Short and long term gains
Mohibul Hassan Chowdhury, London School of Economics and Political Science (LSE), UK
One of the key obstacles towards triggering any sort of dynamism in our lethargic public sector is the opposition from populist political and union leaders. Take our nationalised commercial banks for example, any move to privatise them, or even a management change, instantly prompts angry reactions from powerful union leaders and their allies in main stream politics. Last year when there were suggestions about privatising nationalised Janata Bank, together with the Bank's CBI, the Chittagong Mayor quickly voiced his outrage threatening that any such move shall be contested with full might. Soon afterwards I went to Bangladesh and confronted the Mayor and tried to convince him that the long history of our stagnant public sector has only one answer, that is, taking the politically incorrect but economically sound decision of abrupt restructuring. Sadly but not surprisingly, the result of our conversation was his regretting that I was not being concerned about the hundreds of people who would lose their jobs. His concern was partly based on the fact that the bank might be sold at too cheap a price by corrupt policy makers and officials and jobs would be lost. I failed to convince him that the nationalised banking sector has about 40% non-performing assets due to dodgy debts and unless an entrepreneur or a consortium of them are encouraged to takeover at a significantly reduced hence a 'just' rate, hardly anyone would come forward. He argued 'when evaluating the price of a venture that is up for sale, there is no transparency and proper valuation', and that if he could run the Chittagong City Corporation which provides service as well as generates its own income without increasing tax for last nine years, why can't the government be more active and do the same. For him, failure of the government's administration/management cannot become a reason for job loses of many and the general inefficiencies.As the debate became more heated, I could not continue longer as I did not want to be seen as being unsympathetic towards many people being unemployed. Hence I could not explain him why I thought a vibrant and competitive financial sector translates into better performance in other sectors of the economy and that will create more jobs than that would be lost temporarily. I only thanked him for doing what he does with Chittagong City Corporation, which is an extra ordinary and unique example of being the best service provider in Bangladesh and for which he was rewarded and appreciated by the electorate for three consecutive terms. The moral of the story is, sometimes it is hard for many in our political establishment to digest the fact that the private sector is far more efficiently run than nationalised industries, and you simply can't change this 'top heavy', inefficient, unaccountable army of bureaucrats who are in charge of the public sector, into becoming more entrepreneurial and actually work! Meanwhile, many popular and even sincere politicians would base their logic for opposing privatisation on personal or public sentiment. Dare anyone sacrifice short term gains for long term aims?
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