Usually the public Enterprises are established for production and marketing of fundamental goods and services in a suitable rate. The provision of services by public enterprises is a common practice in Europe and elsewhere. Usually the practice is highly significant in communist countries.
In Nepal in the mid 1950s, it was observed that the public enterprises were essential. Though Nepal is a country with mixed economy, in that time it was hard for any individual or private group to start the business providing basic goods and services to the people. Accumulation of capital from private sector was difficult.
The state took the initiatives; result of which is the establishment of public Enterprises. Public enterprises in Nepal in the past had contributed a lot to the people and the national economy. The government had established enterprises to provide and supply food products, petroleum products, basic medicines, convenience trading of imported goods, means of air and land transportation, means of communication, electricity etc. But in present scenario in almost all sectors there exist private national and international companies in the market.
Because of the tough competition, many public enterprises are in loss. The performance of public enterprises weakened over the 2007/08 fiscal year, as 15 companies suffered losses leading to a decline in the volume of combined profits. Only a very few corporations are in a position to pay revenue to the government. Majority of them are hard pressed to sustain even everyday administrative costs. Most public enterprises have very weak financial position and lack professional competence. Because of the complicated bureaucratic structure and political appointment of the head of the corporation, most of the corporation lacks professionalism, experts and competence.
The account updating, final and internal auditing is rarely completed in time, which has given avenues for financial indiscipline and mismanagement. Major factors for such dismal performances are the low capacity utilization, poor competitive capacity, lack of professionalism, weak managerial capability, delay and untimely decision making, lack of risk taking capability to mention a few. There is a need to adjust the role of enterprise in the economic development of the country in a manner to suit a liberal, open and competitive economic system and, therefore, in such a context, the aggregate achievement of the public undertaking’s goals/targets is not found to be satisfactory one.
The main reasons for unsatisfactory performance standard are inability to operate commercially, excessive employees, obsolete plants and machineries, inability to operate in a competitive environment and gradual minimizations of the objectives and justifications for which the public enterprises are established. In present scenario that Nepal has already become a member of World Trade Organization (WTO), many of the public Enterprises have lost their substance. Most of them can be symbolized as a means of exploitation on government budget.
The government to some extent had realized the fact and enacted the Privatization Act to transformation of public enterprises to the private gradually with certain procedures. During various phases of privatization though some public Enterprises are privatized, the conditions of others became more pathetic that the officials do not show their concern on its functioning assuming that there is no work until and unless it is privatized.
Again public enterprises are by definition intended to be operated in the public interest but in Nepal it is rather a means of political game. From enactment of the special act, incorporation and to the appointment of the head of the corporations, all decisions are led by the ruling government. The decision and policies changed with the change of faces in the e-government.
Thus public Enterprises in Nepal is facing many challenges like privatization, political interference, corruption, competition, no proper monitoring and auditing systems etc that they have been converted to white elephant rather as aimed as service provider to the people.
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Autor(en)/Author(s): Aruna Joshi
Quelle/Source: Telegraphnepal, 25.04.2009
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