Dhaka Leather Company, a state-owned company established in 1996, began operations to produce and sell processed leather and leather goods. But production at the factory was suspended just six days after it opened due to a shortage of raw materials. Although Dhaka Leather Company has remained completely shut since 1998, the government continues to cover the company’s operating expenses and employees’ salaries and benefits.
The same picture can be seen at Chhatak Cement Company Ltd. Production there has been suspended for more than five years. Although around BDT 15 billion has been spent on renovating the factory over the past decade, the company has yet to resume production. An initiative to restart production by bringing limestone from Meghalaya in India has also effectively stalled. Meanwhile, multinational company LafargeHolcim, operating in the same area, is running its business by bringing limestone from India and producing clinker.
Dhaka Leather and Chhatak Cement are not the only examples. Many other non-financial state-owned enterprises, organisations and corporations operate without generating income. The government instead spends a substantial amount of money every year to run these entities and pay their employees’ salaries and benefits. With the government issuing a gazette notification on the ninth National Pay Scale, these entities’ expenditure on salaries and benefits will double.
According to data from the government employees’ portal, 311,387 employees are working at state-owned corporations and autonomous bodies. Data from the Finance Division show that Bangladesh has 230 non-financial state-owned entities, and the government has allocated BDT 893.38 billion in subsidies for these entities in the budget for fiscal year 2026–27.
The Finance Division highlighted the fragile financial and business condition of state-owned enterprises in several reports. Of the 174 state-owned entities that received operating grants in the 2024–25 fiscal year, 88 had no income of their own — nearly one in every two entities. The remaining 86 entities, meanwhile, had a combined income of only BDT 20.52 billion.
After assessing the credit risk of 122 state-owned agencies and enterprises, the Finance Division said 19 were at very high risk with outstanding loans of around BDT 2.22 trillion combined. Another 24 entities were in financially distressed condition, while twelve entities appeared on both lists. A total of 31 entities consequently fell into either or both categories of very high credit risk and financial distress. Around 27,000 people are employed by these entities.
Former Senior Secretary of the Finance Division Mahbub Ahmed told Bonik Barta, “Some entities in the power, energy and fertiliser sectors need to remain under state control for strategic reasons. Beyond these, entities that have been incurring losses year after year and have no prospect of becoming profitable in the future should be relinquished or shut down.”
He further said, “The government’s job isn’t to run businesses. Closing such entities can’t be done simply through administrative or procedural decisions; it requires a political decision. If these entities remain operational, the government has to bear various expenses every year, including salaries, benefits and retirement benefits. This puts significant pressure on the government budget. Yet a large proportion of these entities are inefficient and loss-making.”
Noting that many countries have managed to shut down or restructure such state-owned entities through strict political decisions while others have failed to do so, Mahbub Ahmed added, “This isn’t a problem unique to Bangladesh. The World Bank and various other international organisations have conducted studies on loss-making state-owned enterprises in many developing countries and recommended reforms.”
The government spends substantial amounts of money every year on loss-making and financially distressed state-owned entities. The pressure on this expenditure will increase further following the recent rise in government employees’ salaries and benefits. Even when many of these entities have no production or business activities, the government still has to bear their employees’ salaries, allowances and other operating expenses. This is increasing pressure on the state budget, while inefficient entities continue to operate under the same structure year after year instead of being reformed or restructured.
Professor Mustafizur Rahman, distinguished fellow at the private research organisation Centre for Policy Dialogue (CPD), told Bonik Barta, “Many entities have become a source of financial drain for the government. So a comprehensive reform plan needs to be developed for them. Some entities could be transferred to the private sector, while others could remain under government ownership but have their management handed over to the private sector. Shares in some entities could also be offloaded.”
He also noted, “For entities that own large amounts of land and other assets, we need to consider how these can be used more effectively. But when transferring land or assets to the private sector, one thing must be ensured: land belonging to industrial enterprises shouldn’t later be used solely for real estate businesses.”
Noting that reforming state-owned entities has now become a particularly important issue for the government, the economist added, “On the one hand, the government needs to increase its revenue, while on the other, it must exercise greater restraint in its expenditure. In this situation, there’s no alternative to effective reform to stop the financial drain caused by state-owned entities.”
The total liabilities of the 19 entities classified as being at very high risk amount to around BDT 2.22 trillion. The list includes Bakhrabad Gas Distribution Company Ltd, Bangladesh Power Development Board (BPDB), Chhatak Cement Company Ltd, Eastern Tubes Ltd, Gas Transmission Company Ltd (GTCL), Maddhapara Granite Mining Company Ltd, Joypurhat Sugar Mills Ltd, Khulna WASA, Kushtia Sugar Mills Ltd, Mobarakganj Sugar Mills Ltd, Natore Sugar Mills Ltd, Pabna Sugar Mills Ltd, Rajshahi Sugar Mills Ltd, Renwick Jajneswar & Company Ltd, Shyampur Sugar Mills Ltd, Thakurgaon Sugar Mills Ltd, Zeal Bangla Sugar Mills Ltd and Teletalk Bangladesh Ltd.
