ONCE again, hectic efforts are underway by the new government to implement its left-over agenda of the privatisation programme launched in early 90s. In view of the prevailing socio-economic situation of the country, it is imperative to carry out an analytical analysis of our past experience of de-nationalisation, deregulation, privatisation, downsizing, retrenchments, forced golden handshake schemes and scams of cooperatives and investment companies etc.
Reportedly, two main arguments have been given in support of “Selling the Family Silver”. Firstly, to fill the budgetary deficit and Secondly, to relocate the capital.
If we have a cursory look at our past experience of de-nationalisation of state-owned enterprises, we find that majority of such units were closed down within 2-3 years and they were converted into real estate business. The buyers made fortunes on account of disposing of their fixed assets/ immovable properties. Litigation by the aggrieved parties is still going on in the Services Tribunals, Lower Courts and Apex Court. Pendency of such cases during the last two decades is a clear proof of social unrest in the civil society. Affectees of Cooperatives/ investment companies are living a miserable life provided they are still alive. The poor and the fixed income lower middle class are victims of society due to social injustices although creation of Pakistan was not meant to be a “State for Elite”. Exploitation and illegitimate profit motive is the driving force of private sector in Pakistan which is a great threat to its sovereignty and the country is literally on fire. Such policy ventures for any change in future have lost their attraction for the general masses. Political and business leadership should modify their strategy for progressive developments because political stability and economic progress are inter-dependant.
On the economic front, majority of the world renowned economists agree that economic progress requires balanced growth with equitable distribution. Reduction of poverty, deprivation, income inequalities and regional disparities are the real measures of progress. GDP Growth is not an end in itself unless there is “trickle down” to the poor. Analysis of privatised units in the past speaks volumes for facilitating and encouraging tax-evasion, flight of capital and money-laundering which promoted black economy in the country and now, common man is being burdened to increase resources for the national exchequer.. Package of privatisation stands discredited because it enriches the already affluent.
Key national institutions and state-owned enterprises are over 1000 in Pakistan which play a vital role in economic development of the country. The most prominent sectors are: PSM, PIA, Railways, Energy, Banking and Petroleum etc. Political instability and periodic military takeovers had grossly impeded the strengthening of these institutions in the past. Mismanagement and rampant corruption were encouraged by the previous governments for their own benefits. Competent professionals of impeachable integrity were not appointed on top positions of these institutions and preference was given to those people who committed to involve themselves in corrupt practices and they are responsible for huge financial losses in the major SOE’s.
Although incidence of tax evasion in Pakistan is over 67pc but SOEs pay 100pc tax and utility bills to the Government exchequer. Quality of their products and fair prices are also guaranteed for the benefit of general public. The respective Boards of Directors should be reconstituted on merits to clamp down on corruption and mismanagement. Policy guidelines could also be laid down to exploit the latest technology to promote legitimate business in the country.
Considering the large political risk and far-reaching economic implications, privatisation of SOEs is a dangerous affair that should be avoided.
In this context, compliance of provisions of PC Ordinance 2000 and approval of the Council of Common Interests are also essential. The Quaid-i-Azam in his speech at the opening ceremony of State Bank of Pakistan, Karachi, July 1st, 1948 said that “an economic system based on true Islamic Concept of equality of manhood and social justice must be presented to the world”. One of the main objectives of creation of a separate homeland was to setup a welfare state for the general masses but now the economic-power of the country lies somewhere else. Instead of checking the mismanagement and corruption in SOEs, anti-people policies are being pursued by the new government.
(The writer is former senior banker-cum-economist)
The Nation will welcome more people to express their views on the subject.