Loss-making SOEs should face closure deadline to return profit: Economists

Economists in the country have suggested that the government should set closure deadline for profit return to non-performing State-Owned Enterprises (SOE), which are rife with irregularities and corruption placing a heavy burden on public coffers.

For instance, when most of the private telecom operators in the country are doing profitable business, the state-owned company Teletalk is moving in the opposite direction.

Private telecom companies like Grameenphone, Robi and Banglalink make a profit of around 1,000 crore taka a year, while Teletalk lost 269 crore taka in the 2019-20 financial year.

Thus, in the same financial year, the total loss of 36 government companies was at around 4,000 crore taka.

When asked about the reasons for Teletalk's losses, Posts and Telecommunications Minister Mustafa Jabbar said, “There are logical reasons for Teletalk's losses. The government does not its own network for this operator. Everyone in the villages wants to use Teletalk, but does not get the network.”

Moreover, he added, "In 2016, Grameenphone's investment was 40,000 crore taka, while Teletalk's was 3,000 crore taka. It is impossible to compete with this investment.”

However, the hoped that Teletalk will soon be able to see profit as investment is growing. A project proposal worth 2,200 crore taka has been sent for approval in this regard.

Economists say irregularities, inefficiency and corruption are the main reasons why state-owned enterprises are at a loss. In addition, extreme mismanagement and bureaucratic complexities have rendered state-owned enterprises ineffective. In this case, they have recommended that these institutions should be considered for closure if they cannot return to profit by setting a time limit.

“If you want to know in this context,” the former caretaker government adviser and economist Dr AB Mirza Azizul Islam said, "The main reason for the loss in government institutions is inefficiency and some corruption. There is a problem with manpower recruitment and subsequent performance. There is recklessness of the workers in these organizations. Because there is a lack of accountability.”

He added, “The loss-making organizations should be given a timeline. If they do not turn around in time, they can be left to the private sector. Because year-after-year the government cannot pull losses.”

Former lead economist of the Dhaka office of the World Bank gave a similar opinion.

The cabinet meeting on November 2 approved the profit and loss of all government companies and institutions.

According to the finance ministry, among the top 10 loss-making government companies were Basic Bank and Krishi Bank.

Krishi Bank surpassed Basic Bank in losses and occupied the top position. The loss of this bank was 1,314 crore taka while Basic Bank incurred a loss of 319 crore taka last year.

Moreover, Rajshahi Krishi Unnayan Bank, which is in the field with various programs for agricultural development, also incurred a loss of around 36 crore taka.

Jute Mill Corporation incurred a loss of about 7 crore taka. And the loss of Bangladesh Textile Mills Corporation stands at 263 crore taka.

LP Gas Limited although expanded by doing natural gas-centric business, last year lost 3.5 crore taka.

According to the data, the other organizations on the list of losses include almost all the institutions of the Ministry of Industry.

Shahjalal Fertilizer incurred a loss of 264 crore taka, Chittagong Urea Fertilizer 146 crore taka, Jamuna Fertilizer 72 crore taka, Ashuganj Fertilizer and Chemical Company 72 crore taka, Palash Urea Fertilizer Factory 6 crore taka and Urea Fertilizer Factory 184 crore taka.

Even during a booming cement demand, state-owned Chhatak Cement Company incurred a loss of 40 crore taka in the last financial year.

Several other government-owned industries are following the same path. Of these, Bangladesh Insulator and Sanitaryware Factory 19 crore taka, Osmania Glass Seat Factory 11 crore taka, Atlas Bangladesh 3 crore taka, Eastern Cables 13 crore taka, Eastern Tubes 4 crore taka, Karnafuli Paper Mills 20 crore taka and Bangladesh Blade Factory 4 crore taka.

All the 14 sugar mills are under the control of the Ministry of Industry are in loss year after year. Of these, North-Bengal Sugar Mills made the biggest loss last year at 95 crore taka.

Mobarakganj Sugar Mills incurred a loss of 93 crore taka, Rajshahi and Natore Sugar Mills 74 crore taka, Joypurhat Sugar Mills 6 crore taka, Panchagarh Sugar Mills Tk 72 crore taka, Rangpur Sugar Mills 61 crore taka, Shampur Sugar Mills 63 crore taka, Setabganj Sugar Mills 63 crore taka, Thakurgaon Sugar Mills 60 crore taka, Pabna Sugar Mills 61 crore taka, Kushtia Sugar Mills, Faridpur Sugar Mills 80 crore taka and Jhilbangla Sugar Mills 72 crore taka.

However, it must be noted that a profit of around 15,000 crore taka came from 85 state-owned companies came last financial year.

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