Giving up privatisation would be short-sighted policy

Every government in this country from the mid seventies declared privatisation as among its list of priorities. But actual accomplishments in privatisation, i.e. identifying the industrial and services units in the public sector for privatisation, calculation of their assets and liabilities, bid prices for their disinvestment and finally disposing them off to buyers in the private sector, continue to be slow processes although each government in this period typically established an official privatisation body with the name of privatisation committee, commission, et cetera to spearhead privatisation .
Thus, the outcome of privatisation efforts after nearly thirty-five years of the start of the process in Bangladesh is not an impressive one. Rather fresh worries have been created about privatisation recently as some ministers made known their intention to resume operation of state control 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), appears to have been purposefully weakened with the responsibility for privatisation shifted to different ministries , according to reports. But the PC was considered to be a more competent body in attempting privatisation successfully.
Thus, these two developments, the indication of a reversal of the privatisation process by reopening shut down industries in the public sector and emasculating the PC, have trigged speculation whether government has lost its zest for privatisation. If it really has lost the enthusiasm, then the same would surely 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. There is time yet for the government to shake off its rethink on privatisation and to resume the process with even greater vigour.
The consequences of an unwieldy public sector in the context of Bangladesh is too transparent. The state owned enterprises (SOEs) are the single biggest drain on the country’s economy. A lion’s share of public resources are required annually to keep them artificially afloat in the economic sense. Under the rules of viable operations or loss and profit, these SOEs became very eligible for closure many years ago. But they were kept alive by continuous massive injections of funds in them 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 nationalised commercial banks (NCBs) hold the lion’s share of deposits from the people. But a major share of the resources of the NCBs has been stuck up as classified loans taken by the SOEs. The chances of the SOEs every repaying these loans is almost zero. Thus, the SOEs are a threat to the country’s financial sector or the banking system.
There is no way for the economy to move forward sustainably till the privatisation need is addressed adequately and effectively. 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 economy supportive activities in different areas. More important would be the environment of competition to be created by privatisation. Presently, the consumers of the goods and services of the SOEs are suckers as in most cases they are forced to pay unreasonable amounts for their consumption. The prices or service charges of products and services respectively from SOEs can be arbitrary to cover losses and unduly inflated production or delivery costs.
In a privatised situation, the private producers of goods or operators of services would be keen to ensure lower costs of production or operation respectively. Besides, they would be also in a keen contest to steal a march over each other by delivering relatively better quality goods and services to their consumers at lower prices. From such competition, consumers are likely to gain in terms of quality and price.
Therefore, the long standing benefits of privatisation are seen as varied and ample. Successful privatisation releases taxpayers’ money for better use and stops the ceaseless drain in the form of subsidies which the people actually pay for inefficient enterprises and the burden to buy their goods and services at undeservedly raised prices and charges. The rearing of the white elephants in the public sector is at the cost of insufficient or reduced spending in vital sectors such as health, education, communication, etc., and the consequent ill effects of the same in curtailing overall economic growth. Lack of privatisation leads to a stagnant economy. The entire population has to suffer the misuse of resources or the corruption of a tiny fraction of the country’s workforce engaged in the public sector industries and services.
Therefore, there must not be any rethink as regards privatisation nor should privatisation proceed in a namesake or lackadaisical manner just to make a point with the donors. Privatisation must be accorded the highest priority and pushed through decisively not by incompetent entities like the government’s various ministries but by the Privatisation Commission which was set up expressly for the purpose and which has the capacities to carry out privatisation in the economically gainful manner. The aim of a reempowered Privatisation Commission should be not speeding privatisation that would create new problems and blunders in the haste but to push ahead with privatisation steadily preserving and consolidating the legitimate needs of the stakeholders and supremely meeting the needs of the national economy.
A false sense of collapse of capitalism and private sector may have been created from recent developments in western countries where governments had to intervene in a major way to prevent the downfall of many private sector giants. But the current scenarios in the western economies are only a corrective phase. Both capitalism and private sector are likely to emerge only stronger after this phase is over. Thus, there is nothing so profound for our policy planners to read from these developments or to be gripped by a false understanding that socialism or state controls of the economy would be the wave of the future.