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Contents Introduction ........................................................................................ 2 What is 'Nationalization' ..................................................................... 3 Process of Nationalization................................................................... 4 Environment, Organisation and Operation ......................................... 5 Arguments of nationalization.............................................................. 6 Nationalization in Bangladesh perspective: Background .................... 8 Objectives of Nationalization in Bangladesh ..................................... 13 Who were the beneficiaries?? .......................................................... 14 The impacts of Nationalization ......................................................... 15 Problems of nationalization .............................................................. 17 Conclusion ........................................................................................ 18
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Introduction Nationalization is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to private assets or assets owned by lower levels of government, such municipalities, being transferred to the state. The opposites of nationalization are privatization and demutualization. When previously nationalized assets are privatized and subsequently returned to public ownership by a later government, they are said to have undergone renationalization or renationalization. Industries that are usually subject to nationalization include transport, communications, energy, banking and natural resources. Nationalization may occur with or without compensation to the former owners. Nationalization is distinguished from property redistribution in that the government retains control of nationalized property. Some nationalizations take place when a government seizes property acquired illegally. Nationalization is to be distinguished from "socialization", which refers to the process of restructuring the economic framework, organizational structure, and institutions of an economy on a socialist basis. By contrast, nationalization does not necessarily imply social ownership and the restructuring of the economic system. By itself, nationalization has nothing to do with socialism, having been historically carried out for various different purposes under a wide variety of different political systems and economic systems. However, nationalization is, in most cases, opposed by laissez faire capitalists as it is perceived as excessive government interference in, and control of, economic affairs of individual citizens. Nationalized industries, charged with operating in the public interest, may be under strong political and social pressures to give much more attention to externalities. They may be obliged to operate loss-making activities where it is judged that social benefits are greater than social costs — for example, rural postal and transport services. The government has recognized these social obligations and, in some cases, provides subsidies for such noncommercial operations. Since nationalized industries are state owned, the government is responsible for meeting any debts. The nationalized industries do not normally borrow from the domestic market other than for short-term borrowing. If they are profitable, the profit is often used to finance other state services, such as social programs and government research, which can help lower the tax burden.
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What is 'Nationalization' Nationalization refers to the process of a government taking control of a company or industry, which generally occurs without compensation for the loss of the net worth of seized assets and potential income. The action may be the result of a nation's attempt to consolidate power, resentment of foreign ownership of industries representing significant importance to local economies or to prop up failing industries. The transfer of a major branch of industry or commerce from private to state ownership or control. The takeover by a government of a private company’s assets and business. Nationalization is a risk to companies doing business in foreign countries that don’t have a strong court system and don’t value democratic principles. A government nationalizes companies in order to obtain their profits and to avoid what it considers to be exploitation of the country’s resources by the foreign company. Nationalization, alteration or assumption of control or ownership of private property by the state. It is historically a more recent development than, and differs in motive and degree from, expropriation, or eminent domain, which is the right of government to take property, sometimes without compensation, for particular public purposes (such as the construction of roads, reservoirs, or hospitals).A bailout is a form of nationalization in which the government takes temporary control of a majority of a company and its assets. Nationalization has accompanied the implementation of communist or socialist theories of government, as was the case in the transfer of industrial, banking, and insurance enterprises to the state in Russia after 1918, the nationalization of the oil industries in Mexico in 1938 and in Iran in 1951, and the nationalization of foreign businesses in Cuba in 1960. In some developing countries, temporary state control of various industrial operations may be implemented to mitigate the
lack
of
a capital
market or
an
insufficient
supply
of entrepreneurs in the domestic private sector, thus allowing for a sufficiently competitive market. Questions of international law normally arise only when shareholders of a nationalized company are aliens (foreigners). In such situations diplomacy and international arbitration ensure lawful payment of fair compensation. Nationalization of companies can have far-reaching consequences, both negative and positive, depending upon the motivations of the nationalizing entities and the impact on shareholders, taxpayers, and consumers.
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The Suez Canal, owned and operated for 87 years by the French and the British, was nationalized several times during its history—in 1875 and 1882 by Britain and in 1956 by Egypt, the last of which resulted in an invasion of the canal zone by Israel, France, and the United Kingdom to protect their interests, which included maintaining a passageway for the shipment of crude oil from the Persian Gulf.
