Govt plans unbundling of several public entities

Published November 21, 2020
ADVISER on Institutional Reforms and Austerity Dr Ishrat Husain addressing a press conference on Friday.—White Star
ADVISER on Institutional Reforms and Austerity Dr Ishrat Husain addressing a press conference on Friday.—White Star

ISLAMABAD: Adviser to the Prime Minister on Institutional Reforms Dr Ishrat Husain has announced unbundling of several state-owned enterprises, including Pakistan Railways, PIA and Pakistan Steel Mills, and involving the private sector to run these entities.

Addressing a news conference with Information Minister Shibli Faraz here on Friday, Dr Husain also highlighted the reforms undertaken in the federal tax collecting body. Acknowledging mismanagement and corruption in the Federal Board of Revenue (FBR), the adviser said the best way to eradicate all such misdoings was to minimise human interaction.

“If we are able to harness the true potential of tax collection, the government will not require borrowing and the national debt will reduce,” he said, adding that a UK-based Pakistani had been hired as the chief information officer at the FBR and under the new system, payment of sales tax refunds was going on smoothly.

“Now the claimants do not need to meet any official to receive the cheques for refunds; the amount is directly transferred to the bank account of the company. We have cleared refunds of up to Rs250 billion and soon this system will be implemented for income tax refunds, too,” he said.

PM’s aide says Rs250bn sales tax refunds cleared

Dr Husain said out of around 2.7 million income tax filers, one million showed a negligible income and the FBR had started gathering information about these people from the National Database and Registration Authority, Civil Aviation, etc.

“Due to this integration of database the FBR will know the lifestyle of such persons; it will expand the tax base and eventually lead to lowering the tax rate. All such measures will also help improve the FBR performance,” he added.

The PM’s aide said the restructuring plan of Pakistan Railways (PR) had been approved by the federal cabinet and the organisation would be divided into five entities — a regulatory body on safety and accidents; a separate company for ML-1 for fast-track train from Karachi to Peshawar; a government company to manage the existing tracks and other infrastructure; a freight company as currently only four per cent national freight is being handled by PR and this needed to be enhanced; and a passenger company where the private sector will be allowed to operate trains by giving charges to the track and infrastructure company.

Dr Husain also announced division of Pakistan Steel Mills (PSM) land into two parts as well as a scheme to lay off its existing employees by offering them salaries for two-three years.

“The PSM has been non-functional since 2015, but salaries and other packages are being paid by the government,” he said, adding: “We will establish a company to run the Steel Mills with private sector and 1,200 acres of its land will remain under the administrative control of PSM. We expect that the operating capacity of Steel Mills will enhance up to three million tonnes per annum against one million tonnes.”

He said that 19,000 acres of other purpose land of the PSM would remain under the government control.

The PM’s adviser also announced the unbundling plan of PIA as the accumulated losses of the national flag carrier over the past 10 years stood at Rs450bn. It was a heavily indebted entity making it impossible to achieve any growth path, he said.

“The financial restructuring plan has been finalised; a fresh fleet would be provided to the national flag carrier, but it would be rightsized to 7,000 employees from its existing strength of 14,000,” he added.

Dr Husain said an attractive voluntary separation scheme would be offered to around 3,500 employees, while 3,500 affiliated with non-core business like catering, etc, would be outsourced. “The ratio will be reduced from 500 persons per plane to 250, but that too is higher than that of Emirates or Qatar Airways, to reduce losses and turn the airline around,” he added.

Dr Husain said that out of 65m workforce in the country, only 4m were employed in the public sector and the government had to strengthen the private sector as the driving force for the economy. He said there were more than 100 rules and regulations for the investors to fulfil for setting up an industry in Pakistan and the government was working to reduce the number of such requirements.

He said weakening any institution was easy and faster compared to strengthening the institutions. “That is why it was the vision of the prime minister to appoint only professional and able persons as heads of the institutions, including the chief executives, managing directors and senior managers,” he said.

Dr Husain said the current selection process involved several competent authorities, adding that earlier the hiring of senior managements in state-owned enterprises and other institutions was discretionary of the prime minister. He said that about 50 senior managers had been hired through this process and none of the appointments had been challenged.

Many competent overseas Pakistanis have been hired through this process, he said, adding that the new promotion policy of the government was not based merely on seniority, but also on competency and hard work.

Published in Dawn, November 21st, 2020



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