The latest assessment by the Ministry of Finance has once again brought into sharp focus a problem that has lingered in Bangladesh's public finances for decades but has seldom received the sustained attention it deserves. Nineteen state-owned enterprises (SOEs) have now been identified as posing "very high financial risk", carrying liabilities of more than Tk 2.22 trillion. At a time when the government is struggling to balance its budget amid subdued revenue growth, mounting debt obligations and rising expenditure demands, these financially distressed public corporations represent a fiscal burden the country can no longer afford to ignore.
Bangladesh currently has 122 state-owned enterprises operating in strategic sectors ranging from power, energy and transport to manufacturing, public services and SME development. Many of these institutions perform functions that extend beyond commercial considerations. They ensure energy security, facilitate trade, support industrialisation and deliver services that the private sector may not readily provide. Their strategic relevance is therefore undeniable. Yet strategic importance cannot become a permanent excuse for chronic financial inefficiency.
The Finance Division's review paints a grim picture. The Bangladesh Power Development Board (BPDB) alone accounts for liabilities of nearly Tk 1.8 trillion, by far the largest among all public enterprises. The Gas Transmission Company Limited (GTCL) carries liabilities exceeding Tk 141 billion. More worrying is the broader pattern revealed by the assessment-- operating revenues of many SOEs are consistently inadequate to cover operating costs, while returns on assets and equity remain persistently weak.
The report also highlights contingent liabilities amounting to over Tk 345 billion through sovereign guarantees extended by the government. These guarantees may not immediately appear in the fiscal accounts, but they represent latent risks. Should any of the borrowing entities fail to service their debts, the government would have little option but to shoulder the repayment burden. Combined with the sizeable subsidies many SOEs continue to receive each year, these liabilities constrain the government's ability to channel scarce public resources towards health, education, climate resilience and infrastructure.
The question of what to do with loss-making SOEs is hardly new. It has resurfaced repeatedly under successive governments, often accompanied by promises of sweeping reforms. Yet meaningful progress has remained elusive. Bureaucratic inertia, legal complexities, institutional resistance and political considerations have repeatedly frustrated efforts to restructure or divest underperforming enterprises. Consequently, what should have been an ongoing programme of reform has instead become a cycle of recurring discussions followed by prolonged inaction.
The reality is that most financially troubled SOEs did not become inefficient overnight. Their problems have accumulated over decades through weak corporate governance, politically influenced decision-making, overstaffing, outdated technology, poor financial discipline and inadequate accountability. Injecting fresh capital or extending additional guarantees may temporarily keep them afloat, but such measures seldom address the underlying causes of their distress.
Privatisation has long been viewed as one possible remedy, although the term itself often provokes ideological debate. Experience suggests that privatisation is neither a universal cure nor an objective in itself. Rather, it is one among several policy instruments that should be employed where appropriate. Bangladesh's own experience demonstrates both the potential and the limitations of this approach.
Since the establishment of the Privatisation Board in 1993 and its subsequent transformation into the Privatisation Commission in 2000, 74 SOEs have been transferred to private ownership, with 54 sold outright and 20 through share offloading. These enterprises came from sectors including jute, textiles, engineering, steel, banking, fisheries, chemicals and tourism. Yet the pace of reform has remained painfully slow.
The reasons are well known. Disputes over land ownership, asset valuation, title deeds and outstanding liabilities have frequently led to prolonged litigation. Parent ministries have often been reluctant to relinquish control over enterprises under their jurisdiction. Political interventions have further complicated the process, discouraging potential investors and delaying transactions.
Recognising these obstacles, policymakers in the past explored alternatives to outright privatisation. Leasing state enterprises or transferring their management under long-term contracts emerged as one such option. Draft rules prepared by the then Privatisation Commission proposed leasing factories and surplus assets for periods ranging from 10 to 35 years, allowing private operators to improve efficiency while ownership remained with the state.
The rationale was pragmatic. Leasing would allow production to continue, preserve employment, attract private investment and, importantly, put vast tracts of idle public land to productive use. In a land-scarce country like Bangladesh, allowing valuable industrial land to remain underutilised represents an economic cost that is difficult to justify. Unfortunately, debates over whether leasing was preferable to outright privatisation eventually stalled the initiative before it could be meaningfully implemented.
Perhaps the lesson is that Bangladesh has spent too much time searching for a single perfect solution when none exists. Different SOEs require different strategies. Commercially viable enterprises may simply need stronger corporate governance, professional management and greater operational autonomy. Those providing essential public services but unlikely to become profitable should operate under clearly defined public service obligations with transparent budgetary support rather than opaque subsidies. Persistently loss-making enterprises with little strategic significance should be restructured, leased, merged or privatised after careful evaluation.
Ultimately, the debate should no longer centre on whether Bangladesh should retain or dispose of state-owned enterprises. The more relevant question is whether these enterprises are fulfilling their intended purpose without imposing an unsustainable burden on taxpayers. Public ownership should never become an end in itself. It is justified only when it demonstrably serves the broader public interest.
Bangladesh's debt-laden SOEs are not merely accounting liabilities; they represent an opportunity cost that limits the country's development choices. Every taka spent on chronically inefficient enterprises is a taka unavailable for schools, hospitals, infrastructure or social protection. Delaying reform only compounds the eventual costs. The challenge before policymakers, therefore, is not simply to rescue failing enterprises but to redefine the role of the state in the economy through pragmatic, transparent and forward-looking reforms.
wasiahmed.bd@gmail.com