State-owned Teletalk Bangladesh Ltd is lagging behind its competitors in the country’s telecommunications sector, and ranks last in terms of both subscriber numbers and revenue. The Finance Division has also classified Teletalk as a company at very high risk. The company incurred a loss of BDT 1.55 billion in fiscal year 2024–25.
Teletalk Managing Director Nurul Mabud Chowdhury told Bonik Barta, “A substantial amount of investment is required continuously to expand the network and improve service quality. The government is trying to secure this investment. Several new projects are also in the pipeline. It wouldn’t be appropriate to compare us directly with other operators without adequate government investment. While other operators have 22,000 BTSs (towers), Teletalk has only 6,000.”
He also said, “In line with government directives, Teletalk has been providing internet and voice services to ordinary people at one-third the cost charged by other operators. Unlike other commercial operators that operate solely on a profit basis, Teletalk also has to fulfil various social and government policy obligations (compliance) imposed by the government. Despite receiving no government subsidy, the company is operating on its own income.”
Noting that Teletalk’s financial position has improved steadily over the past two to three years, he said, “The company’s losses have now fallen below BDT 1 billion, to around BDT 700 million. This loss is mainly accounted for by depreciation and amortisation of assets.”
He expressed hope that Teletalk would become a profitable company and be able to contribute a share of its profits to the government once its network expansion and new projects are completed.
There are 24 non-financial state-owned entities classified as financially distressed, 12 of which are also on the list of entities at very high risk. The entities classified solely as financially distressed include Bangladesh Inland Water Transport Corporation, Bangladesh Steel and Engineering Corporation, Coal Power Generation Company Bangladesh Ltd, Dhaka Leather Company Ltd, Faridpur Sugar Mills Ltd, Gazi Wires Ltd, Payra Port Authority, Rangpur Sugar Mills Ltd, Setabgonj Sugar Mills Ltd, Training Institute for Chemical Industries, Usmania Glass Sheet Factory Ltd and Bangladesh Hi-Tech Park Authority. All three of these entities’ net income, operating profit and operating cash flow are negative. They consequently have to rely on government subsidies, grants or loans to maintain their normal operations.
The government has built 39 hi-tech and software technology parks at a substantial cost. However, these parks have failed to generate the expected investment, employment and growth in the technology sector. As a result, the financial difficulties of the Bangladesh Hi-Tech Park Authority have become increasingly pronounced. The Bangladesh Hi-Tech Park Authority, which is classified as financially distressed, incurred a loss of BDT 1.18 billion in fiscal year 2023–24.
Bangladesh Hi-Tech Park Authority Chairman Fazlur Rahman told Bonik Barta, “The main reason the Hi-Tech Park Authority is financially loss-making is the huge amount of investment involved. The previous government may have planned these investments and expected them to generate employment, but those plans weren’t aligned with reality. So far, apart from three parks in Jashore, Chattogram and Natore, the other facilities couldn’t be developed in a way that makes them suitable for investment. Efforts are now underway to make the existing parks and those under construction more attractive and realistic for investors. These are essentially the reasons why we’re running at a financial loss.”
State-owned enterprises play a crucial role in macroeconomic stability and revenue management. But many such entities in Bangladesh have become sources of significant structural and financial risks. Several major state-owned enterprises in the power, energy and transport sectors have been incurring losses consistently. Every year, the government has to allocate substantial amounts from the national budget to these entities through subsidies, grants or loans, creating significant pressure on public revenue management.
In most cases, the government provides “sovereign guarantees” against loans taken by state-owned enterprises. If these entities fail to repay their loans, the liability falls directly on the government, creating a major contingent risk for revenue management. Against this backdrop, stakeholders have called for comprehensive initiatives to reform state-owned enterprises.
A recent World Bank study has also highlighted the financial difficulties faced by state-owned enterprises. According to the study, the combined losses of non-financial state-owned enterprises stood at BDT 441 billion in the 2023–24 fiscal year. During the same period, the government’s total net financial support to these entities, including subsidies and development assistance, rose to around BDT 882 billion, creating a substantial financial burden on the government to keep them operational in addition to their losses.
The World Bank study also highlighted governance problems in the financial management of state-owned enterprises. Fragmented legislation, excessive bureaucratic control, political influence, weak oversight and a lack of financial transparency were identified as some of the key reasons for their poor performance. Financial pressure is particularly high in the energy and power sectors.
To address these challenges, the World Bank recommended restructuring commercially viable entities, establishing independent and professional boards of directors, making the disclosure of financial information mandatory, reducing political interference and gradually introducing competition in monopolistic sectors. It also recommended gradually privatising or shutting down entities that have been incurring losses for a long time and are not strategically important.
Attempts were made to contact Finance Division Secretary Dr Md Khairuzzaman Mazumder for his comments on the overall situation, but he did not respond.