Process of Nationalization As a first step in early February 1972, the planning commission submitted to the cabinet a paper on ‘‘policy options and recommendations for the nationalization of industries” which recommended the nationalization of all enterprise in the jute, textile, and sugar industries with fixed assets of over 1.5 million. The cabinet set up an industrial committee to examine the implications of the planning commission’s recommended proposals. This committee accepted the recommendations of the planning commission, following which Prime Minister Sheikh Mujibur Rahman announced in a policy statement on 26 March 1972 that all large industries and other financial institutions such as banks and insurance and shipping companies with assets of over Tk1.5 million stood nationalized and would henceforth be managed by the state. In all 254 large industrial units were nationalized in the jute, textile, sugar, iron and steel, engineering and shipbuilding, fertilizer, pharmaceutical and chemical, oil, gas and mineral, paper and paper products, and forest industries. In preliberation Bangladesh, there were 12 local commercial banks, which had 1175 branches throughout East Pakistan, and a few insurance companies. All these banking and insurance companies were nationalized. As a result of nationalization, the share of the state in the ownership of all industrial assets in Bangladesh went up from 34% in 1970 to 92% in 1972, correspondently the private sector’s share in industrial assets was reduced from 66% to 8% following nationalization. In order to manage and control the nationalized enterprises, 10 corporations were set up. The chairman of the sector corporations were appointed by the prime minister. The commercial banking sector was organized under 6 banks. The central bank, the Bangladesh Bank, was entrusted with the responsibility for appointing managing directors and general managers and of supervising the nationalized banks. The insurance business was grouped under 2 nationalized insurance companies. In order to meet the financial needs in different sectors-
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such as agriculture, housing, and industry- a number of specialized financial institutions were set up under state ownership – Bangladesh Krishi Bank (Bangladesh Agricultural Bank), Bangladesh Griha Nirman Rindan Sangstha (House Building Finance Corporation), Bangladesh Shilpa Bank (Industrial Bank), and Bangladesh Shilpa Rin Sangstha (Inustrial Loan Corporation). The state also nationalized about 80% of the foreign trade. A Trading Corporation of Bangladesh (TCB) was established for controlling the import business. For handling the jute business, the Jute Marketing Corporation were set up. The nationalization decisions of 26 March 1972 was supplemented by the imposition of ceilings or limits on private investment. Though the nationalization measure drastically diminished the role of the private sector in large industries, many small enterprises still remained in private hands. In July 1972, therefore the state fixed a ceiling of Tk2.5 million on private investment which could grow up to Tk3.5 million through reinvestment of profits. The state under Mujib claimed that the nationalization measure was adopted as part of the AL’s commitment to restructure ‘‘property relations by placing the means of productions under the ownership of the people.’’ The attempt was felt necessary to establish socialism in Bangladesh.
Environment, Organisation and Operation Once nationalization is acted upon, the ownership of the enterprise is transferred to the State. But more than a mere transfer of ownership there occurs a transformation such as: (i) A private property is changed into a State or community property; (ii) Private profit motive and private enterprise as the basis of economic activity are supplanted by a new orientation towards the collective interests based on State planning; private competition is excluded; (iii) The undertakings that are nationalized become legal entities independent of the State but are organically attached to it. No single trend is discernible as typical of innovations in organization and control of the nationalized undertakings. Indeed there is a great diversity in the forms adopted on the implementation of nationalization. Katzarov103 has pointed out three groups of structure and form within the nationalized sector that are distinguishable. The character of these groups are
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largely conditioned by the aim of nationalization in a given country and particularly by the question whether the State is striving to control production and exchange in their entirety as in Soviet Russia or predominantly as in East European socialist countries or only selectively in some of the major branches only as in Britain and France. The wide diversity of the forms of or organization and control and their "frequently paradoxical appearance" is attributed to the exceptional conditions in which they were created.
Arguments of nationalization There are arguments both in fabour and against nationalization. Arguments in fabour of nationalization: The demand for nationalization arose as a result of the excesses perpetrated by laissez-faire capitalism. The onward march of the capitalistic system of production in the 18th and the 19th centuries gave rise to a number of acute social and economic problems. 1. Safeguards the interests of Laborers: Nationalization also came to be regarded as holding the key to better relations between labor and management. Under private capitalism the managers are agents acting for a host of owners. They have therefore to oppose the demands of labor in every case to safeguard the owners’ interests and to keep their own position absolutely safe and clear. This would not be so under a system of nationalized industries, because the interests of the laborers would not be opposed to those of the managers. Both would act on behalf of the nation and get such rewards for their services as the nation is willing to pay. 2. Technical efficiency and lower cost of production: The managers, freed from their tutelage to the industrial overlords, would devote themselves entirely to improving technical efficiency and lowering the cost of production. 3. Cooperation and prosperity for all: The industrial world, under private capitalism, is torn as under by strife and discords. There are frequent stoppages of production or, at least, the quantity and quality of work have to suffer as a result of this bitterness. Nationalization would do away with industrial unrest and usher in a period of cooperation and prosperity for all.
