Performance Analysis of Nonfinancial State-Owned Enterprises in Bangladesh

Abstract

This paper aims to analyze the performance of non-financial SOEs and seeks possible remedial for the problems. State-owned enterprises play a vital role in Bangladesh. After the liberation war in 1971, the Bangladesh government had taken extensive measurements to nationalize some enterprises but due to lack to profitability, accountability, poor management, corruption caused these enterprises to fail in providing enough support to our economy. Bangladesh government has initiated the “Privatization of Public Enterprises” in a massive scale but the performance of these SOEs have not been improved. There are 49 non-financial SOEs in Bangladesh. These non-financial SOEs are classified under seven major sectors- industry, utility, transportation and communication, trade, agriculture, construction, and service. Among these seven major sectors, the service and utility sector have the highest contribution to the public exchequer. Most of the enterprises are facing loss (i.e. mainly industrial sector SOEs) and some others have vulnerable performance. The government is providing a huge subsidy, but the overall performance has not been improved. These SOEs need a reformation in cost minimization, management system, corruption prevention, and most importantly a proper effective policy formulation.

Keywords: Non-Financial SOEs, Nationalization, Privatization, Failure, Remedial Actions