The dilemma has been there for long. Although in the past there were occasions when it looked like the government was going for a decisive move, there has not been any remarkable breakthrough. While time-consuming bureaucracy is believed to be an impeding factor, procedural and legal handicaps do not allow room for a desired shift to what is believed to be ultimate respite - privatisation.
Replying to questions in Parliament, the industries minister recently informed the House that of the 48 mills and factories currently under various corporations under his ministry, 24 enterprises are incurring losses. Nine of these units have been closed down following repeated losses since 2010. The Bangladesh Chemical Industries Corporation (BCIC) and Bangladesh Sugar and Food Industries Corporation (BSFIC), the largest corporations under the industries ministry, have the most number of losing enterprises. The minister informed that of the 18 industrial units under the BCIC, 13 are running and five have been shut down. Of these 13, nine are losing concerns. The situation with the BSFIC units is near-appalling as most of the sugar mills under its control are habitual losers. Another corporation, the Bangladesh Steel and Engineering Corporation (BSEC) has nine of its 13 units in running condition, and of those running, three are incurring loses.
The fact that most of the state-owned enterprises (SOEs) are not doing well is no news to take one aback. It has been a grim reality for decades, a burden that the successive governments have only half-heartedly attempted to address. The solution, the only one available under the circumstances, was to gradually let the enterprises go off the inefficient hands.
The process of changing hands, that is privatisation, has been in place for quite sometime, but an appraisal of privatisation clearly shows that besides being time-consuming, it has been an extremely cumbersome procedure and fraught with obstacles that cannot be remedied by lacklustre moves. There are cases where the sale process has been bogged down in litigation concerning assets, land valuation, title deeds and various claims by the parent ministry after acceptance of a tender offer. There are also cases of conflict of interest involving the parent ministries which would like to retain control of the SOEs. Coupled with these are political interferences, causing not only inordinate delay but frustration among the private parties willing to take over.
Since the establishment of the Privatisation Board in 1993 and thereafter the Privatisation Commission in 2000, 74 SOEs have been given to private hands. Of these, 54 were privatised through outright sale and 20 through offloading of shares. The major sectors for privatisation are jute, textiles, steel, engineering, sugar and food, banking and financial institutions, fisheries and livestock, environment and forestry, chemicals, telecommunications and tourism. Besides, non-financial public enterprises have been categorised into seven sectors, namely: industry, power, gas and water, transport and communications, trade, agriculture, construction and services. The powers vested with the Privatisation Commission allow it to explore avenues for privatisation through certain options under its discretion. These include sale through international tenders, sale of government share in the capital market, transfer of some portion of the shares to the employees of the enterprises in case of selling the shares through the stock exchange, sale of government shares of the private limited company, management contract, leasing out, etc.
During the last tenure of the Awami League government, the Privatisaton Commission resorted to the mechanism of leasing out. In keeping with the provision of privatisation laws which allow leasing out an entity or part of its assets, the Commission had drafted rules on leasing out state mills and firms. It could be gathered that leasing out is an alternative to management contract, but based on the same criteria and for the same purposes, the Commission may lease out any state enterprise identified for privatisation or any part of its assets.
The commission's rationale for leasing out is that the factories would continue with their operations, without being shutdown. The rules allow for leasing out state enterprises on a short-, medium- or long-term basis, for a minimum of 10 years and a maximum of 35 years, with provisions for extension. The process of leasing out for which draft rules were framed aimed mainly to facilitate transfer to private hands unutilised/surplus lands in the SOEs, which have been found to be quite substantial. The rationale is: Bangladesh can ill afford such large quantities of lands left out unused in the state entities. The move of the Privatisation Commission did not see the light of the day, as the debate whether part-leasing instead of outright privatisation of loss-incurring units was a better option or not figured prominently and eventually stalled the move.
Recent newspaper reports say that a fresh move has been taken to strengthen the Privatisation Commission by way of simplifying procedural and legal bindings in order that the Commission can exercise more powers in the decision-making process, and in so doing, part with a substantial amount of bureaucratic tangles. What one would be interested to see is transparency in the legal matters so that the process while meeting the requirements can also ride out debates and controversies.
wasiahmed.bd@hotmail.com
SOEs: To own or not to own
Wasi Ahmed | Published: March 18, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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