The Privatization Policy in Pakistan

Privatization is not a new phenomenon in Pakistan. Simply the Privatization in Pakistan was a policy measure program in the economic period of Pakistan. It was first conceived and implemented by the then-people-elected Prime Minister Nawaz Sharif and the Pakistan Muslim League, in an attempt to enable the nationalized industries towards market economy, immediately after the economic collapse of the Soviet Union in 1989–90. The program was envisaged and versioned to improve the GDP growth of the national economy of Pakistan, and reversal of the nationalization programme in 1970s an inverse of the privatization programme.

According to Hakro & Akram, (2009) Privatization process is started in late eighties in Pakistan with a clear mission statement - “Privatization is envisaged to foster competition, ensuring greater capital investment, competitiveness, and modernization, resulting in enhancement of employment and provision of improved quality of products and services to the consumers and reduction in the fiscal burden”. The success of process is widely debated: economists offer several arguments in favor of transferring government run firms and parastatals to the private sector. Other economists feel this may not happen for a number of reasons.

Struggles for privatization in Pakistan started in 1988s with different policies. But, it was not until the formation of the Privatization Commission (PC) on January 22,1991 that the step of privatization chosen up. Even though the PC’s fiat was primarily restricted to industrial transactions but by November 1993 it extended to include Energy (power, oil and gas), Transport (aviation, railways, ports and shipping), Telecommunications, and Banking and Insurance (commercial banks, development finance companies, and insurance companies) etc. 66 numbers of units privatized between 1991 and 1994. By end-1997, the total increased to 92 while by the end-2004; the number stood at 121, and by August 12, 2006 the number reached to 161. Since 1990, Pakistan sold off 167 state-owned enterprises (SOEs) at a price of approximately Rs476 billion. The first phase of privatization in 1992-96 included partial privatization of banks; this was followed by the second phase (1997-2000), resulting in the complete privatization of the banking sector. And the last phase of privatization from 2001 till 2008 witnessed selling off non-banking sectors. Previous privatization measures caused more un-employment and monopoly in the market. And sectors which were privatized were totally transferred from the government to some select families, which have controlled the economy since the establishment of Pakistan.

Currently, the government has made so many feasible reports and plans in a bid to privatize state-owned enterprises. Sectors which have become limelight for the new phase of privatization policy 2013 are PIA, Pakistan Steel Mills (PSM) and public-sector power projects, including Pakistan Transmission and Dispatch Company (PTDC).

However, selling out of 26pc shares of PIA is also part of new privatization policy phase (2013). This is the so-called fourth phase of privatization since the privatization was established in Pakistan (1990). The government claims vividly that the new phase of privatization 2013 shall not only overcome the fiscal deficit, along with pure economic growth and development, but provide asylum to the employees, working in those sectors which may certainly be part of the privatization policy.

The privatization policy should ensure that fresh investment is not only diverted to buying state-owned enterprises but is also used to secure the future of youths.