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Bangladesh - Privatization and adjustment (English)

With persistent inefficiencies of Bangladesh's state-owned enterprises (SOEs) and mounting losses, privatization has become a compelling necessity. While fiscal considerations are important, the principal argument in favor of privatization is improvement in efficiency under private ownership. The outcome of earlier privatization in Bangladesh has been mixed as a result of the weak enabling environment and faulty implementation. The lesson that emerges from this review is that whilst the benefits of privatization are clear, they will become manifest in Bangladesh only if privatization program is managed in a transparent, credible and well conceived manner, the enabling and regulatory environment is strengthened, and competition is encouraged to promote efficiency. The strategy developed in this report, while based on the experience of Bangladesh, draws from the extensive body of international experience. The report proposes a three pronged approach to deal with the SOE sector performance: (a) accelerated privatization of SOEs in manufacturing sector; (b) early privatization of SOEs in other sectors including those in utilities and infrastructure which account for some 80 of aggregate SOE net worth. These need to be included if the Government of Bangladesh (GOB) is to have a credible privatization program; and (c) greater private participation in utilities and infrastructure and enterprise reform of SOEs that will remain under public ownership for sometime. For smaller, more attractive SOEs there will be no shortage of local buyers. However, for the large SOEs such as in telecommunications, electricity and gas, foreign involvement will be essential for their successful privatization. In parallel with the drive to induce greater private participation and stimulate competition there should be a renewed emphasis on improving the operational efficiency of the large SOEs that will remain under public ownership over the medium term. Labor rationalization and related social concerns constitute an important aspect of the privatization process. Labor concerns are not intractable and a sensible privatization program and adequate safety net arrangements can overcome many concerns. The institutional arrangements for privatization have recently been strengthened with the establishment of the Privatization Board. The Board should be given a strong mandate, co-ordinate and implement the privatization program. The GOB needs to issue a privatization policy statement and launch a significant public relations campaign to build a broad-based support for the program.

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Bangladesh - Privatization and adjustment (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/735311468768584845/Bangladesh-Privatization-and-adjustment