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4. Increased earnings of the State: Nationalization of some important industries would enable the State to earn large revenue easily and without any extra cost. 5. Control over prices of war supplies: During war, nationalization would help because the government could not be forced to pay exorbitant prices for war supplies by a handful of war profiteers. 6. Employment opportunities: In periods of unemployment, people could be given employment expanding the activities of the nationalized industries. 7. Economic and political growth: In short, nationalization would help the State to order the political and economic life of the nation more conveniently both in peace and in war. Without mastery over certain industries, at least, the government would be solely at the mercy of the economic lords. With nationalization the tables are turned and the State can dictate its own terms to those industrial magnates as are allowed to remain.
Arguments against nationalization: Nationalization was a slogan raised by these who were impressed by the wastes of private capitalism and wanted to introduce considerations of social welfare in the management of a nation’s economic affairs. The disadvantages of Nationalization is summarized below: 1. Lack of individual initiative: The men who shout these slogans do not always stop to consider if there can be any progress if individual initiative is stopped. Social philosophers have often pointed out that in a regime of nationalized industries, the spur of individual advancement will never be as powerful as it is today. Men will have a tendency to work in accordance with a dull routine rather than strike out a new path. 2. Lack of freedom: It is only when men can think and act freely as individuals that they can produce new ideas and make new inventions. 3. Lack of Spirit of competition: Then we must not forget that although modem industry is often dominated by monopolies, there is some rivalry among them and the spirit of competition is not entirely dead. 4. Rigid system: State ownership of industries may mean rigid routine and a dead uniformity.
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5. Less intervention of public in economic affairs: Moreover, there is a danger in making the government the sole master of economic affairs. In private Capitalism the government can act as the balance-wheel; if anything goes wrong, we can look to the government for redress.
Nationalization in Bangladesh perspective: Background Bangladesh is among the most recent of the Third World countries which have undertaken a policy of nationalization in some sectors of its economy. within only seventy five days of its inception, a decision was taken to nationalize her banking system, insurance companies and the majority of large scale industries. This was explained in part as a fulfillment of the election promises of the Awami League party which spearheaded the Liberation movement and partly as a means to establish a socialist economic system. The service oriented industries like electricity generation and transport are not included although gas, petroleum refining and marketing and mineral exploration and development are. A Planning Commission as a central planning agency was set up to design perspectives, long term as well as short term economic development programmers and also devise economic policies. The basis of inclusion is that all industries considered come one way or other under the purview of the omnibus nationalization law of Bangladesh known as the Bangladesh Industrial Enterprises (Nationalization) Order, 1972 or more commonly known in Bangladesh as "P.0.27 24 The poor industrial structure, slow economic growth, existence of a sizeable public sector, chaotic political and economic condition, presence of a strong, radical and militant student and labour front, sentiments generally against capitalist owners of the means of production were factors leading to the decision of nationalisation in 1972. Chaotic political condition: The political dimensions attached to nationalisation a major reconstruction program is necessitated after a crisis or instability or a war or in the wake of an independence/liberation movement. Frequently, collaborators of the enemy are to be punished and their "abandoned properties" are seized. It becomes politically necessary to eliminate the vestiges of foreign economic domination. Considerations of strategic defence needs induce the host country to take measures to safeguard the "national interest", to protect the "public domain" and to take such measures as will ensure public control of resources.
