Most state-owned enterprises (SoEs) could not make any appreciable progress in divesting on the stock market despite a government directive for time-bound action, officials said.
They recall that Prime Minister Sheikh Hasina had set a deadline some six years back for offloading the SoEs' shares that the market covets for an impetus.
Officials and experts concerned identified various reasons behind their failure. The negatives include bureaucratic red tape, unstable situation of stock markets, poor flow of funds, and financial state of SoEs.
The Prime Minister in November 2010 approved a deadline for 27 state-sector enterprises to divest considerable stakes as forwarded by the ministry of finance (MoF) after several deadlines set by finance minister AMA Muhith had gone unheeded.
After that, only three energy-sector enterprises -- Meghna Petroleum, Jamuna Oil Co, and Eastern Lubricants -- followed the deadline timely while the rest of the SoEs faltered again.
Sources at the MoF said after the stock-market debacle in December 2010 none of the SoEs show interest in divesting more stakes and the government authorities refrained from putting any pressure on them for further offloading.
At a meeting in May this year the MoF again pushed the SoEs for immediately starting process of divesting shares. Some SoEs were asked to offload shares by December this year while some instructed to update their latest situation by this past June.
In another meeting held in September this year at the MoF, the SoEs were asked to expedite the process of going public.
When contacted, managing director of LP Gas Ltd Dr Sharif Ashrafuzzaman told the FE the company was incurring operating loss and thus offloading shares on the stock market was not possible.
He said it would be considered after the company makes profit.
Company secretary of Titas Gas Ltd Mushtaq Ahmad told the FE the flow of fund in the stock market declined significantly after the ratio of margin loan has been lowered.
"The share price of our company has already declined drastically. If we further offload shares, the price will further fall. So, we are not considering it now," he said as ground for the pause.
General Manager of Jalalabad Gas T & D System Ltd Khan Badiuzzaman said the board of the company was yet to take a decision about offloading shares in view of the prevailing stock-market situation.
"If we offload shares now, none will be interested to by those," he added.
Member (Finance) of Bangladesh Telecommunications Company Ltd (BTCL) Dr Md Abu Sayed Khan told the FE that the company could not post any profit in the recent years.
"But following a meeting decision we have sent necessary documents to the Investment Corporation of Bangladesh (ICB) for expert opinion as to whether the company is suitable for offloading shares or not," he said.
Controller of Bangladesh Power Development Board (BPDB) Lutfor Rahman told the FE the offloading of 10 per cent more shares of Dhaka Electric Supply Company (DESCO) was under process.
But, he added, there is no other mentionable progress in case of other power-sector companies on divestment.
Mr Rahman also said Ashuganj Power Station Company Ltd will issue bond but will take time since the company has various liabilities.
A senior MoF official said the board members of the SoEs show reluctance in divesting shares despite directives from a top seat of government.
He said the finance minister will sit with the company bosses sometime in February or March next year and set a final deadline for offloading.
A commissioner of the Bangladesh Securities and Exchange Commission (BSEC), seeking anonymity, told the FE that actually the companies themselves are not interested in offloading shares.
Board of directors of some companies has decided not to offload shares since the companies do not get money from the divestment through direct listing.
He also said SoEs need to comply with some rules and regulations for share offloading. The SoEs do not want to take such extra burden onto their shoulders since they are not getting money from the divestment rather the government will take the entire money.
He said instead of pressing loss-incurring concerns, the government should encourage the profitable concerns to go for divestment.
An official of ICB Capital Management Ltd told the FE the government needs to stand strict on its decision on bringing SoEs onto the share market for supply of good shares to the investors.
He said many SoEs would not be able to get listed on the market as they are counting loss.
Former adviser of caretaker government Dr AB Mirza Azizul Islam told the FE it won't be wise to encourage losing SoEs to be listed with the share markets.
He observed the bureaucracy creates barrier when SoEs opt for offloading shares, since, after enlistment, they have to hold annual general meeting timely and will be held responsible for company affairs.
Besides, the bureaucrats, who act as chairman and director of the SoEs, fear loss of the facilities they enjoy from the companies and resist the divestment move.
Mr Islam noted that in 2007-08 the SoEs on the Malaysian stock market held 40 per cent of total capitalization, while in Bangladesh the SoEs have hardly 3.0 per cent.
"The government should take proper steps to bring profitable SoEs to get a vibrant stock market," he said.
Former BSEC chairman Faruq Ahmad Siddiqi said divestment of profit-making SoE shares will help enrich the markets with good shares and the transparency at the company level will be increased.
"Bureaucracy, the board of directors, and people working there, who do not want to lose control on the companies, create barriers to SoEs' share divestment," he said.
Mr Siddiqi noted that many of the SoEs have vast assets which remained unused or underused. Private-sector people should be injected into their boards so that the SoEs can make profit and be enlisted on the share market.
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