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History of industrialization of Bangladesh: British period: The process of industrialization and the growth of industrial capitalism in India was

integrally connected with the consolidation of British colonial rule and the transformation of India from a feudal into a colonial and semi-feudal country. Industrial capitalism emerged and developed in India in conditions basically different from those in which it had developed in the West. It arose in a dependent country, ruled by foreign power and so was unable to develop along independent lies. Colonial rules transform the Indian economy into an appendage of the metropolitan economy. Secondly, unlike in Britain, industrial capitalism grew in this country not by beginning of 20th century Jamidars like Monindra Chandra Nandi of Kashimbazar, Brajendra Kishor Roy Chowdhury of Mymensingh, Biprodas Paul Chowdhury of Nadia, Taran Gobinda Chowdhury of Pabna and others invested in industrial enterprises. Thus industrial capitalism did not make its appearance in this country in the course of the normal evolution of industries as it did in the countries of the West. No anti feudal, bourgeois social revolution, or technical leap has prepared the way for its emergence. On the contrary, it was transplanted from an advanced capitalist country to a dependent feudal country to cater the imperial needs of the former. This is what industries in the 19th century were and Bengal was no exception to this pattern. Pakistan period: After the partition of Bengal in 1947, East Pakistan inherited a small share of industries of Bengal. East Pakistan got none of 108 jute mills, 18 iron & steel mills and 16 paper mills of Bengal. Only 90 of Bengals 389 cotton mills, 10 of its 166 sugar mills and 3 of its 19 cement factories fell in the territory of East Pakistan. The cement factory Chattak, Sylhet had to depend on limestone supplied from Ashaam, India. The cotton mills of East Pakistan had to depend upon imported raw materials. The 1951 census revealed that East Pakistan had 63,234 unskilled non-agricultural labourers, 115,480 skilled labourers engaged in manufacturing sectors, 184,535 mining and quarry workers and 121,522 professional persons. The manufacturing sector comprising mainly of food, drink and tobacco processing units employed a total 602,875 persons (4.67% of the total labour force), of whom 433,148 were involved directly in production process and 172,727 in subsidiary activities. There were a total of 360,603 cottage enterprises which employed 949,074 persons. Of the manufacturing units only about 200 of the enterprises used power. The industrial development policy of the Govt. of Pakistan had the manufacture of arms and ammunitions, hydroelectric power, railway wagons, telephone, telegraph and wireless reserved for the state and encouraged the private sectors to come up with industrial ventures in all other sectors. 24 industries including jute, textiles, silk and rayon

were subjected to a central planning. The Govt. created the Pakistan Industrial Development Corporation (PIDC) and Pakistan Industrial Finance Corporation (PIFC) to promote industrialization. PIDC made significant contribution in the establishment of industrial units in sectors such as jute, paper board, cement, fertilizer, sugar, chemicals, textiles, pharmaceuticals, light engineering and ship building. The central Govt., however, followed a discriminatory policy. It favoured West Pakistan in industrial development and drained resources from East Pakistan for the purpose. It also directed most of Pakistans external resources to the cause of industrial development of West Pakistan. Non-Bengalis dominated the list of entrepreneurs coming up with new industries ventures in East Pakistan. Local capital hardly got opportunity to flourish. The central government had control over product pricing to such extent that products growth or manufacture in East Pakistan was sold in the local market at prices higher than in West Pakistan. Despite all these impositions, however, some progress was made in industrialization in East Pakistan during the period between 1950-1970. The number of industrial enterprises in East Pakistan in different sector in 1970 was Enterprises No Food manufacture 408 Beverage.... 6 Tobacco processing. 26 Textile....... 792 Footware..... 204 Wood and cork 14 Furniture..... 17 Paper products 33 Printing and publishing . 14 Chemical products.. 572 Petroleum & coal products. 3 Rubber products.. 3 Mineral products. 53 Basic metal.... 35 Metal products 257 Non-electric products. 88 Electrical machinery 34 Transport equipment. 65 Miscellaneous... 166

Official sources of the government, however, that in 1970, there were 1580 manufacturing units in East Pakistan that employed 206,058 persons. Their gross output was valued at taka 3.636 billion and the value added amounted to taka 1.708 billion. The share of the manufacturing sector in the GDP was 8.9% in 1970 as compared 3.9% in 1950. Bangladesh period:

