The appointment of receivers to industrial enterprises in Bangladesh, often as a response to various disputes, has frequently led to detrimental outcomes. Instead of recovering, many well-established industrial groups have deteriorated into struggling entities under such management.
In most cases, receivership has stifled innovation and marketing continuity, leading to the collapse of businesses that entrepreneurs had painstakingly built. This has exacerbated uncertainties in loan recovery and debt repayment. Recently, rumors of receivership for 10 prominent industrial groups have caused distress among owners and workers alike.
Bangladesh has achieved remarkable economic success over the past 53 years since the Independence, outpacing competitors in economic and social indicators. The private sector, particularly large-scale industries, has played a significant role in this progress. However, mistreatment of businesspeople following certain incidents has harmed both industries and the economy.
Business leaders emphasize that while corruption or crimes by individuals should be addressed, punitive measures must not harm companies, employment, or the economy. Economists echo these concerns, pointing out inefficiencies in state-run corporations that continue to incur losses even while private competitors thrive.
Examples of Receivership Cases
Beximco Group: The High Court ordered receivership for six months across all properties of Beximco Group. While the receivership for Beximco Pharmaceuticals was stayed following an appeal, the order remains effective for other units. Financial struggles have led to worker unrest in multiple factories.
Nagad: A government-appointed administrator was assigned to oversee Nagad, the postal department’s mobile banking service, following alleged financial mismanagement. Transactions and decision-making processes have since slowed.
Premier Leasing: Amid a failure to repay depositors, Bangladesh Bank appointed an administrator in 2020. Many financial institutions face similar risks of dissolution.
Hallmark Group: The infamous loan scam at Sonali Bank involving Hallmark led to both business collapse and unpaid debts. Despite reclaiming some assets through court rulings, legal complexities have hindered their disposal.
Bismillah Group: Another major financial fraud involved fabricating documents to obtain loans, ultimately leading to limited operations and workforce reductions.
e-Valley: This e-commerce platform failed to recover after board dissolution due to operational irregularities. Thousands of customers remain unpaid.
Impact of Nationalization
The experience with nationalized enterprises post-independence reflects similar inefficiencies. Jute mills like Adamjee were nationalized but ultimately closed due to unsustainable losses, costing the government heavily in subsidies.
International Comparisons: China
In China, stringent regulatory crackdowns on private enterprises have also led to massive economic losses. Government interventions in the tech sector between 2020 and 2021 resulted in a combined $1.1 trillion reduction in market value, diminished innovation, and significant job losses.
Government Warnings and Business Concerns
The interim government has warned of potential administrative takeovers in sectors plagued by unpaid wages and labor unrest. However, industrialists argue that such measures might exacerbate challenges rather than resolve them.
Voices from the Business Community
Business leaders stress the importance of treating entrepreneurs as economic contributors rather than political targets. Policies or actions perceived as punitive can damage confidence, deter investment, and hinder economic growth.
Bangladesh Bank’s Stance
Governor Dr. Ahsan H. Mansur clarified that receivership aims to revitalize struggling businesses rather than shut them down, emphasizing the preservation of jobs and economic activity.
The consensus among stakeholders is that while accountability is crucial, protecting industries and employment must remain a priority to ensure sustainable economic growth.
Source: Kaler Kantho
BDST: 1301 HRS, NOV 18, 2024
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