Finance ministry identifies weaknesses of state-owned enterprises, suggest remedies

The finance ministry recently came up with a report on 10 state-owned enterprises (SOEs) and autonomous entities, rating their performances and gauging weaknesses saying the Bangladesh Overseas Employees and Services Ltd (BOESL) and Bangladesh Shipping Corporation were found to be highest scorers in the study.

Bangladesh Forest Industries Development Corporation (BFIDC) got the lowest 2.28 mark in a scale of 4 while BOESL scored the highest 3.63 marks in the finance division evaluation conducted under a massive initiative called Strengthening Public Financial Management Programme to Enable Service Delivery (SPFMS), engaging experts in their respective fields.

The independent evaluation process dubbed as Strengthening of State-owned Enterprises Governance Scheme was carried out for 2021-2022 fiscal under the SPFMS, having eight schemes with a major objective to streamline their financial and operational management.

According to the rating the Bridges Authority secured the third position getting 3.44 marks followed by Chattogram Port Authority scoring 3.20.

In terms of scores Khulna Development Authority (KDA), Bangladesh Petroleum Corporation (BPC), Bangladesh Small and Cottage Industries Corporation (BSCIC), Bangladesh Power Development Board (BPDB) and Bangladesh Parjatan Corporation followed them all getting scores below 3.

In terms of business strategy and institutional governance, BSCIC got the lowest mark while the PBDC is in most dilapidated state as far as financial indicator is concerned.

BPC was found to be most inefficient SOE in terms of governance.

Officials said the evaluation was carried out on the basis of four indexes – business strategy, operational efficiency, financial indicator and institutional good governance while some of these are commercial entities and rests are partially commercial with public service obligations.

The evaluation team was comprised of professionals, technical experts and business leaders alongside officials of cabinet division and concerned ministries.

"The prime objective of the evaluation is to improve the efficiency, transparency, accountability and overall performance of SOEs and Autonomous Bodies (ABs) to ensure good governance," spokesman for the Strengthening of State-owned Enterprises Governance Scheme under the SPFMS Tajul Islam, a finance division deputy secretary, told BSS.

Officials familiar with the evaluation said in most cases they observed the SOEs should reduce their operating costs to make them viable.

It also asked them to take appropriate steps to comply with the relevant international accounting standards (IAS), International financial reporting standards (IFRS) and resolve the financial anomalies mentioned in their 2021-22 audit report.

They identified that the BPDB and BPC's cost of sales or services and financial expenses increased significantly as they incurred huge operating loss as well as net loss.

The BFIDC, Parjatan Corporation and KDA also incurred operating loss, though they earned net profit during 2021-22.

"BPDB, BPC, BFIDC, KDA and Bangladesh Parjatan Corporation must take effective measures to recover their operating loss," one of the study team members said.

The study suggested Parjatan Corporation to adopt a long-term plan and initiate eco-tourism, rural tourism, and community tourism in the country.

For the BPDB, the study recommended implementation of the enterprise resource planning (EPR) software as per their target to run its operational activities smoothly alongside intensifying efforts to reduce their system loss within the acceptable range.

To improve operative income of KDA, automation process should be implemented for all types of revenue collection to provide reliable
and quick service to the stakeholders.

"Financial Statements of the KDA appear to have been prepared without due attention to international financial standard," the report commented.

The report also found BFIDC's financial statements to have lacked appropriate standard while suggested it take initiatives to upgrade and adopt the modern technology for rubber processing and furniture manufacturing plant to reduce the processing loss as well as produce modern design and quality rubber and furniture products.

"The entity shall undertake a modern and appropriate business plan to export more rubber," it added.