The industry sector was severely damaged during the war of liberation in 1971. Replacement and rehabilitation cost estimated for the industries were estimated at taka 291 million of which taka 223 million was estimated for public sector enterprises. The public sector started in 1972 witho o o o o o o 72 jute mills with production capacity of 79,200 tons. 44 textile mills with production capacity of 13.4 million pounds. 15 sugar mills with production capacity of 169,000 tons. 2 fertilizer factories with production capacity of 446,000 tons. 1 steel mill with production capacity of 350,000 tons. 1 diesel engine with production capacity of 3000 barrels. 1 ship building yard (Khulna dock yard).

Mills and factories in the public sector, however, soon become loosing concerns largely because of mismanagement and leakage of resources. The Govt. had to quickly review its policy of dominating the public sector. Although it continued to exercise control over industries, it soon raised the allowable ceilings of private investment. However, this did not bring much improvement. After a series of adjustment and temporary changes in state policy, the Govt. finally adapted a new industrial policy in 1982 following which 1076 state-owned enterprises were handed over to private owners. Unfortunately denationalization created a new problem of industries. They started getting sick because of failure of the inexperienced owners. Many of them were more interested in getting credit cash from selling of the cheaply acquired properly than in sustaining and developing the industries. The result was that industrial sickness affectedo o o o o o o o 50% of the industries in food manufacturing. 70% of them in textile industry. 100% of them in jute. 60% in paper and paper based industry. 90% in leather and rubber products. 50% in chemical and pharmaceuticals. 65% in glass and ceramics and 80% in engineering industries.

The largest group of industries in Bangladesh fall in the category of small and cottage industries and their number in 1984 was 932,200 units of whicho o o o o o o 20.7% were in handlooms. 15.4% in bamboo and cane work. 8.1% in carpentry. 6.1% in product from jute and cotton yarn. 3.4% in pottery. 3.2% in blacksmith. 0.3% in oil crushing.

o 0.8% in bronze casting and o The rest in others type of crafts. Weavers work in all most all parts in Bangladesh but the majority concentrated in the area like Norshingdi (Baburhat), Homna, Bancharampur, Bajitpur, Tangail, and Shahjadpur. However, silk has flourished in Rajshahi and Bholarhat, cigar in Coxs bazaar, coil in Barisal, checked carpet in Rangpur, pottery and bamboo works in Comilla, mat and cane furniture in Sylhet, bronze casting in Nawabgonj. In 1984 Bangladesh had 58 textile mills with an annual production of capacity 106.2 million pounds of yarn and 63 million meters of cloth. Textile is a public sector dominated in Bangladesh and like most other sectors textile also brings losses which amounted to taka 353.4 million in 1984. Problems of this sector include poor management as well as difficulties in developing skilled workers and storage in supply of raw materials and power. Bangladesh had 70 jute mills with 23,700 spindles in 1984. These employed 168,000 workers and 27,000 other staff and used 545,000 tons of raw jute. But their production was less than the 561,000 tons figure in 1969, when the country had 55 jute mills with 21,500 spindles. The jute industry in the country has been declining in the face of competition from India and China and in an international situation where jute goods are being replaced by cheap and durable plastic products. Development of new industries like Sulphuric acid, chemicals, paper, caustic soda, glass, fertilizer, ceramics, cement, steel and engineering in Bangladesh was slow in the period before 1985. There were only two plants for production of sulphuric acid in the country in 1985 with a total production of 6,000 metric ton while the production of this important ingredient for industries like soap, paper, cast iron & steel was 6,500 metric ton in 1970. Production of caustic soda in 1985 was 6,787 metric ton. This was used almost entirely in paper mills. Because of the availability of sand, salt and limestone within Bangladesh, the country has a good prospect in developing its glass industry. Dhaka and Chittagong are the two largest centers for this industry. The only automatic glass factory that time (Usmania glass sheet factory at Kalurghat, Chittagong) produce 12.9 million square feet of sheet glass. The fertilizer industry in the country uses natural gas as the main raw materials. The fertilizer factories produce a total of 808,660 metric ton in 1985. 741,463 metric ton was urea, 9,634 metric ton was ammonium sulphate and 57,563 metric ton was TSP. the three major factories were at Fenchugonj, Ghorashal and Ashuganj. The total production of cement in the country in 1985 was 293,000 metric ton. The major industries were at Chattak and Chittagong. Pakshi of Pabna, Chandraghona of Chittagong hill tracks were the main location for