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Economic Exploitation: During the British rule, the people of Bangladesh experienced economic exploitations. At the time of the Partition of British India, Bangladesh was one of the most backward regions in terms of economic and industrial progress. Economic policies pursued during Pakistan period did not much help to alter the disadvantaged position of Bangladesh. The rate of increase of the Gross Domestic Product in West Pakistan was much higher than Bangladesh. Differences as regards to the amount of Gross Domestic Product (GDP) and Per Capita Income widened over the years between the two regions. If purchasing power of the currency and the relative price ratios of the two regions are considered including - consumption patterns, the disparity in economic development between the two regions becomes more glaring. The ruling oligarchy of Pakistan manipulated the State power in channeling the surplus of the whole economy in their control. The agriculture sector in West Pakistan received 52 per cent of the international market price for its produce during 1950 and 1965 due to the operation of this concealed subsidy to industry. But the Bengali cultivators received only 44 per cent of the international market price for their exports. The pattern of economic development was directly influenced through resource allocations. During the two decades between 1950 and 1970, the aggregate development expenditure in Bangladesh was less than 50 per cent of the aggregate development expenditure in West Pakistan.
Aggregate development expenditure during the period between 1950 and 1970 was: Sector
Bangladesh
West Pakistan
Total
Public
20639
30827
51466
Private
10934
31986
42920
Aggregate
31573
62813
94386
Bangladesh received 47 per cent of the aggregate financial allocations in three. 70 More than 90 per cent of the defence expenditures were spent in West Pakistan. The actual estimates in the Annual Budgets revealed that the central expenditures were diverted to West Pakistan in a proportion larger than its contribution to the central revenues. The manner in which the foreign economic aid was utilised and disbursed helped to further widen the disparity in economic development between the two regions. Bangladesh received only 20 per cent of
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foreign exchange out of the total availability for the whole of Pakistan and only 4 per cent of foreign aid excluding U.S. Aid .Only 34 per cent of total U.S. Aid for the whole of Pakistan was received by Bangladesh.
INDUSTRIKAL DISPARITY: Bangladesh, inherited at Partition some major industries at least as large as those in West Pakistan. The following table shows the relative position of the two regions in 1947.
TABLE I Number of Large Scale Industrial Enterprises in Bangladesh and West Pakistan in 1947 86
Industry
Bangladesh
West Pakistan
Jute
Nil
Nil
Cotton
10
6
Sugar
5
4
Cement
1
4
Safety Matches
4
4
Total
20
18
But industrial progress in West Pakistan was more accelerated than in Bangladesh. west Pakistan enjoyed a higher rate of structural development. A higher proportion of the more complex, capital intensive and technologically more sophisticated industries were located in West Pakistan which had a more developed infrastructure ready for a more rapid and successful industrialisation at the end of 1970. The following table shows how far industrial production in Bangladesh was outstriped by West Pakistan in 1970:
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TABLE II Production of major manufacturing industries in Bangladesh and West Pakistan in 1970
Product
Unit
Production 1969-1970 Bangladesh
West Pakistan
Cotton yarn
Million pound
106
602
Cotton cloth
Million yarn
59
726
Sugar
Thousand tons
89
551
Cement
Thousand tons
53
2570
Safety matches
Million gros
13
1.2
Resources generated in manufacturing industries in Bangladesh were transferred to West Pakistan as only 2.5 per cent of private industrial assets were owned by the Bengali Muslims. Industries in Bangladesh came to be closely tied to financial and social interests of West Pakistan and failed to contribute towards local capital accumulation or emergence of a dynamic entrepreneurial class in Bangladesh.
