Amending SOE law

Published July 7, 2024

IN Pakistan, reforms move slowly, particularly when powerful lobbies are involved. The reform of state-owned enterprises — agreed with the IMF in 2019 under the $6bn Fund bailout to improve SOE governance and financial efficiency and to ready these entities for privatisation — is a glaring example. A law to improve SOE governance and operations prepared in 2021 was passed by parliament only last year, and that too under immense pressure from the IMF and other multinational lenders. However, it remains largely unimplemented due to political and bureaucratic hurdles. The government recently amended the SOE law in order to accomplish one of the prior actions it needs to complete before it can clinch a deal with the IMF. The new amendment empowers the government to appoint and remove directors of federal SOEs through an institutional mechanism on the recommendation of a board nomination committee. The idea is to select the best available human resources to efficiently run these entities, and to remove them if they are found wanting in their performance as board members.

This is in line with good corporate governance practices. Sadly, the opposition took this opportunity to make the issue subject to controversy and accused the government of ulterior motives. If the opposition leaders had concerns regarding the amendment or suspected the government of wrongdoing, it was their best chance to thoroughly debate the law and suggest meaningful changes to strengthen it rather than attempting to settle political scores. No legislation is perfect. The job of the opposition is to keep a close watch over the government and hold it accountable for every misstep or bad legislation. That said, it is the government’s responsibility to provide parliamentarians with the opportunity to discuss and debate every piece of legislation rather than rushing them through. Lack of transparency and productive debate always bog down real reforms at the expense of the economy and the people.

Published in Dawn, July 7th, 2024

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