WSJ | Privatizing Pakistan's Economy.

[Kompromat]

September 25, 2013, 12:55 p.m. ET

Privatizing Pakistan's Economy

Islamabad plans to sell 35 inefficient state-owned enterprises.

Sympathetic observers of Pakistan take progress where they can get it. So amid more outrage and tragedy—the Taliban double suicide bombing that killed 85 Christian worshipers at a Peshawar church on Sunday; the Baluchistan earthquake that killed more than 200 on Tuesday—at least there is some good economic news. Prime Minister Nawaz Sharif has launched a major effort to privatize state-owned enterprises that have long stifled Pakistani industry.

Officials have announced plans to sell 35 public corporations over three years, including power companies, Pakistan State Oil, Pakistan International Airlines and Pakistan Steel Mills. These enterprises currently lose taxpayers some 500 billion rupees ($4.7 billion) a year, while delivering poor service. Inefficiencies in energy cause frequent blackouts, and the supply problem is exacerbated by government subsidies that have cost a further 1.5 trillion rupees over five years.

"Billions of rupees spent on government institutions functioning in deficit can be saved each year," Mr. Sharif said Saturday in a national address. He blasted state-owned enterprises for "nepotism, favoritism and financial mismanagement."

Now comes the implementation, which has proved difficult in every attempted round of reform since Islamabad established its Privatization Commission in 1991 (when the industrialist Mr. Sharif was first prime minister).

Already the opposition Pakistan People's Party has threatened to block the national highways in protest. In 2006, when the PPP was last in opposition, it successfully pushed the Supreme Court to scuttle a planned privatization of Pakistan Steel on grounds that officials executed the sale too hastily. Then as now, unions were loudly opposed to any change in the status quo. Since then Pakistan Steel has burned through tens of billions of rupees in losses and bailout funds.

This time around, helpful pressure may come from the International Monetary Fund, which agreed recently to lend Pakistan $6.6 billion over three years, subject to reform progress. Islamabad's new leaders are seeking an additional $6 billion or so from other foreign lenders.

To better impress outside investors and lenders (to say nothing of diplomats), the Sharif government could extend its reform agenda to trade with India. After New Delhi granted most-favored-nation trade status to Pakistan in 1996, Islamabad was supposed to reciprocate in 2012 but never did. The excuse was India's nontariff trade barriers, but in reality the government bowed to domestic agricultural interests.

Neither country is a hero here, but the upside is clear: Normalized cross-border trade could amount to $40 billion, up from $3 billion today, according to the Woodrow Wilson International Center for Scholars.

Mr. Sharif has a long and mixed political record, and terrorism of the sort seen Sunday could derail his third premiership. But with growth down since 2008, privatization is a laudable first step toward revitalizing Pakistan.

Review & Outlook: Privatizing Pakistan's Economy - WSJ.com

 

[AUz]

IMF giving 'danda' in the butt to privatize Pakistani economy...PML(N) following.

Western world has CENTURIES of corporate-tradition...with top class companies like Boeing, Dell, Microsoft, Apple, Lockheed Martin etc etc working under bestest of the minds...not as mere 'family businesses'

I wonder how privatization experience would turn out to be for a country like Pakistan. Probably bunch of family businessmen would buy steel mills, PIA, and power generation companies-- and their next generations will have our balls for free.. lolol

Anyways, Goodluck Pakistan. I hope things go well...

Pakistan must have a healthy, private, competing industry owned by brilliant, able Pakistanis.

Khawaja Saad Rafique is turning things around for Railway? I heard no privatization for railways though?

 

[niaz]

Privatization is mostly a good thing. Any government is essentially meant to provide a peaceful environment for private enterprise to flourish. Ideally government should only control:

1. Defence
2. Internal security (Police & Judiciary)
3. Foreign policy
4. Control of import & export mainly to get income from it. ( Custom & Excise duties)
5. Central banking / currency. Meaning control of fiscal & monetary policy.

Some would add telephone, construction of roads and railways to it. These are means of communication which affects all citizens and private ventures may make the same too expensive. The same could be said about Education & Health.

One can successfully argue that gov’t has no business running anything else. However this goes against the grain of Socialist philosophy and highly centralized systems where it is the gov’t who decides how and where an individual will live, where he would work and which hospital he would go if he falls sick etc. Workers in the gov’t run industries will always reject privatization because in a private company they will have to earn their keep or lose their jobs.

Experience of nearly 100 years after the Bolshevik revolution has conclusively proven that gov’t run organizations are inefficient; give rise to rampant corruption and promotion based on nepotism; thereby killing off merit and competition. This is true all over the world not only in Pakistan. As long as these entities don’t ask gov’t to bail them out year after year, one can live with the situation.

White elephants such as PIA & Steel Mill are not ‘ASSETS’. These are money sucking pits where ordinary tax payer is paying for keeping the umpteen thousands of incompetent workers in job. These establishments are national liabilities and sooner these privatized the better.

However after buying these companies for peanuts; new owners should not come back to GOP asking for hand outs. If this happens; GOP should revoke the sale without any compensation and resell the same to someone else better equipped to run large organization.

Railways IMHO is a different cattle of fish. British left us a very good run railway system. It has been neglected because it was given to an incompetent minister. There must be someone like Lalu Parshad in Pakisatn, who despite all his faults, can turn Pakistan railways around.

 

[AZADPAKISTAN2009]

Our curreny is devalued for reason

When people will come to buy businesses and land it would be substantially cheaper for them as they have a higher currency then pakistani rupee ...


That is why we are constantly getting loans from France, IMF , USA, Japan etc

In the end , when our currency is devalued to great extent buyers will come

Buy the COAL mine in sindh for 5% of its true value
Come buy the Precious metal mines in Balouchistan for 5% of its value
Buy the water producing companies like wapda and charge money from Pakistanis for water


What will Pakistani get ? Minimum wage jobs

 

[Jungibaaz]

Privatisation is the way forward to deal with these inefficient state owned enterprises.
The private sector will keep all of them running in the black.

But that's not to say I don't have some fears, political corruption and stupidity may make us lose more than we ought to.
In the process of privatisation, I am 100% sure that some of them will be sold too cheaply, and other places there'd be corruption bribery and again state owned enterprises being given away.

 

[[Bregs]]

Pak Govt must be a minority stake holder in these state controlled companies instead of selling whole of them to private players, this might make them accountable else rather they taking consumers or common man for a ride

 

[A.Rafay]

Pak Govt must be a minority stake holder in these state controlled companies instead of selling whole of them to private players, this might make them accountable else rather they taking consumers or common man for a ride

Govt is not selling whole entities, PIA is being privatized 26% only.

 

[ziaulislam]

well, if PPPP wants to stop privitzation of stell mills, then sindh govt should buy it