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Essay On Privatization In Bangladesh


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nationalization of the Bengali-owned jute and cotton textile industries was an outcome of theideological conviction of some members of the ruling party and of the handful of economistsworking at the Planning Commission during that time. The absence of a clear vision aboutthe goals of the nationalization programme, lack of trained and efficient management to runthe SOEs, excessive over-staffing of the SOEs, rigid wage structures and controlled pricingpolicies etc., turned the nationalized industries into loss-making concerns. These concernsthrived on huge state subsidies which proved to be exceedingly costly to the national exchequerand caused the national economy to stagnate and suffer from corruption and operationalinefficiencies.Much discussion has taken place about the public sector performance, particularly aboutthe losses suffered by the SOEs. One of the recent studies, which was done by Satter (1997),reports that the persistent losses by the SOEs was costing the national exchequer nearly oneper cent of GDP by 1991. This, among other things, provided the most emphatic argumentfor privatization in Bangladesh. A reversal of the policy of state ownership and control of industries began as early as 1974 and the size of the public sector declined significantlythereafter. What is ironical is that despite the gradual decline of the size of the public sector,losses suffered by the SOEs kept increasing every year, as noted below.

1.2The current size and performance of the SOEs

The size of the SOEs sector has shrunk considerably after the shift in the Government’seconomic policy towards encouraging private sector participation in the economy, greatermarket orientation and liberalization, and successive divestments of the SOEs, Nevertheless,data presented in Appendix Table A-1 show that some 218 SOEs (grouped under 36 sectorcorporations) are still in operation. The largest number of SOEs (121) are in the manufacturingindustries sector, which comprises jute and cotton textiles, chemicals, sugar and food, steeland forest industries in descending order of importance. While declining importance of thepublic enterprises is evident, (Figure 2.1 and 2.2 based on Appendix Table A-1), the lossesincurred by these enterprises are reported to have been increasing (Figure 2.3). The MonitoringCell of the Ministry of Finance (MOF), Government of Bangladesh, estimated the after-taxlosses of the SOEs to have increased from Tk. 3.8 billion (or US $ 0.12 billion) in 1986 toTk. 4.8 billion (or US $0.13 billion) in 1991,Tk. 7.5 billion (or US $0.19 billion) 1995 and Tk.12.7 billion (or US $ 0.29 billion) in 1997. The comparable figure estimated by the WorldBank (1999) for FY-97 stands at Tk. 14.1 billion (or US $0.33 billion).


Notwithstanding thevariations affecting different estimates of the SOE losses, these have been rightly termed bySatter (1997) and Mondal (1997) as proverbial losses of SOEs which have significant economicimplications. Needless to reiterate, a resource-poor country like Bangladesh can not affordto sustain losses of this magnitude year after year. While the Governments’ resources arelimited, there are more pressing demands for financing the social sectors such as health,


The latest MOF estimates put the SOEs losses at a much higher figure, around Tk. 45.5 billion (or US $1.03billion) for the year 1997-98.

Лишь едва слышно шуршали лопасти вентиляторов охлаждения мониторов да доносилось ровное дыхание Дэвида в микрофон, почти прижатый к его рту. - Д-дэвид… - Сьюзан не знала, что за спиной у нее собралось тридцать семь человек.  - Ты уже задавал мне этот вопрос, помнишь.