Divergent views: Privatisation - Consensus yet to be reached

Economists discuss state run enterprises at a seminar, book launch.

Economists at a seminar here on Thursday offered divergent views on the privatisation policy. 

The seminar on ‘Privatization: New Imperatives’ and launching of a book titled, ‘The Impact of Privatization in Pakistan’ by Dr Akhtar Hasan Khan was organised by Pakistan Institute of Development Economics (PIDE).

While speaking on the occasion, PIDE Vice-Chancellor Dr Rashid Amjad said, “Policy stances which reflect our best economic interests and take into account the political economic dimensions should be adopted.” Amjad expressed a need for an overhaul of the system for increasing efficiency and productivity of loss making public enterprises. This according to him could be achieved by “empowering workers and employees and keeping away political interference in running and planning of these institutions.

On the other hand, vouching for a pro-privatisation approach on the subject, NUST Dean Ashfaq Hassan Khan said, “My view is a bit different, as benefits of privatisation help reduce the country’s debt burden and also help improves the allocation of resources.”

He highlighted that the government is spending over Rs 300b of tax payer’s money on rotten Private Sector Enterprises’ (PSEs) which is about 1.5 percent of GDP. “If these organisations are off from the government budget two things can happen: budget deficit can be reduced and as such the pace of debt accumulation can be slowed,” he said. “The surplus amount can be spent on the poor by allocating this money for education and health infrastructure,” he added.

While talking about the book, that was also launched at the ceremony, he said, “This book is neither a chronological review of nationalisation and de-nationalisation process nor is it a historical review of events. Contrary to this, the book is a very well researched piece of literature, which has analytical depth and strength in arguments.”

Adding on to his own opinion on the subject, he said, “The role of government should be as a facilitator for creating conducive environment where private sector can play its effective role.”

Meanwhile, discussing the reason for the failure of privatisation in the country, Dr Ather Maqsood, Head of Department, School of Business, NUST, said, “Most of the employers of privatised enterprises were laid off and some of them chose golden hand shake, this huge money was spent as a onetime expenditure like marriage of daughter or paying off debt instead of further productive use.”

He further said, “Present environment is not favourable for privatisation.”

Dr Akhtar Hasan Khan in the end gave a historic background on privatisation in Pakistan starting from the 1960s to mega privatisation decade in 21st century.

He said that the present situation is not favourable to launch any privatisation programme. However, the government, he added, can seek to revamp the existing structure by appointment of extremely competent CEOs in public enterprise selected through a completely merit-based procedure, promoting public-private partnership and giving weight to labour unions.

Published in The Express Tribune, March 2^nd, 2012.