Late last year, the Prime Minister directed the ministry of textile and jute to 'reclaim' the mills and industries from private entrepreneurs who had failed to resume their operation as per agreement of disinvestment. It is not yet known whether or not the ministry could complete the job.
Forty-seven state-owned jute mills and factories were sold out during the period between 2009 and 2013 either without inviting tenders or in non-transparent ways. Quite a number of SoEs (state-owned enterprises) were privatised unlawfully by the ministries concerned bypassing the Privatisation Commission (PC).
It is alleged that some unscrupulous persons under the guise of promoters bought those mills and factories at a nominal price, taking advantages of the privatisation programme. Later, they used the public properties as a tool for making money.
Since 1982, as many as 134 jute and textile mills of the public sector were divested. Of this, 48 mills and factories were handed over to the private sector during the time of former minister Abdul Latif Siddique alone, who was then in charge of the ministry concerned.
As per directive of the Prime Minister, the ministry was scheduled to get back over 100 industrial units, including the 48 textile and jute mills, under government ownership. Among them, 70 mills that were disinvested in violation of the agreement with the government appear to be non-existent. Those exist in paper only, according to reports.
On the land of such mills, various establishments, including houses, have been built up. Some entrepreneurs were reported to have 'bought' the SoEs at nominal prices, allegedly in connivance with a section of corrupt PC officials. Such allegations suggest that even the face value of a disinvested unit was several times more than its sold-out price.
Lack of coordination among various public sector agencies and inaccurate valuation of the SoEs hindered the process of privatisation in a transparent manner. The functional role of the PC was also largely unclear. This was partly because of the fact that no firm signal about the future of privatisation was available from the government.
However, the government did re-open some of the closed jute mills in order to rejuvenate the ailing jute sector. But many loss-making entities in the public sector are still responsible for causing haemorrhage to the public exchequer. Inefficient management, corruption and worn-out machinery have been sapping the vitality of many public sector mills and factories. Such industries have not even been modernised with the change of time.
Some major sectors were slowly opened to private entrepreneurs -- both domestic and international. For example, the government declared a policy of allowing the private sector to set up power generation companies to produce and sell power to the government. Approval for such companies has already been given and more may come in the future.
The natural gas and oil exploration business was also made open to the private sector entirely and it appears that this sector is attracting some foreign investment as well. The telecommunications sector was also privatised and a number of private sector telecom operators are now operating in the country.
Meanwhile, the government has reportedly merged the Board of Investment (BoI) with the PC in order to address some pertinent issues. The merged entity, renamed as Bangladesh Investment and Industrial Development Authority (BIIDA), is expected to coordinate and harmonise all trade- and investment-related activities of the government and private agencies responsible for raising the level of investment in the economy.
Reports say BIIDA may have powers and functions to give registration to new investment proposals and provide one-stop service to clients. It will also coordinate the investment-related requests with other organisations like Bangladesh Export Processing Zones Authority (BEPZA), Bangladesh Economic Zones Authority (BEZA) and such other bodies.
The new organisation has been designed on a Malaysian model to meet the emerging challenges arising out of a growing interest of many foreign investors from Asian countries and beyond to make Bangladesh their new investment destination. The main focus of the proposed BIIDA will be to give quick and efficient services to foreign and local investors by removing all kinds of bureaucratic hassles.
Past experiences suggest that many good and viable projects ended up in utter failure due to alleged indifference on the part of the government high-ups, coupled with non-cooperation of different ministries. If the authorities concerned could successfully accomplish the task of reclaiming land of the mills and factories from the 'errant' private sector entrepreneurs, such land will better be utilised for leasing those to the foreign entrepreneurs who want to invest in Bangladesh.
It was witnessed that many overseas investors came up with fresh or reinvestment proposals in Bangladesh, but they got discouraged due to unavailability of land. If foreign investors get land and other facilities such as power and energy, they will feel encouraged to invest in a big way.
Foreign investors are discouraged by land crisis or exorbitant prices of industrial plots in Bangladesh. In spite of having huge potential, land crisis stands in the way of industrial growth, leading to diminishing the scope of employment, the economy's vital driving force.
Though the government has long been inviting foreign entrepreneurs to make more investment in Bangladesh, foreign direct investment (FDI) is not drawn at an optimum level due to land crisis at different export processing zones (EPZs), especially in Dhaka and Chittagong. Land crisis has turned so acute that authorities concerned had to reject the investment proposals of some large international companies.
The government is, of late, planning to create Economic Zones (EZs) in 22 places. Of them, the government is expected to build 19 EZs while three more EZs will be set up under private initiatives. The reclaimed land of the divested mills and factories could be turned into EZs and leased out to the prospective investors for setting up industrial units.