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Need for creating new industries

September 05, 2013

THERE are two opinions in the country about the privatisation of industry. For some it is the right thing to do, to help create new industries and create better competition and better prices for consumers.

But for many others privatisation is the wrong idea as they think that some industries are important for Pakistan and should not be trusted with private owners or foreigners, who might not run the industry according to the custom of the Pakistani people.

However, the fact is that when we do not privatise the loss-making industry, we are unintentionally forcing our children into debt. Looking at the example of Pakistan Steel Mills, one will find that though the Musharraf government had privatised the company in 2006, the local workers union went to the Sindh High Court, which annulled the contract of privatisation within three months of commencement of court hearing.

Since that time the company has not produced more than 17pc of its capacity. And the government has injected an average of Rs25bn to pay for the workers’ pay every year.

The company is grossly mismanaged: its staff requirement is 1,600, but it is operating at only 17pc with employees numbering more than 2300 personnel. The staff gets salaries and special benefits like being paid rent allowance while also living in a company house.

It is estimated that since 2006’s Sindh High Court decision, the government of Pakistan has injected Rs150bn into the PSM, and the company has also accumulated a total debt of Rs550bn.

Ironically, the company that had won the privatisation bid of the PSM utilised their returned investments to construct a new steel mill called TSML, which is operating at above 80pc production and supplies 20pc of Pakistan’s steel requirement. Therefore, I believe that unimportant industries that are also loss-making should be privatised. It is not the government’s job to do business; rather it is the government’s job to nurture business.

By being the gardener rather than the tree, the government should create new industries, set them up and privatise them, thus giving the people of Pakistan ready industries to expand further.