Govt backtracks from divestment plan, drops 5 loss-making SoEs from its list
Shakhawat Hossain | Thursday, 14 August 2008
The government seems to have developed a distaste for privatisation following a debacle over the sale of Rupali Bank as it plans to drop five loss-making state-owned enterprises (SoEs) from the divestment list, officials said.
The SoEs are Daulatpur Jute Mills Ltd in Khulna, Service Facilities Center (SFC) in Brahmanbaria, Textile Facilities Center (TFC) in Laxmipur, Tangail Cotton Mills Ltd in Gorai and Magura Textile Mills Ltd in Magura.
"They (SoEs) will be sent back to their respective controlling agencies," said a senior Privatisation Commission (PC) official on condition of anonymity.
Such a decision will be taken today (Thursday) at a meeting of the PC, the officials said.
Failing to divest the largely state-owned Rupali Bank to a Saudi prince the PC sent back the bank to the finance ministry.
The PC official, however, did not disclose the reasons behind such a move when tenders have already been floated for disposal of Daulatpur Jute Mills and SFC in Brahmanbaria.
Besides, asset valuation is now being carried out for three other SoEs --TFC in Laxmipur, Tangail Cotton Mills and Magura Textile Mills.
Another official said de-listing of the SoEs will put a break on the PC activities as it will reduce the present divestment list of SoEs to 21 from previous 26.
The divestment drive has already been slowed down in the current calendar year as only two, out of 26, are at approval stage while nine others are under tender process, he said.
Available statistics show the PC divested six SoEs in 2007 compared with five in 2006. The number of SoEs divested in 2005 was seven.
A World Bank (WB) study in 1994 disclosed that around 305 SoEs comprising industrial, commercial and financial institutions were nationalised in 1974-75.
However, the size of the public sector enterprises has been reduced considerably after the shift in the government's economic policy towards privatisation.
Since the establishment of the Privatisation Board in 1993 and later constitution of the PC in 2000, 74 SoEs were privatised. Of which, 54 were privatised through outright sale and 20 through offloading shares.
Farooq Sobhan, president of the Bangladesh Enterprise Institute, in his key note paper at a PC seminar May last said the persistent losses by the SoEs were costing the national exchequer nearly one per cent of gross domestic product (GDP).
But he noted that at least 50 per cent of the privatised SoEs had remained closed due to a variety of reasons.
"With a few exceptions, privatised SoEs have not significantly improved on the performance of SoEs nor have they contributed substantially to the economy," he said.
Mr. Sobhan suggested six-point recommendations including complete overhauling of the PC, creation of a pool of experts on privatisation, restructuring all SoEs boards and two-year close monitoring of divested SoEs for meaningful privatisation.
The SoEs are Daulatpur Jute Mills Ltd in Khulna, Service Facilities Center (SFC) in Brahmanbaria, Textile Facilities Center (TFC) in Laxmipur, Tangail Cotton Mills Ltd in Gorai and Magura Textile Mills Ltd in Magura.
"They (SoEs) will be sent back to their respective controlling agencies," said a senior Privatisation Commission (PC) official on condition of anonymity.
Such a decision will be taken today (Thursday) at a meeting of the PC, the officials said.
Failing to divest the largely state-owned Rupali Bank to a Saudi prince the PC sent back the bank to the finance ministry.
The PC official, however, did not disclose the reasons behind such a move when tenders have already been floated for disposal of Daulatpur Jute Mills and SFC in Brahmanbaria.
Besides, asset valuation is now being carried out for three other SoEs --TFC in Laxmipur, Tangail Cotton Mills and Magura Textile Mills.
Another official said de-listing of the SoEs will put a break on the PC activities as it will reduce the present divestment list of SoEs to 21 from previous 26.
The divestment drive has already been slowed down in the current calendar year as only two, out of 26, are at approval stage while nine others are under tender process, he said.
Available statistics show the PC divested six SoEs in 2007 compared with five in 2006. The number of SoEs divested in 2005 was seven.
A World Bank (WB) study in 1994 disclosed that around 305 SoEs comprising industrial, commercial and financial institutions were nationalised in 1974-75.
However, the size of the public sector enterprises has been reduced considerably after the shift in the government's economic policy towards privatisation.
Since the establishment of the Privatisation Board in 1993 and later constitution of the PC in 2000, 74 SoEs were privatised. Of which, 54 were privatised through outright sale and 20 through offloading shares.
Farooq Sobhan, president of the Bangladesh Enterprise Institute, in his key note paper at a PC seminar May last said the persistent losses by the SoEs were costing the national exchequer nearly one per cent of gross domestic product (GDP).
But he noted that at least 50 per cent of the privatised SoEs had remained closed due to a variety of reasons.
"With a few exceptions, privatised SoEs have not significantly improved on the performance of SoEs nor have they contributed substantially to the economy," he said.
Mr. Sobhan suggested six-point recommendations including complete overhauling of the PC, creation of a pool of experts on privatisation, restructuring all SoEs boards and two-year close monitoring of divested SoEs for meaningful privatisation.