations, Mechi-Kankai in Birtamod and Mechi-Hile in Ilam have appointed individuals to 'check' vehicles from the Phidim-Panchthar Transport Association.