ISLAMABAD, Feb 5: Pakistan and international lenders have agreed to critically evaluate the role of regulatory authorities through a detailed impact assessment exercise to improve their performance and create a competitive environment in the country, it is learnt.
The government has also agreed to issue a “policy statement” on the objectives it wants to achieve through competition and a regulatory environment in the local market and what it wants the regulators to deliver before it really introduces the competition law, a senior government official told Dawn in a background briefing.
The move is aimed at putting in place a regular impact assessment system for evaluation of the regulators’ performance in the light of their specific target objectives. This would also provide a forum to hold regular dialogue with all market regulators, including the central bank, capital market, electricity, oil and gas, telecom and media.
The lenders are of the opinion that most of the regulatory authorities in Pakistan have completed more than five years and it is time the government assesses whether the specific objectives of their establishment had been achieved.
Generally, the multilateral lending agencies are dissatisfied with the performance of regulators in Pakistan and want them to improve.
They are critical of the practice in Pakistan where bureaucrats take over the regulatory role of the sector which they used to control before the inception of regulatory bodies.
“The mindset of these bureaucrats seldom change but their packages improve from Rs40,000 per month to Rs300,000 per month overnight,” he said.
For instance, lenders say that State Bank of Pakistan-led banking reforms have improved the health of the financial sector and non-performing loans have reduced but it has not been able to provide a level playing field to common men in terms of access to finance.
Similarly, they are also critical of retired civil and military officers taking over the energy and media sector regulatory authorities and argue the market had turned stale instead of becoming vibrant.
The World Bank would be playing a lead role in the impact assessment of the existing regulatory authorities and formulation of a competitive market in the country. Other lenders would also participate.
Under the World Bank’s demand, he said, the government has already constituted a seven-member steering committee led by Finance Secretary Tanvir Ali Agha to come up with a policy statement of the government on competition as to what it wanted to achieve in markets like finance, energy, telecom, media and stock market over the medium- to long- term period.
The World Bank has also forwarded a seven- to eight- member panel for appointment of a three-member team of consultants to conduct the impact assessment of the regulators and then come up with a model of competitive market. These consultants would include a lawyer, an economist and a regulatory expert.
Sources said the government was in the process of seeking the cabinet’s approval for the competition law but was advised by the lenders not to run through it and instead put on hold the process for a few weeks for a comprehensive input based on best practices in the world like the UK, Singapore, USA, etc.
The lenders also insisted that the regulatory environment should be reliable, completely independent and professionally competent enough through private sector experts to enjoy trust of the investors as well as consumers.
For example, they said, there was no policy statement of the government as to what sort of capital market it wanted to see and what objectives it wanted to achieve through reforms.
The lenders did not welcome the recent change of the SECP chairman owing to a conflict with the stock market and said it gave a signal that market players could dictate terms to the government.
The government has already decided in principle to abolish the Monopoly Control Authority and replace it with a National Competition Commission to synchronize all regulatory authorities in an effort to create an overall competitive environment in the country.
The sources said the government has been facing crisis-like situations in sectors like power regulation, oil and gas pricing and other such issues from time to time because of independent positions taken by the regulatory authorities or uncontrolled business practices by the industry like cement, oil sector and sugar industry and it seemed if there was no government at all in the country and business sectors moved in separate directions.
