Reforming SoEs  

Published: July 01, 2018 21:33:34 | Updated: July 03, 2018 22:13:03


The importance of the state-owned enterprises (SOEs) has diminished over time with the private sector assuming a dominant role in the economy. Yet some SOEs are making a notable contribution to the economy, especially in the power and gas, transportation, communication and service sectors. But factors such as mismanagement, inefficiency and financial irregularities have been eating into the vitals of a number of SoEs. And their failure is reflected in the accumulation of huge debts to the government and banks and the subsidies they devour almost regularly.

A number of studies carried out over the years have found the delegation of responsibility and authority in public enterprises not consistent with the managerial need for devolution and decentralisation. While field officers remain responsible for implementation of various programmes, much of the authority and power remains vested in the top officials at the secretariat. The required authority is not delegated to people who are assigned to oversee the operations of SoEs. Concentration of power and authority at the top level in various ministries often saps the drive and dynamism at the field level where it is most needed.

The effectiveness of SOEs has been greatly impaired through curtailment of their autonomy and postings of civil service bureaucrats having little managerial or professional skills in top positions. Back in 1989, a USAID/GOB study on public administration efficiency showed fundamental weaknesses in the bureaucratic control of public enterprises, centralised authority in decision making, lack of confidence in delegation of power, lack of professional knowledge in the ministries and anomalous positions in different cadre services. It has been observed that the intensity of control by the ministries/divisions in day-to-day operations has gradually increased in recent times.

The extensiveness and intensity of bureaucratic control leave very little room for applying intelligence, innovation and risk-taking. Innovative qualities and entrepreneurial spirit are therefore replaced by a rigid bureaucratic attitude in the administration of public enterprises. Although control creates an impact on accountability, the enterprises and corporations shift the incidents of accountability back to the central ministries as the extent of control and direction is connected with these.

Historically, there have been powerful civil service elites in the country who have wielded considerable power and influence in framing and implementing national policies and in running the government. They have consistently been reluctant to part with their authority, ardently guarding their privileges. They have viewed autonomy and decentralisation of power as a threat to their interest and have always blocked such moves. Thus, because of their opposition, the rules of business for public corporations and enterprises could never be framed. Besides, monitoring has been transformed into a tool for post-facto audit over the years, and not a tool for timely managerial decision making.

It has therefore become amply clear by now that the bureaucratic control structure of SOEs in Bangladesh is not performance-oriented. The detailed means and measures for evaluating and monitoring performance have not yet been worked out properly. A control system which is built around mistrust and oriented more towards delving into procedural omissions and commissions cannot increase work-cum-operational efficiency and improve performance. Consequently, an overhaul and reform of the current management system and administrative practices in the state-owned enterprises of Bangladesh appear to be the only solution to this stagnation. Examples of successful countries like China and India may also be emulated for the purpose.

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