Entrepreneurship Vacuum: After the emergence of Pakistan, the strategy to encourage private enterprise and specific government policies providing incentives helped a rapid industrial growth for Pakistan as a whole. A great majority of industrial establishments came to be owned privately. The new class of industrial entrepreneurs in Pakistan period was drawn from the Muslim immigrant traders from India, Burma, and East Africa. They brought some amount of capital and a limited fund of technical and entrepreneurial skills with them. These trading classes preferred to settle down in business in West Pakistan. The centralisation caused to place intending Bengali entrepreneurs in great disadvantage. On the contrary, immigrant entre- preneurs found the location of their industrial establishments in West Pakistan with many advantages. Only a few immigrant entrepreneurs later found it easier to obtain permission for imported machinery or raw materials for industries established in Bangladesh and decided to set up part of the family business there. During the two decades, financial assistance of centrally sponsored financial corporations like the Pakistan Industrial Credit and Investment Corporation, Industrial Development Bank of Pakistan, Agricultural Development Bank of Pakistan and Pakistan House Building Finance Corporation pursued a
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discriminatory policy towards Bangladesh interests. The financial assistance to private sector in Bangladesh was only 34 per cent of the total amount allocated to West Pakistan based clients. Resulting entrepreneurial vacuum in Bangladesh is indicated from the fact that at Liberation Bangladesh found 21 per cent of its industrial establishments, 27 per cent of trading houses and 75 per cent of bank organisations were owned or controlled by non-locals constituting hardly 1 per cent of its population. During liberation war most of these non local entrepreneurs left the country. This entrepreneurship vacuum provoked Mujib for nationalization. Desire to establish socialist democratic era: A belief in public ownership coupled with an erosion in the traditional belief in the infallibility of proprietary rights of the individual, a desire to establish a "socialist democratic state", to gain workers' control over means of production and disenchantment with experiments in cooperatives have acted, at different times, as motivating factors for nationalisation. Besides socialist county Russia supported Bangladesh during liberation war. So Sheikh Mujib took the decision of nationalization as a way to establish socialist democratic era. Unskilled workers: Although Bangladesh had a large work force, the vast reserves of under trained and underpaid workers were largely illiterate, unskilled, and underemployed Inflation: Inflation, especially for essential consumer goods, ran between 300 and 400 percent. Lack of industrial resources: Commercially exploitable industrial resources, except for natural gas, were lacking. War damages: The war of independence had crippled the transportation system. Hundreds of road and railroad bridges had been destroyed or damaged, and rolling stock was inadequate and in poor repair. Cyclone: The new country was still recovering from a severe cyclone that hit the area in 1970 and caused 250,000 deaths Sizable public sector: The industrial policy in 1948 of the Pakistani administration limited public ownership to a few specified fields8. Public sector activities were to consist in high risk capital intensive and technologically complex areas and to areas where otherwise private ownership would enhance concentration of economic power. Policies pursued by the Pakistani administration were, however biased towards fostering private enterprises in the industrial field. This strategy did not help to alleviate the slow growth in Bangladesh. A class of Bengali industrial entrepreneurs did not emerge.
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Objectives of Nationalization in Bangladesh Bangladesh achieved her independence through a bloody liberation war in 1971. She had to sacrifice 3 millions of lives in this war. Civilian people had a major role in this war. They formed Muktibahini which was a major force in our liberation war. The first regime of Bangladesh, Sheikh Mujibur Rahman led Awami League government had to meet demand from various group of people. For this reason, they initiated industrial enterprises which is popular by Nationalization. Objectives of nationalization in Bangladesh is given below: 1. Ambition toward socialism: In the liberation war of Bangladesh, USSR and India gave full support. The movements for liberation gained full involvement of mass people. It got involvement of different socialist party. As a result, various socialist agenda started to embedded into Awami League. After liberation, Socialism was taken as a fundamental principle of the constitution. There were a good support for socialism in the country. In the first regime, nationalization was happened in order to achieve socialism. 2. Fulfill demand of JSD: Jatiya Samajtantrik Dal had a great role in our liberation war. It was mainly a part of then student league, student organisation of Awali League. After liberation war, they started movement for communism. They started violence across the country. To check them, Awami League government took nationalization policy 3. To check anarchy after war: After liberation war, anarchy in the country was a common issue. It was mainly led by JSD and other local organisations. They started to push continuous demand to government.
It was another objective of nationalization in
Bangladesh. 4. Control of huge resources: As Pakistani entrepreneurs went after Bangladesh became independent, there were created a gap in the ownership of industries. It could be destroyed and ravaged by various groups of people. As a result, government had an ojective to take control of the huge resources. 5: Profitability of government: Industries were profitable in Pakistan period. But Bangladesh was not beneficiaries of this profit. As west Pakistanies were the owners of the industries, west Pakistan got benefits. If government took over control of the industries to private section, they could not make profit. To make a good profit, the first regime of Bangladesh took nationalization initiatives.
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6. Development in priority sector: Development in the priority sector is another prime objective of nationalization process. Private sector looks only their profit. But Bangladesh need to meet demand of the wide range of people as she was a war torn country. 7. Decreasing the growing inequality of Pakistan period: In Pakistan era, a growing inequality between the rich and poor was widely visible. It created continuous discontentment among the mass people. It was a major objective toward nationalization policies in Bangladesh. 8. Electoral agenda of Awami League: Nationalization of banks, jute mills, suger mills, insurance companies and other industries was a major electoral agenda of Awami League. To fulfill their electoral agenda, Awami League took nationalization enterprises. 9. To check factional division among freedom fighters: Freedom fighters are the real hero of our country. They had an aspiration toward Awami League government. They wanted to see change in their luck in newly born country. They had a demand for employment in the independent country. There was created factional division among them. To check this, government took nationalization initiatives. 10. Debate for efficiency: As Pakistani entrepreneurs went from the country, there was created an efficiency vaccum. Government could not find efficient private entrepreneur in the war torn country. As a result, government took control of the industries to raise efficiency of the output.
