Offloading of state-owned enterprises' shares for public subscription seems to be a seasonal issue.
It was found to be a hotly discussed subject when the market too was 'hot' or buoyant. And the market now being at low ebb, any discussion on the issue makes no sense.
The top leaders of the bourses wanted the government to offload the SoEs' stocks in a market that, according to them, had been facing serious dearth of 'quality' stocks. A few of them had met with the key government figures on a number of occasions to pursue the issue in 2009-10 when the market was bizarrely 'hot'.
Finance Minister AMA Muhith was also convinced and he had requested a few ministries to look into the issue positively. Later, the Prime Minister also had instructed the finance ministry to offload SoEs' shares.
There was an initial flurry of activities. But things could not make any notable progress, primarily because of tacit opposition from the bureaucrats and a section of ruling party honchos.
Following the collapse of the market in the final months of 2010 the SoEs' stock offloading issue was, apparently, shelved because of a lacklustre market environment.
However, the issue has come to life again. A meeting, held early this week at the finance ministry, discussed the progress made with regard to the offloading of the SoEs' stocks in the capital market.
Despite the market being in a moribund state, a good number of new issues got listed on the bourses during the last six years. And strangely enough most of those issues were over-subscribed. However, it remains a difficult job to guess the investors' response, had the government offered the stocks of any SoE for public subscription.
It is quite obvious that the government is not found willing to offload the stocks of any profit-earning public sector unit. It is more interested to bring in the relatively weak SoEs to the capital market. However, such a move is also facing resistance from vested interests both in the administrative and political circles.
The proceedings of the latest meeting held at the finance ministry last Sunday on SoEs' stocks offloading issue would corroborate that fact. The meeting was, reportedly, told by some representatives of SoEs that there existed disagreement among their board members on the offloading issue and that was one of major reasons for the delay in share offloading.
There is no denying that the government has not been pursuing an unambiguous policy on divestment. The offloading of SOEs' stocks is also their partial divestment. Conflicting signals do often come from policymakers about privatisation of public sector entities. Instead of disposing of the closed and sick SoEs, a section of policymakers are very much in favour of resuming their operations. The closed SoEs and many existing ones are responsible for causing heavy financial loss to the economy. Yet the government seems to be very much unwilling to part with the problematic SoEs.
It is no secret that the government cannot manage enough resources essential to bankroll many development and welfare programmes. Divestment, either through direct sale or through offloading of shares in the stock market, could be a handy source to meet that scarcity, at least, partially.
Neighbouring India, which owns a great number of public sector units (PSUs), has been mopping up substantial volume of resources through divestment of its PSUs. According to an estimate, the Indian government between 1991-91 and 2015-16, mobilised more than Rs. 3.6 trillion through the sale of its PSUs. It has set the highest ever annual target of mopping up Rs. 565 billion during the current financial year through divestment of a good number of PSUs, including the Oil and Natural Gas Corporation (ONGC).
India started disposing of the loss-making PSUs from 1991 under a reform programme and it has not paused since then. But Bangladesh has always staggered while accomplishing the same job.
True, the process of divestment had faced troubles soon after it had been initiated in the middle part of 1980s. But that was mainly due to wrong selection of entrepreneurs, willfully or otherwise. However, streamlining the divestment process is no big deal. If the government is sincere, it can develop an appropriate strategy for the purpose.
As far as partial divestment of SoEs through offloading of their shares through stock market is concerned, the government would have to select SoEs having good track records. Otherwise, investors are under no obligation to put their money in sick SoEs.
Besides, the government does have in its possession stocks of many multinational companies (MNCs). It can dispose of the same at prevailing market rates. The government is a proven bad manager and it should not be in business in any form. The sooner the policymakers realise this fact the better.
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