Will divestment of good SoEs finally happen?

The continued downward spiral of the country's bourses does not come as a surprise to market watchers. The stock markets are littered with more bad stocks than good ones and this has been a problem spanning more than a decade. Despite best efforts of stock exchange authorities, the mood remains bearish as people have gotten their fingers burnt again and again. Now there appears to be some glimmer of hope as the honorable prime minister has stated publicly last week that state-owned enterprises (SoEs) should be listed on the bourses.
While the prime minister deserves applause for her directive, one must take this with a grain of salt, simply because this is not a new move. Five years ago, a similar announcement had been made but the actual divestment never happened because the desire to carry through with such a directive dissipates every time the market turns bearish. This time round of course things are a bit different since no number of measures taken has been able to lift the gloomy mood of the bourses. According to a report published in this newspaper, it is understood that the Executive Committee of the National Economic Council (ECNEC) has decided, in principle, to make proper scrutiny about listing of SoEs. The point of contention is not divestment per se. Already some SoEs are listed on Dhaka and Chittagong Stock Exchanges. However, the question is precisely what percentage of stock is being publicly listed. Titas Gas, DESCO are major utility companies that have been partially divested but problems with their management and the manner in which they are run remain. Allegations of financial mismanagement and misappropriation have long dogged these entities along with others that include, but are not limited to, enterprises such as Bangladesh Shipping Corporation.
Even back in 2018, directives were issued to do something similar. Unfortunately, it appears that a section of the bureaucracy and policymakers believe in retaining control of such enterprises even when they are divested. Privatised SoEs, of which some percentage of stock was offloaded, ended up with managements that are run by bureaucrats who are deputed to senior management posts from their respective ministries and departments. Hence, there is little in way of motivation to make these so-called privatized SoEs profitable. If the State is going to remain in control of privatized SoEs, these enterprises will never see the light of day when it comes to profitability. Ordinary shareholders who do not represent at least 51 per cent stake in a privatized SoE have no say in the running of the company. That means the annual general meetings will be nothing more than eye-wash where the management of these so-called publicly listed companies will be holding court and nothing tangible will have happened in terms of profitability or accountability. Ordinary shareholders will have no say there.
For decades, the State has tolerated the misappropriation culture in SoEs and that is no longer acceptable. Billions have been sunk into these companies and enterprises with government largesse and this is a complete waste of financial resources. The prime minister has hit the nail on the head when she says it is time to divest. The manner in which it is done of course will decide whether the government is serious about turning things around not just for SoEs that have a lot of potential in terms of profitability, but also, the need to bring more blue-chip companies to be listed on the stock exchanges.