Who were the beneficiaries?? From its inception, I would like to say that nationalization is the method in where private assets are transformed into public assets. In this system govt. takes control of company or industries. Through this system public ownership over the production would be established. Through nationalization, We see,the economic development, well distribution of power, industrial development, public welfare,development of backward area would be increased. But it is evident to us that there is not seen orchestration between govt. and public in nationalization. After the independence war of Bangladesh Sheikh Mujibur Rahman nationalised all industries, all institutions in Bangladesh. We have seen that bureaucratic elites have been more benefited than public in Bangladesh through nationalization. In this
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system, Government wouldn't be able to fulfill the public demands. The government officials take the control of nationalized industrial units. That's why they get huge scopes to make themselves more influential. Thus they involve themselves in corruption. Most of the time, it is seen that through nationalization govt. couldn't do well distribution of property in the public as well as country. When Ziaur Rahman, former president of Bangladesh,privatised all industries, all institutions etc, then individual ownership of property had been established. Through this privatization a good relation between labour & industry would be established. Here it is worth mentioning that Sheikh Mujibur Rahman followed socialist planning in the realm of doing nationalization in 1972. Through it, Though govt. had been beneficiary, the public had been deprived of fulfilling their demands. In sum, through nationalization bureaucratic elites would fulfill their aspirations but not public.
The impacts of Nationalization Nationalization could hardly have happened in Bangladesh fortuitously. As examined earlier, the process of social, political and economic experiences of the people of Bangladesh over past decades helped to mould the values, philosophies and material status which resulted in nationalization being accepted as a major instrument of economic and industrial policy. The political elites explained nationalization in terms of socialistic ideology. But as it will be seen nationalization in Bangladesh has served the purpose of patronizing capitalism under the different regimes irrespective of their apparently dissimilar ideological orientations. Political Patronage : As a result in the initial stage management boards for the abandoned enterprises were set up regionwise under the leadership of officials of the Ministry of Industries.
This seriously overstrained the meagre administrative resources of the
government. These boards were practically replaced by the administrators, specially appointed to manage these enterprises. It was essentially a temporary arrangement. These administrators were mostly selected from the outsiders and out of personal choice of the political leaders without having regard to their educational or professional competence for the position. Benefits for Landowners : The Awami League government attempted to resolve the problem of the rural economy through its decision to abolish land revenue on all land holdings up to about 8 acres. This meant that over three quarters of all cultivated land was
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exempted from the tax without any reasonable basis. In the absence of land reform and to increase agriculture growth the government strategy was to develop the functional cooperative based on modern inputs. Elements of subsidy in the form of cheap credit and underpriced inputs supplied by the public sector agencies tended to concentrate these benefits in the hands of the bigger landowners. Rise of new rich class : In the nationalised sector, political patronage became the chief consideration in the distribution of managerial jobs and licences for industries. A group of new rich class was created who had access to political power and utilised that contact to make their fortunes by working as middlemen between the real business and the government. Promoting capitalist interests : A large surplus in private hands was generated, often at a direct cost to the public sector enterprises. A political commentator observed that the government of the Awami League had nationalised industries and trading houses in order to organise their "open and disguised plunder" of the existing wealth of the nation and in order to promote capitalist interests in a particular manner although they claimed their policy of nationalization as socialist. The nationalization policy of the Awami League helped to promote capitalism and capitalists interests through three different methods of implementation: - Firstly, the Awami League Government made use of its power to appoint administrators for the abandoned and nationalized enterprises. Initially 221 enterprises were placed under the newly created Sector Corporations to run the nationalized industries. The administrators were mostly selected from outsiders out of personal choice of the political leaders without having regard to the educational or professional competence of the appointee. Appointed by political patronage, these
administrators, by and large, proved to be greedy, unscrupulous and
dishonest. - Secondly, distribution of the scarce entitlements in the form of permits and licence was a potent device. In spite of nationalisation of large scale industries, banks and insurance companies, the distribution and marketing channel of the industrial products were left in the private sector. With the connivance of the ruling party the chosen distribution channel could exert monopoly control over the market - Thirdly, the Awami League made use of its labour front to extend the activities of wanton patronage and to paralyse the genuine trade union activities. The natural expectations of the
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workers after Liberation and nationalisation was exploited by the pro-Awami League labour leaders. The members of the labour front of the Awami League and its militant volunteer corps, in the name of maintaining industrial peace, took forcible possession of some of the enterprises and offices of the rival trade unions.
