Government puts SoE privatisation on hold
Sunday, 26 April 2009
FE Report
The government has decided not to privatise the state-owned enterprises (SoEs) as the privatisation programme in the past has failed to achieve its objectives, Industries Minister Dilip Barua said Saturday.
He, however, said there would be review of cases relating to the SoEs that are awaiting privatisation.
Explaining the salient features of the draft industrial policy 2009 at a workshop organized jointly by the Ministry of Industries and the United Nations Development Programme (UNDP) at a city hotel, Mr. Barua said "The SoEs privatized earlier were supposed to run smoothly. But it did not happen. So, we will no more allow privatisation of the existing SoEs," he said.
The Industries Minister said that the SoEs in the past had been privatised with the hope that those would run efficiently under new management and help generate additional employment opportunities.
"But there are instances where privatised SoEs have been kept idle. Some owners even sold vacant land belonging to the enterprises to the real estate developers. Privatisation cannot be allowed to become a tool for looting."
"So we will no longer allow privatisation of any state-owned mills and factories at the moment. In future we may consider it," the minister said, admitting the fact that privatisation has both positive and negative results.
Mr. Barua said the government will also examine the possibility of reopening of SoEs closed earlier. But decision in this regard will be taken after conducting proper feasibility studies.
"The government will work for the development of the SoEs through fresh investment and give greater attention to the loss-incurring and non-profitable enterprises to help those come out of their present state," he added.
The government will also carry out reforms in the SoEs on an urgent basis, he said.
The minister said: "In the past priority was given to trade-oriented economy. But now we are in the midst of a transition period. But our goal is industry-based economy."
"But we have to formulate a policy considering the ever changing national and global scenarios. We cannot bypass the global economic developments," the minister said.
Mr Barua also said that instead of establishing export processing zones, emphasis will be on special economic zones where both local and foreign investors will be able to share equal facilities and opportunities, he said.
He said priority will be given to domestic industrial sector. "The present government is committed to turning the country into an industrialised one."
"We did not have a comprehensive industrial policy in the past. Now we want to formulate a policy where interests of all sectors would receive judicious attention."
"Our focal point is private entrepreneurs - both local and foreign. Overseas Bangladeshis also can be a part of it. Joint ventures will be encouraged."
Mr Barua said the global crisis has brought the opportunity to protect the domestic industries. "Many countries have taken up steps to protect their local industries from the fallout of the global crisis."
He said the present government is going to formulate a policy for the sick industries to help them become profitable. But none will be allowed to take advantages in the name of sick industry, the minister added.
He said the duty structures of raw materials have to be restructured so that the local market does not get flooded with foreign goods, leading to sickness of local industries.
The minister also suggested bringing down the bank interest rate to single digit from the present 13 per cent, saying the high interest rate is one of the major obstacles to industrialization.
He criticized the imposition of non-tariff barriers by the Indian government to block the entry of Bangladeshi products in the Indian market. "We have to resort to similar tactics, if needed," he said.
Industries Secretary Dewan Zakir Hossain said the ministry has formulated the draft industrial policy on the basis of the policies of 1996-2001, which emphasised the growth of local industries, reduction of dependency on imports, development of small industries and women entrepreneurship.
ABM Khursheed Alam, additional secretary of the Ministry of Industries, while presenting the draft said the policy will ensure the presence of both the local and foreign investors. "The advancement of small and medium enterprises will be enhanced at local and rural levels to increase income and generate employment."
The policy will be environment-friendly in line with requirements of the World Trade Organisation, he said.
The draft policy identifies 16 sectors as controlled, that is defined as preserving national resources, national security and major infrastructure, where new investment would require special approval.
The sectors include deep-sea fishing, private banking and non-bank financial institutions, insurance, power generation, refining crude oil and exploration, excavation and supply of natural gas and other mineral resources.
They also include major infrastructure projects-such as flyovers, elevated expressways, monorail, container depots, mobile and land phone networks-airlines, seaports, satellite channels and casinos.
Speaking as chief guest, Tofail Ahmed MP, also the chairman of the parliamentary standing committee on Industries Ministry, said there is no alternative to industrialization for generating employment.
He said: "The government should identify the thrust sector and review the existing tax holiday system."
He requested the government to formulate an industrial policy that would attract more foreign investment.
Later, a technical session discussed the draft policy where representatives from different ministries and divisions and chambers, businessmen and industrialists took part.
The draft industrial policy was prepared with an expectation to build a strong industrial base in the country by 2021 where the manufacturing sector will contribute at least 35-40 per cent to the gross domestic product and generate 45 per cent of total employment.
