For the country
In the backdrop of the promulgation of an ordinance by the President converting Pakistan International Airline Corporation into a public limited company to be called Pakistan International Airline Limited Company (PIACL), paving the way for the sale of its 26 percent shares, the entire opposition in the parliament led by PPP has picked up cudgels against the move. All the opposition parties staged a walk-out from the National Assembly and also boycotted the assembly proceedings. They returned to the house after a briefing by the Finance Minister and an agreement on the formation of a parliamentary committee to deliberate on the issue and present its recommendations on resolving the tangle.
The issue of privatisation is a very vital national issue and therefore needs to be understood in the context of historical perspective and the rationale behind it. The PPP which is now vehemently opposing the privatisation of PIA was the architect of the nationalisation of the industrial unit during the regime of Zulfikar Ali Bhutto, an initiative which was taken on purely political considerations rather than being rooted in sound economic considerations. The measure undoubtedly proved disastrous for the economy and there are no two opinions about its debilitating impact on the economic profile of the country.
Over the years the state owned enterprises (SOEs) became a burden on the economy instead of contributing to its health and progress. Therefore the step badly needed to be reversed. Privatisation or de-nationalisation of SOEs commenced in 1991 during the first Nawaz government. It was vigorously pursued by Musharraf regime. The ranting testimony to nationalisation being a wrong step and privatisation of the state-owned enterprises being the preferable option to revitalise the sagging economy came when even Benazir Bhutto during her second term as Prime Minister privatised 20 industrial units, one financial institution, one electric power plant and 12 percent shares of Pakistan Telecommunications Ltd.
It is estimated that SOEs are collectively incurring an annual loss of between Rs400-500 billion, more than 25 percent of the total revenue receipts of the government in a fiscal year. Keeping them afloat, therefore, constitutes a huge drain on our precious national resources which could have been invested in vitally needed projects of socio-economic development. The government, presently, is running 126 such entities including big money guzzlers like Pakistan Steel Mills, PIA, PSO and Railways among others. Pakistan Steel Mills alone suffered losses to the tune of Rs200 billion during the last five years and the government had to give four bail-out packages amounting to Rs40 billion to keep it on the ventilator. PIA is facing losses to the tune of around Rs30 billion per year. Its total liabilities stand at around Rs150 billion, while total accumulated losses have exceeded Rs220 billion. During the tenure of this government PIA has received Rs16 billion cash support. These entities owe the current state of affairs to inefficient management, corruption, political interference by successive regimes and recruitment of excessive personnel on the basis of political affiliations rather than actual needs of the organisations.
Privatisation of some of the major loss incurring units and restructuring of others to turn them into profitable entities is an integral part of the economic agenda of the present PM-N government. It has already decided to privatise 31 SOEs in three years, including PSM, Pakistan State Oil and a number of power producing and distribution companies. The political parties including PPP who are opposing the privatisation of the SOEs, are doing it on purely political grounds rather than looking at it from a realistic perspective rooted in economic considerations. Their apprehensions that these units would be privatised at throw away prices in a non-transparent manner and that the government would be able to privatise only profitable units and would still remain burdened with loss-accruing enterprises and that the rights of the workers will be adversely affected, do not carry much weight.
The first thing to understand is that the Ordinance is not about total privatisation of PIA as also stated by the Finance Minister Ishaq Dar on the floor of the house. It only aims at transforming the corporation into a company facilitating public-private partnership. According to the Ordinance, employment conditions for employees would remain unchanged. All stakeholders, employees of every grade and category have been transferred to the company, PIACL, with the same designation and on the same terms and conditions as they held in PIAC. The PIACL has succeeded to all the assets, liabilities, duties and obligations of PIAC.
According to Chairman Board of Investment (BOI) the policy of privatisation of SOEs is aimed at reducing state losses and attracting foreign investment in the crucial sectors of the economy. The successful implementation of the policy of privatisation and restructuring, he believes, would reduce national losses by Rs500 billion. It is worth noting that the government is not simply handing over these units to the private sector for only raising money but is also trying to ensure improvement in the services of these entities through public-private partnership.
The truth is that it is not the job of the governments to run commercial concerns except those of strategic importance and public-welfare oriented units. It only has a regulatory role to ensure that there prevails a healthy competition in the market. Many other countries including Britain have taken such decisions to rectify the economic maladies and improving the health of the economy. The decision to privatise the non-profitable SOEs is economically prudent and would contribute tremendously to the process of revival of the economy. However, the government must make sure that the concerns expressed by the opponents are properly addressed, utmost transparency is observed and seen in the privatisation process and the rights of the employees of the privatised units are protected to avoid any political and social backlash.
The political parties sitting in the opposition have every right to question the government policies and seeking plausible answers in regards to the rationale behind them. But they should also be mindful of the fact that in a democratic dispensation opposition is also under obligation to place vital national interests above their own political agendas and dedicate their efforts to promoting the overall well being of the people and the state. Under the prevailing circumstances and in view of the state of the economy, privatisation of SOEs is the best available option to rectify some of the distortions afflicting the economy and nudging the process of economic revival.
The country needs a national economic agenda enjoying the support of all the stakeholders. The government by agreeing to address the reservations of the opposition parties and forming a parliamentary committee in this regards has taken a positive step to resolve the issue through consensus. Therefore, the opposition should also exhibit a positive approach to the issue and make its contribution towards making the process of privatisation and reforms in the SOEs — which in the opinion of economist and opinion leaders are indispensable for the health of the economy — free of loopholes and infirmities if there are any, instead of scuttling the process.
