Privatization of Public Businesses in Bangladesh Essay

Privatization of Community Enterprises in Bangladesh:

Problems and Prospective customers

By Tanweer Akram*

*Academic Address:

Office of Economics

Columbia University

New York, BIG APPLE 10027

United states

E-mail: [email protected] edu

JEL: L33

Dated: October six, 1999

This paper can be downloaded from the

Cultural Science Exploration Network Electric Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=272605

two

Privatization of Public Enterprises in Bangladesh:

Problems and Prospects

ABSTRACT

The performance of the public enterprise sector in Bangladesh is poor. The ineffectiveness of public enterprises places a fiscal burden, diverts limited resources coming from growth-enhancing open public spending to unproductive financial assistance, and influences the country's industrial competition. This daily news identifies the prospects, concerns, and stumbling blocks of privatization program and policies in Bangladesh. Firstly, the stylized facts about general public enterprises are provided and the standard issues in privatization insurance plan as it relates to Bangladesh are discussed. Second, the preconditions for effectiveness gains arising from privatization will be evaluated. Third, the role of general public enterprises inside the labor marketplace in Bangladesh is evaluated. Finally, the political plus the economic factors that can balance the potential performance gains from privatization in Bangladesh happen to be critically analyzed. (JEL L33) 3

Privatization of General public Enterprises in Bangladesh:

Challenges and Potential customers

1 . INTRO

This paper examines the scope for gains from your privatization of public corporations in Bangladesh. The newspaper discusses the key economic issues related to privatization of open public enterprises. Bangladesh's privatization programs and procedures are placed in the context of its personal economy.

2 . PUBLIC CORPORATIONS IN BANGLADESH: SOME FACTS & RECORD

Public enterprise activity is about 6 percent of the Major Domestic Item (GDP) and the fixed resources represent 25 % of Gross Fixed Capital Formation. Community enterprises work in vital industrial portions of the overall economy, particularly in manufacturing, and in providing infrastructure services. The net well worth of community enterprises is around US$ 3. 6 billion (approximately 18 percent of GDP). In 1996-97, the annual loss of the community sector way US$ 250 million which can be equivalent to 30 % of the country's annual project disbursement help and almost 1 percent of its Low Domestic Merchandise. 90 percent of the general public enterprises have borrowed remarkably from the nationalized commercial financial institutions. There are nearly 300 community enterprises. These firms happen to be organized in to 39 businesses which are umbrella entities; 4 nationalized banking institutions; three insurance corporation; two agricultural bodies; and three development finance institutions. Public corporations are prominent in the pursuing sectors: Electrical power, gas, and water; railway; airlines and civil modern aviation; petroleum; telecommunication; and banking companies and insurance. 80 percent of public venture assets happen to be in the utilities and system such as power, gas, telecoms, and transport.

There has been a long-term decline in the revenue of community enterprises. The poor performance of public enterprises has indirect and direct costs. People enterprises require budgetary support. They create a serious danger to the financial security with the 4

nationalized commercial banking companies and, certainly, the economic climate. There is also personal costs of public enterprise failure. The inefficiency of public enterprises leads to bigger production costs and lessens the competition of Bangladeshi products in international markets. A good example of the inefficiency of public business is the system-loss of electrical energy transmission. Generally, public companies in Bangladesh earn possibly very low costs of financial profits or incur high losses. They may be inefficient, all their subsidization weakens its money position and their poor overall performance adversely influences...

References: Mahmood, Syed Akhtar. " The Performance of Selected Open public Sector Sectors in

Bangladesh: 1972-1985, ” unpublished G. Phil., thesis, University of Oxford, 1989.

London: Open public Policy Middle, 1985.

Cambridge, Massachusetts: UBER Press, 1988.

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