Analysts underline agency for corporate governance
Tuesday, 29 July 2008

A group of analysts Sunday stressed the need for a central coordinating agency to carry out corporate governance reforms in Bangladesh, reports bdnews24.com.

The concept was floated at a workshop on roles and responsibilities of board members of SOEs (state-owned enterprises), organised by Bangladesh Enterprise Institute and Agrani Bank Limited.

Finance adviser AB Mirza Azizul Islam inaugurated the day-long workshop at the BEI.

In his speech as chief guest, the adviser said SOEs had "neither equity nor efficiency".

"Inefficiency of the SOEs is displayed by the massive loss they make and in terms of equity, government subsidy for them is on the rise."

Mirza Aziz said the board members of SOEs should look into governance issues, instead of being concerned with day-to-day operations.

"They should focus on setting performance indicators, monitoring actual compliance with those indicators and lastly, identify strength and weakness of the organisation," said Mirza Aziz.

Speaking to reporters, the adviser said the government would consider tasking an agency with checking corporate affairs.

There are 44 SOEs and about 200 subsidiary enterprises in Bangladesh, owned by 19 ministries.

SOEs can be grouped into eight sectors: industry, power, gas and water, transport and communication, trade, agriculture, services, construction, banks and financial institutions.

According to media reports, losses incurred by SOEs in last fiscal year amounts to more than 2 percent of GDP.

Speaking as special guest, Siddiqur Rahman Choudhury, chairman of Agrani Bank, said the major cause of SOEs poor performance was lack of good corporate governance practices.

"Better corporate governance in SOEs can increase productivity and create a model to increase pressure on the private sector to improve its own governance," he said.

Choudhury suggested a central coordinating agency to implement corporate governance reforms.

The agency will provide a regulatory framework, promote and monitor compliances of the best practices of corporate governance, he added.

BEI president Farooq Sobhan echoed the former finance secretary and said SOEs account for an important part of the economy.

"The only way these loss-making SOEs can be profitable is strengthening corporate governance practices."

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