How to deal with state-owned enterprises

Our experience of denationalisation (privatisation) of state-owned industrial and commercial enterprises is far from pleasant. There are reports of flagrant violations of the terms of transfer by the transferee on the one hand, and failure to restart the units on time, on the other. In addition, there had been allegations of illegal use of the transferred properties or part of them for purposes other than industrial use for which these were allotted. The situation reached a point where the government found it too heavy to take on the burden and decided to be rid of these units by disinvesting them to private entrepreneurs. The modus operandi was formulated and a designated government agency Privatization Board was formed to oversee and conduct the process of transfer. Over the last few years, there was a shroud of mystery around government's stance on denationalisation which resulted in slowing down the activities of the Privatization Commission.  
Nationalisation has been in practice around the world for many years. But our experience in this respect is bitter, to say the least. A review of our industrial history reveals that until liberation, we had three categories of industry owners. Majority of the industries were owned by Pakistanis or non-Bengalees. Some were under Benglaee-non-Bengalee joint ownership. Only a handful of local entrepreneurs had the privilege of owning a few units. Non-Bengalee industrial entrepreneurs left for Pakistan during and after the war of liberation.
This created a void in our industrial sector as most industrial units were orphaned by the war. The government had no other choice but to take over those units under state management. Besides, socialism being one of the four fundamental state principles required state acquisition of the abandoned units. With the passage of time, the state-owned enterprises belied the objectives of state policy and turned out to be safe haven for indiscriminate looting and wastage. As a result, the once profitable organisations turned into perpetually losing concerns.  Each unit incurred losses worth hundreds of millions of taka.
Eventually, the government had to decide in favour of denationalising and handing over those units to private ownership. But the process of denationalisation lacked transparency and accountability. At least 500 state-owned units were transferred to private hands, but none of those was able to stand on its own feet and the country lost financially.
 In 1993, at the advice of the World Bank, the Privatisation Board was renamed Privatisation Commission. A total of 74 industries had been transferred to private owners, out of which 54 units were sold outright and shares of 20 others were transferred. But according to surveys conducted later, most of the transferred units were not restarted on time. Only a few were started partly. Many of those who bought state-owned units utilised those for some other purposes and even for building housing projects. Some again sold the land to some other person or organisation. As a result, production process could not be resumed and expected employment could not be generated. Only interests of few individuals were served. The purpose of privatisation was not materialised.
We cannot stay away from the existing reality and the need for appropriate measures to salvage the privatised enterprises has become imperative. Individual interest can not be allowed to take precedence over national interests. The world today is dominated by privately owned business houses and the role of the government has been reduced to a supportive one. Most economists are of the opinion that governments do not make good entrepreneurs. No country in the world has been able to achieve desired progress by pursuing state controlled economic system. The reason behind China's phenomenal progress has been market economy. China responded to the need of the hour, allowed priority to the private sector and achieved staggering growth over the last decade. This is a good enough justification for us to concede in favour of private enterprises and leave the perennially sick and losing state-owned industrial entities to private hands. At the same time, the losing state concerns should not be disinvested at  throw-away prices to non-entrepreneurs and corruption must not be allowed to set in.
The state-owned enterprises are run by state representatives. Owners of such enterprises, that is, the state does not operate them directly, but through representatives, and the representatives cannot be expected to be as responsible as the owners. On the other hand, privately owned companies are run by the owners directly. As a result, they are more sincere in running the affairs of their own enterprises.
The situation warrants that state-owned enterprises should be transferred to private ownership as soon as possible. But before doing so, the process of denationalisation must be clearly determined. The employees of such enterprises may be offered shares and if they want to run the units by acquiring shares, they may be allowed to do so and care should be taken so that they don't indulge in immoral practices or take any undue advantage.  At the same time, attempts should be made to resume production in the sick units. Efforts to rehabilitate the sick units were taken before without any success. There are two categories of sick industries. Firstly, there are industries that are deliberately made sick by the entrepreneurs themselves. This is done particularly by those entrepreneurs who have borrowed from state owned banks and financial institutions and don't want to pay instalments. Stern action should be taken against them. Secondly, there are units whose entrepreneurs are not being able to operate their industries in spite of best of efforts for circumstantial adversities. Specific action programmes may be taken up to salvage these units by, if necessary, providing fresh loans. It is easier to rehabilitate a sick unit than setting up a new one.
Before doing so, stern action should be taken against those entrepreneurs who purchased state-owned industries but failed to resume production on time or used company property for some other purposes. Properties sold may be taken back. Entrepreneurs who have violated the terms of transfer, should be brought to book and strong punishment should be initiated against them. A high-powered committee may be formed to probe into the allegations of corruption and malpractices and exemplary punishment should be awarded. This is how recurrence of such incidents can be prevented. Unless the government takes a firm stand against corruption and malpractices, efforts to attract investment at home and from abroad will be inconsequential.
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