The merger of the Board of Investment (BoI) and the Privatisation Commission (PC) is reported to be at the final stage.
The proposed merger of the two agencies, according to the government, will augur well for the country's fare investment and business activities. This was reported recently by the media.
Prime Minister Sheikh Hasina, ex-officio chairman of the two organisations, thus, recently asked the Cabinet Division to take necessary steps for speeding up the merger of the two bodies. The proposed merger, as she observed, will be aimed at reducing state expenditure.
However, these two state agencies have, for all practices purposes, remained ineffective over the years. They were otherwise expected to play a pivotal role to promote divestment of state-owned enterprises (SoEs) and help attract foreign and local investments. But they have so far failed to go perform their assigned jobs during the last several years.
Officials and employees of these two state-owned agencies, as the reports said, have been sitting idle. On their part, PC officials say the ministries and divisions did never listen to their suggestions and that was why they could not function properly. Both the PC and BoI had to wait for the Prime Minister's intervention on most occasions.
Sharp differences surfaced between the ministries and the PC on the privatisation of SoEs since the latter's inception. The PC alleged that the ministries had never taken any initiative to make the loss-making firms profitable. The ministry of finance (MoF) took several attempts to close down the PC as per the directive of the Prime Minister's Office (PMO). However, it later changed its mind for unknown reasons.
The government, to recall, constituted Privatisation Board in 1993. This body was later upgraded to the status of a commission - designated as Privatisation Commission (PC) -- in 2000. At present, a total of 70 officials and staffs are working at the PC and the government spent Tk 170 million during the last four years for the upkeep of its outfit. During this period, no SoE could be privatised.
The BoI was established in 1989 with a view to raising the level of local and foreign investments in the economy. The Board started with 495 staff and of them, 359 posts are now vacant.
The five-member sub-committee, assigned to develop a merger plan of the BoI and the PC, has reportedly finalised the drafting of a relevant law. The proposed body, among others, is expected to provide investment registration, land for new industry and ensure availability of utility services to new industries. It will also make allotment of the excess and unused land belonging to the SoEs to the genuine investors.
Land scarcity is otherwise a big problem for the investors to set up new industries in the country. The merger plan aims at addressing such particular problems. Keeping in mind the barriers that are often put by the relevant ministries to productive uses of public land by setting up of new industries, the new law reportedly stipulates formation of an execution committee for investment-related projects. It will take decisions on land use through meetings with all stakeholders so that no barrier remains on its operational way at any later stage.
Most SoEs have a large area of land at their own premises. The new organisation will take up the plan about how to meet an individual investor's demand for land, once the registration is made for investment. The land of the SoEs has in-built infrastructure like roads, gas and electricity and investors may utilise such facilities quickly. Once the new organisation starts working, its one wing may handle investment-related proposals while another will reportedly line up land and take steps to allocate it to the genuine investors.
During the previous caretaker government, now-defunct Regulatory Reforms Commission (RRC) did make a number of recommendations in order to reinvigorate the activities of the BoI. It had suggested updating of the old, ineffective and complicated laws to speed up development process through boosting investment and trade. But those did not receive any due attention from the government.
Likewise, the very existence of the PC was at stake due to radical changes made in the government policy. After coming to power, the grand alliance government in 2008, during its previous tenure, took a firm stand against further privatisation of public sector mills and industries. Furthermore, its industrial policy stipulated that no industries would be handed over to the private sector. That being the case, the question then naturally arose about the utility of running a commission for privatisation. Why was the government so hesitant over this issue during all these years?
It was the electoral pledge of the Awami League (AL)-led government not to close or privatise any industry without generating alternative employment opportunities for the workers and employees. The government did re-open some of the closed jute mills in order to rejuvenate the ailing jute sector.
But most of the loss-making entities in the public sector have been continuing to cause haemorrhage to the country's economy. Why should the government continue to sustain heavy losses years after years?
The existing organogram of the BoI took 23 years for approval by the government. That was enough to destroy its internal discipline, besides causing setback to efforts for making it properly functional. The manpower size of the new organisation will reportedly remain almost equal to the combined strength of both the PC and the BoI. If that is the case, experts question how the government would reduce public expenditure without deciding on the fate of the perennially loss-making SoEs sooner rather than later.
Having noted this, it will be interesting to see how the proposed merger plan will work for attracting foreign and local investment without making the government's stance on SoEs clear and recasting its industrial policy. Moreover, attracting investments is no push-button job. It will require hard works to remove the existing infrastructure deficit, reduce the costs of doing business and improve the overall business and investment climate.
Until these things are done, mere merger of the BoI and the PC will serve no effective purpose.
szkhan@dhaka.net
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