Privatisation is an important economic reform policy tool for generating growth and to erase structural inefficiencies by removing false barriers and opening up the economy to competition. The Privatisation program is part of the economic and structural reforms agenda of the Government that along with deregulation and good governance seeks to enhance the growth and productivity of Pakistan’s economy by harnessing the private sector as its engine of growth. It takes an integrated approach towards enhancing the private sector’s role and goes beyond just a transfer of public assets to the private sector by identifying the linkages and role of regulation, good governance, market competition in fostering conditions that provide incentives for the private sector to invest in providing goods and services efficiently.
Privatisation is challenging given the complexity and breadth of the issues and touches all aspects of economic activity and economic policymaking. For the first time Pakistan has continuity in terms of policy and process and while the struggle against anti-privatisation forces continues, a more conducive enabling environment now exists. Our focus now is on consolidating and building upon the successful reform process and opening more avenues for investments in the country.
Privatisation Commission is also looking forward to making the privatisation process more participatory by encouraging the public to “own” the process through the capital market via Initial Public Offerings and Public Offerings. Along with enhancing a sense of ownership of the privatisation programme amongst the people, it broadens, deepens and strengthens the capital markets and introduces corporate governance to many public sector enterprises, thus accelerating the process of restructuring and preparing the units for strategic sales.
Restructuring & Revitalization of Units
PC has been also instrumental in the restructuring and revitalization of various units and liquidation of non-viable and sick units in order to curtail losses and stop financial haemorrhaging in the public sector. Similarly other units identified as non-privatisable for various reasons were excluded from the privatisation programme from time to time
The privatisation process is expected to continue to play an important part in further stimulating the economic development through increased capital formation, widespread ownership of the privatised assets and reduction in the burden of subsidies. Direct participation of the Government in commercial activities needs to be progressively reduced. In this regard the Government should focus on two broad areas. First, building up a stable governance and environment that encourages investment but, at the same time, safeguards the public interest through a regulatory framework in case of key areas such as power, telecommunication, oil & gas and transport sectors. Second, helping to create a suitable physical and technological infrastructure required for the unhindered economic development of our rapidly growing society.
The current privatisation programme includes transactions in the banking and finance, oil and gas, power, and other sectors. The Government is committed to privatising all its power distribution and generation companies. Work for this purpose has been initiated and it wouldn’t take much time when the distribution companies to be brought to the point of sale. Eventually a competitive market for power would be envisaged. In some areas, such as the national flagship airline, PIA and Pakistan Railways, the Government strategy is to turn around the companies before considering the privatisation option. Similarly, the privatisation of airports, seaports, insurance companies, and shipping have all been studied or proposed at some point. There are other sectors where many such possibilities exist such as roads, water distribution and sewerage etc.
In short the potential privatisation agenda is large. Successful implementation of the existing agenda is key to ensuring further progress in privatisation in order to strengthen public finances and enhance the quantity and quality of Pakistan’s goods and services.