The government has decided not to privatise the state-owned enterprises (SoEs) as the privatisation programme in the past has failed to achieve its objectives, Industries Minister Dilip Barua said Saturday.
He, however, said there would be review of cases relating to the SoEs that are awaiting privatisation.
Explaining the salient features of the draft industrial policy 2009 at a workshop organized jointly by the Ministry of Industries and the United Nations Development Programme (UNDP) at a city hotel, Mr. Barua said "The SoEs privatized earlier were supposed to run smoothly. But it did not happen. So, we will no more allow privatisation of the existing SoEs," he said.
The Industries Minister said that the SoEs in the past had been privatised with the hope that those would run efficiently under new management and help generate additional employment opportunities.
"But there are instances where privatised SoEs have been kept idle. Some owners even sold vacant land belonging to the enterprises to the real estate developers. Privatisation cannot be allowed to become a tool for looting."
"So we will no longer allow privatisation of any state-owned mills and factories at the moment. In future we may consider it," the minister said, admitting the fact that privatisation has both positive and negative results.
Mr. Barua said the government will also examine the possibility of reopening of SoEs closed earlier. But decision in this regard will be taken after conducting proper feasibility studies.
"The government will work for the development of the SoEs through fresh investment and give greater attention to the loss-incurring and non-profitable enterprises to help those come out of their present state," he added.
The government will also carry out reforms in the SoEs on an urgent basis, he said.
The minister said: "In the past priority was given to trade-oriented economy. But now we are in the midst of a transition period. But our goal is industry-based economy."
"But we have to formulate a policy considering the ever changing national and global scenarios. We cannot bypass the global economic developments," the minister said.
Mr Barua also said that instead of establishing export processing zones, emphasis will be on special economic zones where both local and foreign investors will be able to share equal facilities and opportunities, he said.
He said priority will be given to domestic industrial sector. "The present government is committed to turning the country into an industrialised one."
"We did not have a comprehensive industrial policy in the past. Now we want to formulate a policy where interests of all sectors would receive judicious attention."
"Our focal point is private entrepreneurs - both local and foreign. Overseas Bangladeshis also can be a part of it. Joint ventures will be encouraged."
Mr Barua said the global crisis has brought the opportunity to protect the domestic industries. "Many countries have taken up steps to protect their local industries from the fallout of the global crisis."
He said the present government is going to formulate a policy for the sick industries to help them become profitable. But none will be allowed to take advantages in the name of sick industry, the minister added.
He said the duty structures of raw materials have to be restructured so that the local market does not get flooded with foreign goods, leading to sickness of local industries.
The minister also suggested bringing down the bank interest rate to single digit from the present 13 per cent, saying the high interest rate is one of the major obstacles to industrialization.
He criticized the imposition of non-tariff barriers by the Indian government to block the entry of Bangladeshi products in the Indian market. "We have to resort to similar tactics, if needed," he said.
Industries Secretary Dewan Zakir Hossain said the ministry has formulated the draft industrial policy on the basis of the policies of 1996-2001, which emphasised the growth of local industries, reduction of dependency on imports, development of small industries and women entrepreneurship.
ABM Khursheed Alam, additional secretary of the Ministry of Industries, while presenting the draft said the policy will ensure the presence of both the local and foreign investors. "The advancement of small and medium enterprises will be enhanced at local and rural levels to increase income and generate employment."
The policy will be environment-friendly in line with requirements of the World Trade Organisation, he said.
The draft policy identifies 16 sectors as controlled, that is defined as preserving national resources, national security and major infrastructure, where new investment would require special approval.
The sectors include deep-sea fishing, private banking and non-bank financial institutions, insurance, power generation, refining crude oil and exploration, excavation and supply of natural gas and other mineral resources.
They also include major infrastructure projects-such as flyovers, elevated expressways, monorail, container depots, mobile and land phone networks-airlines, seaports, satellite channels and casinos.
Speaking as chief guest, Tofail Ahmed MP, also the chairman of the parliamentary standing committee on Industries Ministry, said there is no alternative to industrialization for generating employment.
He said: "The government should identify the thrust sector and review the existing tax holiday system."
He requested the government to formulate an industrial policy that would attract more foreign investment.
Later, a technical session discussed the draft policy where representatives from different ministries and divisions and chambers, businessmen and industrialists took part.
The draft industrial policy was prepared with an expectation to build a strong industrial base in the country by 2021 where the manufacturing sector will contribute at least 35-40 per cent to the gross domestic product and generate 45 per cent of total employment.