THE sale of the loss-making First Women Bank to a large investment company based in the UAE for a modest $14.6m, albeit small in scale, is nonetheless a welcome development. The sale of the government’s entire stake of 82.64pc in the bank to the International Holding Company, under what is being touted as a ‘government-to-government’ deal with the UAE, to a major player controlling assets worth $240bn globally sends positive signals, even if the amount is limited. Yet the fact that it took the government 31 years to sell the bank, despite repeated attempts since its inclusion in the privatisation list in 1994, shows how far the privatisation agenda has drifted from its original promise. The transaction could serve as a catalyst for the long-promised flows of Gulf investments to Pakistan.

Still, the transaction has triggered concerns over the manner in which the sale has been executed. Instead of taking the preferred route of competitive bidding as mandated under the Privatisation Ordinance, the government’s preference for a negotiated deal under the Inter-Governmental Commercial Transactions Act has raised valid questions about the lack of transparency in the process. The law, enacted in 2022 to bypass the bidding process in direct G2G transactions, appears to have been manipulated to facilitate the sale of a public asset to a foreign private entity. The argument that the deal could not have materialised without the UAE’s active support, or that the law does not necessarily have to be invoked in direct transactions with foreign governments or their entities, has merit. Still, questions remain about transparency and whether a better price could have been secured through competitive bidding. The government would do well to avoid this opaque route to privatisation in future. The use of this law to bypass competitive bidding, particularly in big-ticket transactions, risks reinforcing public perceptions that the G2G framework is being used to favour certain buyers. Transparency will also ensure that the new owners will not have to face legal challenges as has been the case in several past privatisation deals. That only one prior transaction involving a concession agreement with a UAE firm for managing Karachi Port berths was concluded under this law before the sale of the bank suggests that foreign investors are seeking deeper structural reforms and greater confidence, and not the suppression of competition.

Published in Dawn, October 20th, 2025