GOVERNMENT SHOULD FACILITATE BUSINESS BUT NOT ENGAGE IN BUSINESS

F R Chowdhury

Experience has shown state-owned business suffer from inefficiency, corruption and bureaucratic red-tape. Many public sector organizations are kept alive by injection of state funding. The losses keep on adding up until the cumulative losses reach a stage that it cannot be disinvested. They eventually become a perpetual liability for the State and the Government.

Business in private sector enjoys all the drive, motivation and initiative. Business in private sector has better chances of profit because that is the only way to survive. Based on performance, the share-holders get dividend and employees get bonuses. If there is no profit or loss then the business strategy has to be reviewed. The company may undergo restructuring that often results into job losses. If the business still does not turn around, then it is time to wind up because nobody is going to run it as a charity with their own money. They will look for new avenues and ventures.

However, in the context of developing countries, it is not unusual to see the Government engaging itself in business. This normally happens in capital intensive business where there may be lack of private entrepreneurs. Defence industry is one sector where the Government may find it too sensitive to rely on private sector. It is quite normal to see developing countries having their national airlines owned and operated by the state. In some cases the Government may even take initiative to create a national shipping line. Similar things may also happen in case of heavy industries like steel, fertilizer, oil refinery, ship-building; and exploration and development of oil, gas and other mineral resources. However, two things the Government must ensure. One that Government finds the right professional people to run those industries without bureaucratic interference. Two, Government must not maintain monopoly except defence industries and allow private sector to grow in parallel to the public sector. In most countries telecommunications once operated by the Government have been eventually opened to private sector for competition, technological advancement and better service.

Railway net-work has long been considered as a public service almost everywhere. Things are now changing. In the UK as well as some of the European countries they found a noble way to privatise. While state (Government) retains the infra-structure such as tracks, signalling and station facilities; the actual operations of trains are privatised. Such privatization may take place for individual routes or may be in general for total operation. The operating companies own the engines and coaches, employ the driver and other sales staff; and provides full service. Competition brings in technology and improves the standard of service. Even the railway engineering workshops are sold to private companies who provide the repair and maintenance service to all operators. The potentials of the workshops may also be used by the private owners for many other manufacturing and maintenance work. Such workshops in conjunction with polytechnics and technical colleges can provide planned apprenticeship and other on-the-job training to produce better quality of technicians.

Airports and seaports are being already privatized in many parts of the world. Each state considers its own circumstances and after extensive public consultation decides on the mode of privatization. Some states prefer to keep control towers (VTS in case of seaports) in its own hands. States will positively retain the final say in respect of security matters.

Yet there is another form of privatization. It is commonly referred to as Public-Private-Participation. This is normally done in case of new bridge, tunnel etc. where the Government would make agreement with selected bidder to build, operate and then hand-over as a turn-key project. The bidder arranges for the finance to build the project and then operate for a period of time to recover their investment (through tolls as agreed with the Government) and then finally hand it over to the Government.

Recently I read something very interesting in our newspapers. It reported that none of the 32 parties given licence to build ships for carrying containers from Chittagong to Pangaon terminal have taken any initiative to build any ship, rather trying to sell their licences for good profit. These licences were reportedly issued to people who had no business experience. They got it because of their political link and connections. I got surprised because I knew nothing about this matter before.

The news item has given rise to many questions. To the best of my knowledge there is no legal provision in present merchant shipping or inland shipping legislation for the Government to grant such licence. As far as I understand, transportation of goods and passengers within Bangladesh may only be done on Bangladesh Flag vessels owned and operated by Bangladeshis. To the best of my knowledge there is no other barrier or restriction. However, common requirements such as the vessel being surveyed by competent authority and certified fit (seaworthy) and the personnel being duly qualified under law shall always apply.

We live in a world of open and competitive business, what we call free enterprise. Anyone who complies with all the requirement of existing law can set up a business and operate the same. Why should it require special licence? If there is a demand for movement of containers from Chittagong to Pangaon, I am sure our smart business community will take advantage of the situation and place their vessels. If suitable vessels are not available in the country, they may buy or charter suitable vessels. Since Bangladesh has all the expertise to build such vessels, I am sure that operators would place order for new purpose-built vessels to eventually have a permanent slot of the business. Our naval architects, shipyards and ship-owners are capable of coming with best possible design and size of the suitable vessels. Let supply and demand drive the market. Let the concept of free enterprise economy prevail. Let us not introduce artificial barriers and requirements.

There is more surprise in store. Chittagong Port Authority also wants to engage in the same business. They say they have enough surplus funds to buy such ships and that their act/ charter allow them to engage in such other business. As I understand Government creates different bodies and authorities with different objectives. It already has Bangladesh Shipping Corporation for ocean going sector and Bangladesh Inland Water Transport Corporation for inland sector. It has also another organization known as Bangladesh Inland Water Transport Authority whose duty it is to provide navigational and port facilities in the inland water sector. We cannot think of BIWTA buying and operating ships. CPA is expected to have pilot boats, mooring boats, tugs; water and oil barges for providing all sorts of services a port authority is expected to provide. CPA could even maintain a salvage team to provide service whenever needed. Transportation of goods on commercial basis is not the job for a port authority. I have not heard such a thing before. If we allow that, Bangladesh will have a bad name for centralising everything and the world will condemn us for business monopoly. When the former East European countries are opening up to private business, we cannot go back to those black days. The Government must not allow CPA to indulge into such business venture where they will be always accused of giving favour to their own vessels. The CPA has enough to do with its core business – development of the port and its facilities.

The Government must understand that provisions for more controls, permits and licences make room for more corruptions and bungling. Why should we introduce such licensing when there is no need for such a thing? Let the market force determine the future path. We must not resort to artificial barriers and licences which are undemocratic in nature.

However, now that Bangladesh has excellent ship-building facilities, the Government may consider a ban on import of ships under 5000 GRT.  This will provide support to our industry and employment to our people. The Government should achieve this through appropriate legislation. In past we heard a lot about transfer of fund abroad by over-invoicing. At least this will close that loophole. Corrupt military dictators make money through permits and licences. Democratically elected Government must not resort to such unholy activity.

I shall conclude the article by saying once again that Government should facilitate business but not engage in business (as far as practicable) or create barriers and bottlenecks.

<fazlu.chowdhury@btinternet.com>

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