FEATURES NEWS THE RISING NEPAL (DAILY)

Sickness Of Public Enterprise
Causes And Cures

By Khageswor Aryal

PUBLIC Enterprise (PE) became quite popular in 20th century in the developing countries. It has been considered as one of the best effective economic tools for economic development and social justice in the countries.

History

The history of Nepalese public enterprise began with the establishment of Nepal Bank Limited in 1994 B.S. But it was considered as a Public Enterprise only when the government purchased its 51 per cent shares in 2010 B.S.

Government ownership, operational autonomy, legal entity, government control, public responsibility, business behaviour are the key factors of a government enterprise.

These days are in crises of Public Enterprises. It will be a good news to hear that Public Enterprise is in profit. However, the most of PEs are reportedly suffering from economic crises and bearing loss. Some of them have already turned into liquidation. Private companies with small investment in comparison with the public corporations are earning profit and are in the state of sound economic condition. They are giving bonus to their staffs and paying tax to the government. But public corporation with huge investment and using monopoly and support of government are always bearing loss. It has become a mysterious subject.

There are so many criteria of measuring corporation efficiency. The main criteria are profit making, productivity, contribution to the public revenue, employment generation, cost of production, avoidance of wastage, achievement of objectives of its establishment, etc. But government is measuring the corporation's efficiency only on the basis of profit making criteria. It means the public enterprise should invest only in the profitable area. In the non-profitable sector the government should invest and provide services to the people.

It seems the government is not clear about the functions and demarcation between corporation and government department. Some of our ministers say that corporations are white elephants and burden to the country on the one hand while on the other they themselves involve in the corporation's irregularities.

The government also puts burden of new project on the shoulder of the corporation to get commission without its need and interest and some are accepted without identifying local need. The government should make legal framework and create sound environment for growth of public enterprises and industries. It should give necessary direction and guideline to the corporations. But in practice they are not accepting these factors. They don't hesitate to interfere in operational matters like staff promotion, recruitment, training, nomination, transferring, etc. An executive chief appointed by the minister always obeys the order.

Board of Directors is a high level decision making body just under the respective ministry. Almost all top-level decisions are made by the Board. Boards capacity, vision and decision play vital role in the promotion of a corporation. But unfortunately boards are formed on the basis of their role and affiliation with the ruling party rather than judging their professionalism and expertism. This is one of the factors behind decline the organisational growth. Thus, our PEs have become recruitment centre for political workers to make them facilitated.

Executive Chief is nominated on the same way as the board of directors and he/she maintains link within the organisation. Chiefs of account, store, procurement etc. are changed and everything pass through these loophole. Even higher level officials should praise and make those focal point staff happy in genuine work. In this way irregularities take place in PEs.

After the restoration of democracy in 1990, many staff tried to affiliate to political persons. They didn't pay the full attention towards their duties and responsibilities and could not devote their efforts to achieve institution's goal. Commission and corruption became rampant in almost all . Most of the staffs not found in institutional discipline and few who do not have link with upper body and who had no strong source remain honest and obedient. No body listened to their voices. This trend is still continuing in many of the PEs.

Some of the corporations do not have to compete with other organisations. Such monopoly led them to be in decline condition. Private sector organisations have sound and efficient management. They are able to provide best services by utilising limited resources to the customers but on the contrary the government corporations are failing to show their performance in providing service.

So many committees have been formed to find out causes behind the fall in PEs and their cures. They submitted the reports to the government but implementation has not yet been initiated. Dr. Shanker Sharma's "Corporation Reform Suggestion Committee, 2057" remarked in his report that an expert committee should be formed to fix the required criteria and recommend executive head for corporation. The report highlighted that it should be on the basis of expertism and professionalism rather than political affiliation. The present government also announced on corporation reform in its " Economic Reform Programme " and stated to audit the account in the end of the same fiscal year.
If we cannot improve PEs they should be privatised or take into liquidation. It is said that privatisation has been influenced by the international agencies and western countries. It has different forms such as Joint Ownership, Lease, Management Contract and Divesture. Divesture / ownership transfering and Management Contract type of privatisation is being practiced since the eighth five year plan in Nepal. Some privatised enterprises like Hari Siddhi Brick Factory, Bansbari Leather Shoe Factory are falling down instead of improving.

In the case of interest of international group, we should not accept any loans and aids without identifying our need. Before accepting it we have to watch its terms and conditions sincerely. Acceptance of aids is not long lasting way out to develop the country. It is primary cure.

Clear Vision

National policy, concept and vision of the government should be clear in its objective and functional area. Corporations are national property and effective tool for economic development. It provides service to all sector that private sector can't do. We should, therefore, protect and preserve PEs for integrated development of the country and people as well. Creation of sound working environment and honest and hard working employers can be helpful in promoting PEs. For this the government should come up with concrete programmes. Certainly, collective effort and strong commitment, dedication, sincerity and honesty of every individual concerned in this regard, will improve the present situation of the PEs.

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