Pushing forward the privatisation process

The troubled state of the private sector-led economies of the western world must not be interpreted out of proportion in Bangladesh as capitalism dying. The developments there in the wake of the global economic crisis that still lingers on in some parts of the world in varying degrees, should not be misconstrued. The same must not provide the ground for re-establishment of socialism with a new enthusiasm that would vitally include steps to reinvigorate state owned enterprises (SOEs) or to reverse their privatisation process. The SOEs still continue to have the major stakes in industry, power, gas, transport, communication and service sectors of the Bangladesh economy. Such enterprises presently devour and waste a great deal of public resources that could be more efficiently utilised in other deserving sectors.
A report in this paper last Wednesday reported that the government is working on assessing its total stakes in SOEs. But it also quoted official sources who claimed that major SOEs in recent years reduced their losses and some of them have reportedly even gone on the profit path. This can create fresh worries about privatisation. Some ministries after the transition to the elected government have made known their intention to resume operation of the state-controlled industrial units that had been earlier closed down and readied for privatisation. At the same time, the present official body to carry out privatisation, the Privatisation Commission (PC), has largely been weakened. This may be a purported move on the part of the vested interests to frustrate any fresh endeavour to carry forward meaningfully the privatisation process. Meanwhile, the responsibility for privatisation is being sought to be shifted to different ministries.
Such developments do give signals about a possible reversal of the privatisation process by reopening shut down industries in the public sector. In the process, this has trigged speculation whether government has any zest for privatisation. The reluctance to pursue the course of privatisation of SOEs would otherwise mean a major setback in the country's macro-economic management. It would give a disheartening signal about unsound policies once again becoming ascendant in the realm of macro-economic management because of the direct and indirect burden of inefficient and corruption-ridden SOEs on the budgetary resources of the government.
Under the rules of viable operations or loss and profit, most SOEs became very eligible for closure many years ago. But they were kept alive by continuous massive injections of funds over the years at the cost of denial of such funds for capacity building or infrastructures by the government in support of private sector activities. The state-owned commercial banks do still hold the lion's share of deposits from the people. But a major share of the resources of such banks has been stuck up as classified loans taken by the SOEs. The chances of the SOEs every repaying these loans are almost zero. Thus, the SOEs are also a cause for financial indiscipline in the country's banking system.
There is no way for the economy to move forward sustainably, without moves to carry forward adequately and effectively the privatisation process in a transparent manner. The carrying out of privatisation to a conclusion will make the economy streamlined, add to vitality in the financial sectors and create the conditions for greater availability of resources in the hands of the government for growth-supportive economic activities in different areas. More important would be the environment of competition to be created by privatisation. Furthermore, acceleration of the privatisation process through offloading government's shares in public enterprises in the capital market will be a meaningful step to help address the supply-side constraints at a time when the demand side in the stock market remains very strong.