December 24, 2006	Sunday	Zilhaj 02, 1427

KARACHI: Overall the privatisation has so far claimed the jobs of more than 150,000 employees of public sector enterprises including over 28,000 from the banks and financial institutions since 1991, alleges a well-researched document of Action Aid International Pakistan.

Deregulation of commodities’ trade has pushed up prices of pulses, wheat, grains, vegetable oil and cooking oil, drugs, petrol and other products to back breaking levels. Disappearance of essential commodities - wheat, sugar, vegetable ghee and cooking oil and vegetables - at regular intervals is now a bitter reality that the majority of 160 million helpless consumers have to put up with.

About $6 billion deficit in 2004-05 is a gift of trade liberalisation. This doubled to over $12 billion in 2005-06 and is now feared to go beyond $15 billion in the current fiscal year. With disinvestment and privatisation becoming direct foreign investment in official jargon, no one now grudges the process of deindustrialisation and flooding of local markets with goods from all over the world.

The government functionaries, from prime minister to advisers in the finance ministry, proudly claim bringing down national poverty ratio by 10 per cent to about 24 per cent in last three years. Liberal bank credits have created a class of 30 million consumers who throng shopping malls. “Agreed, all agreed,” cried a cynic who moans on sufferings of 130 million remaining Pakistanis.

According to Economic Survey 2005-06, 35 per cent of these 130 million Pakistanis are vulnerable to be pushed down below poverty level and at least 20 per cent are quasi poor.

Deregulation, disinvestment, privatisation and liberalisation were introduced in Pakistan’s policy since July 5, 1977 after removal of a popularly elected government of late Bhutto and military takeover of General Ziaul Haq. Small traders and transporters agitated on the streets in 1977 to overthrow Bhutto and big business returned with a vengeance to reap fruits of the political and economic turmoil.

Transporters and small traders have been effectively utilised in Iran in early 1950s to destabilise Mossadaq’s government, in 1973 to topple Chile’s popularly elected government and in many other countries. With military takeovers, come this prescription of deregulation, disinvestment, privatisation and liberalisation everywhere and it came to Pakistan also.

In a changed scenario, the big business, landed gentry and now the multinationals have come to occupy the key position for them the deregulation, disinvestment, privatisation and liberalisation are the policy tools. Trade unions are reduced to nothing and consumer protection and citizens’ rights are hollow and meaningless words.

About 2,000 agro based units were given back to the owners in September 1977, within three months of taking over and then military government offered management contracts of a number of state owned enterprises to the private sector.

Commodities trade was gradually deregulated and eventually the price controls also went to the businessmen.

Late Ziaul Haq returned Ittefaq Foundry to Nawaz Sharif and two other units to their original owners and set in pace the process of privatisation. Benazir Bhutto took over the government in late 1988. But before the elections were held and an elected government could take over Dr Mahbubul Haq had already put his signature on dotted lines with the International Monetary Fund (IMF).

A committee on disinvestment, deregulation and privatisation was formed by Benazir Bhutto and a small number of PIA shares were offered to investors in the stock exchange. The import tariff, by and large, remained unchanged and a Sales Tax Act was introduced in 1990. Nawaz Sharif was the beneficiary of privatisation and liberal bank loans in 1977 and came out with a full package of foreign exchange, capital market reforms and privatisation.

From 1988 to 1999 both Benazir and Nawaz Sharif pursued almost same policies but were still cautious. Benazir was reluctant to bring down import tariff below 35 per cent in face of all pressures while Nawaz Sharif resisted to sales tax on drugs, fertiliser and food items.

But for Shaukat Aziz and his team after 1999 there was no such popular compulsion. With a military back up the government moved swiftly since the year 2000. Privatisation is moving on a fast track despite a Supreme Court intervention in Pakistan Steel transaction. A temporary lull seen in earlier part of this year now seems to be a passing phase. Foreign investors from nearby Middle East have been given a special place and PTCL and KESC the two vital utilities have been given to them.

What has been the cost of privatisation? The privatisation of Pakistan’s two premier banks — United Bank and Habib Bank - fetched government a total amount of about Rs35 billion but only after Rs21 billion taxpayers’ money had been pumped in it by the finance ministry and thousands, Yes thousands of employees were thrown out of jobs, many of them literally on gun-point. Like all other banks, these two banks are also showing handsome profits for the last few years, but the savers continue to get a negative return on their deposits.

Overall, the divesture of nationalised banks gave government a little over Rs46 billion that is hardly $700 million at current rupee exchange rate, since the controversial privatisation deal of Muslim Commercial Bank in April 1991. The Allied Bank was handed over to an employee-management group in late 1991 that eventually proved scandalous. The villain of this epic episode is a big business group, identified by the Central Bank Inspection Team in a report, who obtained a big loan on bogus documents. In nexus with the top executives of the ABL, the business group managed to re-purchase shares from the employees at a throwaway price. Situation had reached a stage when the State Bank was compelled to quietly purchase two per cent shares to retain its 51 per cent shareholding control. It is a story written by the State Bank of Pakistan that begs for action.

Many of the ABL employees have since died heart broken. The only punishment the top four executives of ABL received for their complicity in sordid episode was that the State Bank of Pakistan declared them unfit for any banking job for life. The big business group has perhaps become bigger and continue to borrow heavily as ever on rate of return which were declared recently by the Governor of State Bank of Pakistan as the best in South Asia.

The Action Aid study reveals that the number of employees in state controlled entities, industries, banks and utilities have been reduced from 425,000 to less than 275,000. Many of those who enjoyed the benefit of golden handshake were robbed by the big sharks of stock exchange and swindlers.

With weak trade unions and political parties supporting status quo there is little for the workers, citizens and consumers in the future. “We support privatisation but the present government’s procedure is flawed,” said Kamal Azfar, the Chief of Pakistan People Party’s Policy Planning Cell. The MQM remains a supporter of General Musharraf while the PML (N) too subscribes in principle with the policy of deregulation, disinvestment, privatisation and liberalisation but with operational changes.