DHAKA: Government’s latest ultimatum for a bunch of state-owned enterprises to offload shares on the stock market got a clear naught as the deadline ended Sunday without any compliance.
Despite strong warnings from the government, not a single SOE did float shares on the market in the last six months thanks to bureaucratic foot dragging and lack of coordination among the ministries concerned.
Finance Minister AMA Muhith from a high-level meeting on January 12 finalized the decision to offload the shares of 26 state-owned companies that include Bakhrabad Gas, Sheraton Hotel, Sonargaon Hotel, Essential Drugs Company, and the Shipping Corporation of Bangladesh.
The meeting had asked the companies to take effective steps to offload their shares within six months and declare themselves as corporate entities.
As per the directives, all the formalities should have been completed by July 11 and the companies should have landed on the capital market. But no progress has been made so far, sources at Dhaka Stock Exchange (DSE) said.
Chief Executive Officer of the DSE and stock market expert Prof Salahuddin Ahmed Khan blamed bureaucratic tangles as the major bottleneck for the decision to be implemented.
“This is nothing but bureaucracy that has created the complexities,” said an irate CEO, as their effort and waiting ended in a flop.
The first decision to offload shares of the public companies was taken in 2005 and subsequently 56 state-owned institutions were listed.
Four years have elapsed since, but the stock market saw a few companies that include DESCO, Power Grid Company, Titas, Jamuna Oil and Meghna Petroleum.
According to DSE estimate, the state-owned companies so far have realized Tk 20,000 crore offloading their shares and spent the amount for their infrastructural development. It is expected that the remaining companies could fetch as much as Tk 50,000 crore once they make debut.
The stock market is not suffering from cash-flow crisis, but it lacks strong companies with better fundamentals.
Prof Salahuddin believes if the Finance Ministry’s decision has to be implemented, the Industries Ministry and companies concerned should come forward.
“There should be coordination among the Ministries as well,” he said.
He also identifies lack of initiative on part of the Securities and Exchange Commission (SEC). “The SEC should follow up with the companies and sit with them, if required.”
More importantly, Prof Salahuddin suggested, the top policymakers in the government must have strong commitment.
BDST: 1500 HRS, 12 JULY 2010