Good, but how good?
Pakistan has finally joined the new spectrum club of 3G and 4G mobile services which already has a membership of about two hundred countries. In the budget 2013-14, Ishaq Dar had expected to raise $1.2bn from the auction. Later he raised the expectations to an unrealistic $2bn only to deflate them days before the auction to $1.3bn. Even this turned out to wishful thinking as it did not reflect the socio-economic value of the spectrum. Consequently the government had to be content with $1.182 billion. That the government kept changing its target every few months was another disincentive for potential bidders. Dar failed to attract any more than four competitors who were already well versed in the conditions of the domestic market. Whatever efforts were made to lure the Gulf and Turkish investors, whose presence could have boosted the prices, fell through. While Dar can afford to look at the investment scenario in Pakistan with rose coloured glasses, hardnosed investors thought otherwise. Wary of uncertainties caused by lawlessness, serious infrastructure deficiencies and the PML-N’s knack for clashes with institutions, they decided to keep away.
This should make the finance minister worry about the proceeds of the forthcoming sale of the 31 SOEs which he wants to be completed before June this year. The government hopes to raise some $2.5 billion through the sales. Early this month Dar quoted ‘a recent survey’ by the Japan External Trade Organisation which had reportedly declared Pakistan as the second most favoured destination for investments and the Wall Street Journal which had described Pakistan as the most attractive place for private investment despite difficult security situation. As the outcome of the spectrum auction indicates the somewhat sexed up surveys did not correspond with the realities on ground.
While Pakistan has one of the highest ratios of cellphone users in the region, consumers in the country currently enjoy connectivity at some of the lowest rates in the world. This is going to change after conversion to the new technology which may triple internet cost for users. It is for the operators to consider how to cushion the shock to make the technology available to the vast majority.
The government wants to use the funds raised through privatisation to help bridge the fiscal deficit and meet government expenditures. Many think the government needs to keep a greater check on wasteful spending than it is currently doing. What is more, it has to make a more judicious choice of its development related priorities. The idea of a bullet train might be attractive to some, but shouldn’t it be left on the back burner till the railway system is really made functional? Is it a better idea to buy a fleet of new airplanes than reforming the PIA first?
This criticism seems unfair and unjust. With current law and order situation in the country, expecting major international firms to commit hundreds of millions of dollars on purchase and launch of G3/G4 Spectrum is unrealistic.
Under the circumstances, the bids received are fair. Had the terrorism situation been under control and law and order in a better shape with better economic conditions, same spectrum could have fetched $2.5 billion.
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