Public Sector Corporations caused $3 billion loss in 2010

[AgNoStiC MuSliM]

Munter for privatisation of SOEs​

AHMED MALIK

KARACHI (December 07, 2010) : The US Ambassador, Cameron Munter, has said that privatisation of state-owned enterprises in Pakistan is one of the necessary components in the broader scheme of economic reforms. Speaking at Karachi Stock Exchange (KSE) here on Monday, he said that, in fiscal year 2010, these enterprises cost the Pakistan government almost $3 billion in state subsidies --twice the amount of Kerry-Lugar-Berman assistance.

"These inefficient enterprises are a major drain on Pakistan's budget, and consume resources that could be more productively used by the private sector". He said that privatisation, in a transparent and open manner, is often an effective way to unlock the productive the private sector". He said that privatisation, in a transparent and open manner, is often an effective way to unlock the productive potential of a nation's resources and add significant value to those very assets.

He said that the government of Pakistan has pursued a significant privatisation program over the last two decades. It has stalled, with no new privatisation's since 2008. This represents another untapped resource that, if employed effectively, could increase Pakistan's capacity to fund additional development spending. He pointed out that the United States is engaged with government officials on all levels to improve the business climate in Pakistan by reducing corruption, improving transparency, and strengthening effective dispute mechanisms.

He said that foreign direct investment flows have shrunk by 60 percent from the levels seen in 2007 and 2008. Some of this is due to the difficult security environment, but Pakistan can also attract investment if its leaders work to combat the corruption and red tape that hamper economic growth and private sector development. Such improvements will encourage long-term investments in Pakistan, which will, in turn, create jobs and lay the foundation for sustained economic expansion.

The US Consul General in Karachi William Martin was also present on this occasion. A large number of KSE members attended the event. Earlier, Haroon Askari, Acting Managing Director of Karachi Stock Exchange in his welcome speech briefed the guests about the KSE and its performance. The KSE member and director Abid Ali Habib in his speech thanked the US diplomats for their visit to the country's premier stock exchange.

Top Stories - Munter for privatisation of SOEs

There you go - an amount almost equal to the entire Pakistani defence budget.

For people arguing that development in Pakistan cannot happen without cutting the defense budget, this should be an eyeopener. Pakistan loses billions of dollars each year supporting inefficient and loss making State enterprises, that are used to pack in thousands of unqualified political workers, and dens of corruption and waste.

Even if we give away these PSE's for free, we save billions each year that can go towards other development programs, not to mention the possibility of these PSE's actually providing efficient services to their customers, the Pakistani Awaam.

 

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There you go - an amount almost equal to the entire Pakistani defence budget.

For people arguing that development in Pakistan cannot happen without cutting the defense budget, this should be an eyeopener. Pakistan loses billions of dollars each year supporting inefficient and loss making State enterprises, that are used to pack in thousands of unqualified political workers, and dens of corruption and waste.

Even if we give away these PSE's for free, we save billions each year that can go towards other development programs, not to mention the possibility of these PSE's actually providing efficient services to their customers, the Pakistani Awaam.

Chill yaar..... Gov. enterprises are like guns. If you know how to shoot it ..you will rule but if you don't know what to do ..it will be no more than piece of metal.
In India we had same issue but in last 10 years we changed scenario. Our Gov. enterprises are in fortune 500 and they are doing excellent. Driving growth of India.
You need Gov. enterprises to secure national interest. There are scenarios where private companies are short of will and fund to secure national interest. For e.g securing energy resources abroad.
Here in India ONGC is doing that work nicely.
second example is Railway .. it is difficult to make profit from passenger devision of Railway specially in country with more lower income group people. Railway needs huge investment to maintain existing infra and to make new one. But one should not try to see it as profit making company , see it as national asset which one need.
Private sector will never enter in to Railway.

Yeah but same time keep it efficient... try to minimize losses , by putting professional administrator as well as running it professionally.

Gov. enterprises should be base for new industries. Once they get excellency in it , they should started transferring it to private sector which will take it further.
don't curse them they are final defense to increase national growth , to generate employment , and can give gov. much more needed money to spend on development budget.

Instead of making them totally private once should go for public - private model. Private skill and government's resources.

 

[justanobserver]

Chill yaar..... Gov. enterprises are like guns. If you know how to shoot it ..you will rule but if you don't know what to do ..it will be no more than piece of metal.
In India we had same issue but in last 10 years we changed scenario. Our Gov. enterprises are in fortune 500 and they are doing excellent. Driving growth of India.
You need Gov. enterprises to secure national interest. There are scenarios where private companies are short of will and fund to secure national interest. For e.g securing energy resources abroad.
Here in India ONGC is doing that work nicely.
second example is Railway .. it is difficult to make profit from passenger devision of Railway specially in country with more lower income group people. Railway needs huge investment to maintain existing infra and to make new one. But one should not try to see it as profit making company , see it as national asset which one need.
Private sector will never enter in to Railway.

Yeah but same time keep it efficient... try to minimize losses , by putting professional administrator as well as running it professionally.

Gov. enterprises should be base for new industries. Once they get excellency in it , they should started transferring it to private sector which will take it further.

Public sector have actually become an asset. These companies have turned gold, they can project national interest like anything!

Sure there used to be lots of loss making PSUs but then the government disinvested a portion of their shares (around 20%), now these companies are in the Fortune 500. Instant privatization is not good, Russia had a bad experience with it

 

[apophenia]

Any rationale mind can deduce that if economy is to be marketized its property rights should be privately owned. we have seen private sectors growing rapidly as they're ever ready in adapting to emerging markets. If our institutions promotes privatization it will encourage market development and strengthen our markets.

 

[johnny boy]

see mate public sectors in india are an asset..........it will all change if u hav efficient administration

 

[ajpirzada]

i have added a poll to it... see what we get out of our enlightened members

 

[TechLahore]

I support privatization, but it needs to be done very carefully. We've had some missteps in the past with the troubles around KESC etc. The bidder must not just indicate a price, but a rehabilitation plan that should be given weight in the eventual decision. Independent evaluators who have industry specific experience should be used to consider these rehab plans. Also, bidders must have prior successful operational experience in countries similar to Pakistan. Personally, I would favour Chinese bidders because they meet most of the criteria above, especially for the Railways.

As for PIA, it can actually be a very strategic deal. If there is a public-private partnership, or a deal whereby a foreign airline is allowed to own a significant stake, this could be leveraged to really supercharge the aviation sector in Pakistan. For example, if Emirates or Etihad are brought on board for this, could the GoP predicate the use of a major Pakistani airport as a second regional hub for these airlines, thus generating significant revenue for the GoP? Could we include fleet upgrades or increased participation of current PIA manpower in the parent airline, thereby increasing remittances to Pakistan significantly? There are lots of things that can be done here... from the additional revenue, we should build smaller airports across the country which can fuel the growth of numerous other private airlines.

That's the way to think about this privatization process. Not just what you can get from a one-time transaction, but how you can align the interests of a financially strong buyer with your own long-term interests.

There's a lot of potential in these deals and it's not just about finding the highest bidder and selling off the assets.