paper production in Bangladesh. The total production of paper in 1985 was about 75,000 metric ton. In 1985 Khulna had a news print mill with a production capacity of 55,000 metric ton and a hard board mill that produce 1,621 square meters of hard board. Around this time Bangaldesh also had some mills for production of particle boards and partex. The country also achieved self sufficiency in producing matches. The major centers of match production were Dhaka, Khulna, Khepupara, Chittagong, Sylhet, Bogura and Rajshahi. The total production was 1.3 million gross boxes in 1985. That year (1985) Bangladesh had 8 sugar mills with a total production of 87,000 tons. The sugar mills of Bangladesh produce only white plantation sugar. Gur is also produced which is sweater than sugar because of some impurities present in it. The sugar mill at Dorshona also produces alcohol, methylated spirit and rectified spirit besides pharmaceutical grade sugar. The iron and steel industry in Bangladesh were mostly under the steel and engineering corporation and were concentrated in Chittagong & Dhaka with a few enterprises with Khulna, Kushtia and Bogura. Industries marked by notable development in Bangladesh in the mid 1980s which includeso o o o o o o o o Ship building. Automobile assembling. Oil refinery. Insulators and sanitary-wares. Telephone equipments. Electrical goods. TV assembling. Cigarettes and Vegetable oil (REVO- Refined edible vegetable oil).

The country achieved a significant success in developing garments industry in this decade. The Govt. followed a strategy of plant growth with free-play of market forces. The manufacturing sector showed some growth in the 1990s. The share of the manufacturing sector in countries GDP grows to 11% in the 1996. Investment in the manufacturing sector was taka 57.8 billion in 1997 as compared to 22.6 billion in 1991. The share of the public sector in the total investment came down to 8.63% in 1997 compared to 37.03% in 1991. The Govt. continues to implement a privatization programme to hand over public sector enterprises to private owners. Simultaneously the Govt. implement a programme of rehabilitation of industries identified as sick because of various reasons. Industries identified for rehabilitation under the programme in 2000 included-

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1 cement factory (Annual production capacity 0.15 million tons). 1 paper mill (Annual production capacity 30,000 tons). 1 news print mills (Annual production capacity 52,000 tons). 6 cigarette factories (Annual production capacity 630 million sticks). 8 oil mills (Annual production capacity 934,818 tons). 2 food processing unit (950,000 tons). 2 fish processing unit (6.9 million tons). 2 cold storages (5.9 million pounds). 1 bevarage producing unit (4.3 million bottles). 3 chemical industry units (26,000 tons). 1 glass factory (97.5 million feet) and 12 pharmaceutical industries.

In 2000 the total employment in industry was estimated as 600,000 of which the privatization sector employed 500,000. Industrialization efforts of Govt. during 1990s included investment in balancing modernization and reconstruction, creation of new industrial state and export processing zones, promotion of private investment and attraction of foreign direct investment. The policy changes have been in line with trends in international market, recommendations of donor countries and agencies of liberalization of trade and investment and structural adjustment programmes. Almost at regular interval of 4 to 6 years after 1982, the Govt. adapted new industrial policies with increased incentives for private investors from both home and abroad. These policies have some common aspects such as Incentives to promote industrialization in rural and remote areas and To encourage entrepreneurs to use local raw materials and the efforts towards development of a system that would help in development indigenous product as well as transfer of modern technology. 07.12.12