Problems of nationalization Nationalization is considered a important step for acquiring economic development .But in reality it is totally different .Sometimes nationalization creates negative affects in economy .Several problem of nationalization are explaining bellow. 1.Increase in corruption: The nationalized industrial units were handed over to the government officials and it creased the corruption in this sector .Efficiency of the units reduced after nationalization . 2.Fall in production: After the nationalization production of various units decreased and rate of profit removed. The managers of those units did not pay proper attention. 3. Carelessness of labor: after nationalization worker became careless about their duties and this attitude of labor affected the production adversely. 4. Private sector discouraged: The nationalization policy discouraged the private sector and due to this rate of investment decreased. Even the target of private investment in the 8th five year plan could not achieve due to the fear of nationalization. 5. Sick industries: In the short period these industries suffered a loss and were declared sick industries. 6. Bureaucratic complexity: As the causes of nationalization bureaucratic complexity creates in public sector Where bureaucrat tenacious of a strict adherence to his official formalities. 7. Political pressure: political pressure in the process of recruitment and formation of new industry. Both government and opposition party leaders pressurize equally. 8. Absence of integration: As for nationalization different industry come into under the control of government different ministries where they failed to make sure integration.
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9. Lack of competition: In the process of privatization competition occurred between several competitive groups but in the process of nationalization proper competition did not take place in respective sector. 10. Destruction of self freedom: Area of interest of mass people did not take into account .Where failed to chose there selective workplace. 11. Lack of technical knowledge: technically nationalized sector is leg far behind from private sector where private sector employee get much enough advancement in ICT sector rather than government sector. 12. Imprudence: lack of proper competency of running several industrial sector where public officer not much active on respective sector. 13. Creation of unskilled management: As for nationalization unskilled management appear in public sector where absence of outlook is present in several sector. 14. Lack of coordination: In addition the nationalized industries had limited scope to raise capital for long term investment and modernization because they would have to compete with other government spending departments, like education health and advocacy. The result was prolonged period of under investment in these industries.
Conclusion The program me of nationalization in Bangladesh has been plagued by many problems. The absence of autonomy at the corruption and enterprise level and also the involvement of a large number of agencies in the decision making process has been mentioned by many as seriously efficiency of the public sector enterprises. Mainly the nationalized industries in post liberation in the socialist countries during the course of debate over centralized and decentralized planning. Most of decision making these countries have gone through successive phases of bureaucratic centralization and decentralization of the decision making process with regard to management of the nationalized countries. The recent trend is towards a more flexible approach in terms of accommodating both centralized and decentralized planning.Centralised planning provides a general guideline for the whole economy, while decentralized planning is used at the enterprise level in determining level of production,
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marketing of output, purchase of inputs and so on. A similar model should work quite well in Bangladesh .It appears that the question of autonomy and multiplicity of authorities in the decision making process can be relegated to the background, once a smooth coordination among various governmental agencies is ensured. For this clear channels of horizontal and vertical flow of information must be established. Serious problems arise in many strategic inputs into the production and distribution processes are beyond the control of the corporations and enterprises. Therefore, production and distribution process are interfered with due to a bottleneck in the supply of-raw materials, transport facilities, internal finance and foreign exchange. Clearly, some of these are interdependent, though they all depend in turn on the overall state of the economy. The political authorities are said to be contributing to the unsatisfactory performance of the nationalized in three ways these are-(1) there is some amount of indifference on the part of management of the nationalized industries. This is clearly indicated by fact that many of the coercive measures to improve the efficiency of the nationalized industries are yet to adopt,(2)there is considerable scope for conflict between political and administrative decision making and the political authority has done nothing to remove this,(3)interferences from political and trade union leaders are too frequent for the healthy operation of any productive enterprise. Obviously there are no easy solutions to these problems, these are to be solved through the sociopolitical dialectic process.
