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Shipping ministry's new ship: Buying bankruptcy?
Qazi Azad

          BUSINESS is no joke. If it does not ensure that it will not lose money in purchases such as in buying capital goods and raw-materials, its margin of profit from manufacturing or retailing commodities or sale of any service or whatever is bound to be low or negative.
Most of the state-owned corporations have become bankrupt in this country because of mainly questionable purchases. Money lost in such purchases could not be recovered through the subsequent manufacturing activities and hence the bankruptcy. Prior to the introduction of the free market economy, the manufacturing corporations managed to survive well in spite of such losses as they could fix the prices of their products making allowances for the money lost in purchases. It was the poor buyers who had to bear the burden of their high cost of production, rendered inevitable more often by their questionable purchases. It did so happen either due to corrupt practices or foolishness or under pressure from or influence of the exporting countries or both.
The Bangladesh Textile Mills Corporation (BTMC) has been in the red or bankrupt since long due mainly to the fact that the machinery of most of its mills were procured or their replacement made under so-called commodity aid. This commodity aid usually meant that the aid-giving countries were off-loading their obsolete machinery on a deferred payment basis, which they could otherwise treat as junks. Some of the corporation's mills have been losing concerns right from the first day of their re-opening after the so-called balancing, modernisation and replacement (BMR) undertaken under such commodity aid packages. Spindles newly set up in these mills replacing the old ones often had the primitive rotation per minute (RPM), compared to that of competitive new machines. This inherent non-competitiveness of machinery in relation to up-to-date spindles having several folds higher RPM is one of the basic reasons for the BTMC mills not being profitable and being losing concerns. The BTMC case is one example of money lost in purchases means profit is either meagre or negative.
The current problem of Bangladesh Biman has similarity with that of the BTMC. The nation's flag carrier is supposed to be a pride organisation to enhance the nation's reputation in respect of high quality of everything - cleanliness, service and reliability. At first, Biman replaced its old but dependable 707 jets with some British-made ATPs, which literally earned a nickname in this country as all-trouble aircraft for reasons best known to the airline. The deal involving the procurement of these aircraft made headlines in the late 1980s in the Bangla newspapers, published from East London. The ATP aircraft left Bangladesh air space for good after a lot of public outcry giving the national airline a big jerk by putting it into a situation of having to count loss. Then Biman disposed of some Fokker-27 aircraft citing the need for wide-bodied aircraft. Long after the manufacturing company of Fokkers ceased operation closing its plant for good, Biman purchased two old Fokker-28 medium-haul jets from an Indonesian private company under justifications which may be explained by only those who planned and executed the purchase. Malaysia wanted to buy the Fokker plant, but Netherlands did not agree to sell it to the Southeast Asian nation. Now scarcity of their spares often render these aircraft not air-worthy. The engineers of Biman can say whether flying with them is any more safe. The airline must have been paying an exorbitant premium to the reinsurers abroad, like Lloyds in the UK, for flying these junks. Why should then Biman be not broke? Well, it was practically wingless for a vexing long period prior to the last Eid-ul-Azha and had to confront a lot of embarrassments in arranging Hajj flights. Biman is again in a difficult situation now in maintaining its flight schedule. But we are yet to learn business.
Now the ministry of shipping is reportedly working to further the bankruptcy of the already broke Bangladesh Shipping Corporation. Recent reports have it that the ministry is working to have an ocean-going ship built for the Bangladesh Shipping Corporation. The procurement price of the new ship was fixed in the original proposal at Tk 910 million and then raised to Tk 980 million in a revised proposal and now, after the second revision of the proposal, the price stands at Tk 1.3 billion. The raising of the price in the second revision by 43 per cent in relation to that in the original proposal has reportedly drawn sharp reaction from the parliamentary committee on the ministry.
The parliamentary committee is said to have questioned the rationale for the mysterious increase in the cost of building the proposed ship and warned the shipping minister that he will have to bear the responsibility for any corruption in the particular purchase. The committee has reportedly advised that price of the ship must not exceed Tk 1.0 billion. This decision does not also seem to be in accord with standard business practices. The board of directors of the Bangladesh Shipping Corporation is said to have expressed their considered opinion that buying the proposed ship at a cost of Tk 1.0 billion will not be financially viable. If it is so, what is the justification for moving further for having the proposed ship built at all?
One wonders, what could be the reason for revising the projected cost of building the ship upward in successive revised proposals? One may ask - what does the feasibility report in the latest revised proposal say about the viability of the project? Once the shipping corporation's board of directors has concluded that buying the new ship at a price of Tk 1.0 billion will not be financially gainful, there is no rational justification for going ahead to buy the ship. Should they buy bankruptcy?
As said earlier, business is no joke. If money is lost initially in the purchase of capital goods and raw materials, the business concerned is doomed to be in dire straits. It happened so with most of our state-owned corporations; it did so happen with most of the private businesses, which have defaulted in repaying huge bank loans. Perhaps it happens so with some of the public limited companies, which have sold shares to members of the public through the share markets and fail to declare dividends or declare scanty dividends.
Could it be so that many of them plan to lose money in purchases in connivance with their suppliers for booty and to cheat the creditor banks and the shareholders? The Securities and Exchange Commission and the banks should rather check. Many of the country's sky-crappers, private buildings and cars will have to be dismantled or put on auction if the state resolves to deny benefits of corruption to any of the corrupt persons. There is, however, a primitive prescription to cure the sickness in matter of projects. Let there be a process of stern accountability of those who prepare and sign on the feasibility reports of all failed projects of the past, present and the future. Why not deal a problem at its source like those who wage pre-emptive wars?


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