The Political Economy of Public Enterprise Privatization: The Case of Bangladesh

Abu Elias Sarker University of Sharjah, United Arab Emirates Historically, public enterprises were the mainsprings of the Bangladesh economy. However, largely because of the poor performance of public enterprises and the worldwide trend towards privatization, successive governments in Bangladesh have embarked

on selling these enterprises to the private sector. Despite concerted efforts, the privatization program in Bangladesh has failed to deliver the promised results. This paper analyzes the problems involved to improve our understanding of the privatization process in developing countries. It argues that many of difficulties in privatizing state-owned enterprises in a country such as Bangladesh are caused by problems in the political economy of the country, rather than problems in the privatization process itself. The paper identifies a number of problems such as the presence of speculative buyers, preponderance of the international donor agencies, nexus with state politics, the sale of enterprises and bank loans, social costs of privatization and weak organizational strength. Finally, the paper makes suggestions for improving privatization including strengthening political will and commitment, enacting a comprehensive privatization policy, reinvigorating the institutional strength of the privatization commission, improving the monitoring of the performance of the privatized enterprises and making the process more transparent and open {} Delegation of Authority to Public Enterprises in Bangladesh: A Case Study of Bangladesh Steel and Engineering Corporation Ahmed, Nasiruddin and Bhuiyan, Md. Aminul Islam (1988) Key Words: Delegation of power; Public enterprises; Improvement Background Public enterprises played an important role in the economic development of most of the LDCs. Originating partly from colonial heritage and partly from historical necessities, the dimensions of public enterprises in Bangladesh owed largely to ideologies of rhe state and development policy of the successive governments. Lack of adequate delegation of authority both administrative and financial was viewed to be one of the major reasons for poor performances of the public enterprises. This case study was based on the hypothesis that the performance of public enterprise was being adversely affected for lack of adequate decision-making authority. The objectives of this study were: to identify the relationship between ministries and public sector corporations in order to discover as to how far authority delegated to the corporation was being exercised by them; to find out the reasons for any gaps between theory and practice of delegation of authority and its implications; and to identify the areas where further delegation of authority was needed for smooth conduct of business of a corporation. . Methodology Out of 50 public sector corporations existing in Bangladesh, Bangladesh Steel and Engineering Corporation (BSEC) was studied and analysed. Since procurement of raw materials, spare parts, etc. was one of the most important functions of BSEC, the study

focused on procurement from abroad. The study confined with the procurement made by BSEC and procurement made with the approval of the Ministry of Industry. The first case was selected on random sampling, while the second one was selected purposively. Both cases that were related to Financial Year 1986-87, was the latest year with respect to which information on procurement was available. In addition, the researchers interviewed selected personnel and studied respective records, rules, regulations, reports, etc. to meet the desired ends of the research. Findings Issues identified in the study included (i) lack of adequate delegation of financial power at the appropriate level: delegation of financial powers to enterprises for import of raw materials was limited e.g. up to Tk. 2 crores; beyond this financial limit, Corporation undertook procurement function for the enterprises places under them. In such cases, it was evident that it took more than a month to take a decision on procurement; (ii) according to the Cabinet Division procurement agencies of the government/autonomous bodies would have to first obtain the right of refusal system (ROR) from the Ministry of Industries before they place orders for their requirements with the foreign suppliers. This system was meant to act as a check on the use of imported materials when local products could meet the requirements. However, the study observed that this system, itself was confusing and addedto delays (iii) lengthy and cumbersome procurement procedures also added to the problems as analysis of the cases revealed that BSEC followed the Manual of Purchase Procedure (Part I & II) which contained eight stages that involved a lot of time in decision making process; (iv) the study revealed that sometimes undue external pressure also created procurement delays; and (v) cumbersome control mechanisms of foreign exchange further delayed the procurement system. Recommendations The study recommended that (i) for the sake of economic and timely purchase, corporations should be delegated adequate financial authority so that they could purchase according to their needs. This financial power should be revised from time to time considering the price position of materials in the international market; (ii) the ROR needed to be rationalised. There should be specific list of items requiring ROR. Both procurement proposal and ROR might be handled simultaneously. Since almost entire raw materials of Steel and Engineering sector had to be imported, the system of ROR became redundant, so at least for this case ROR might be abolished; (iii) procurement procedures needed to be simplified so that the public enterprises could take full advantage of the international market in matters of procurement by making need based purchase; (iv) in order to enable the public enterprises to import from the competitive and cheapest source, attempts should be to make available sufficient foreign exchange to them in time; and (v) performance contracting might be applied to resolve the conflict between the public enterprises and the government.