ISLAMABAD, Jan 13: Abdul Hafeez Sheikh, Adviser to the Prime Minister on Investment and Privatization, speaking at the development economists’ seminar here on Monday, charged that the privatization in Pakistan was stalled by hidden opponents among the vested interest including bureaucracy.
Responding to the criticism by some leading economists of the country who questioned the social rationale of privatization during first plenary session of 3-day 18th Annual Meeting of Pakistan Society of Development Economists (PSDE), he said not a single leader over the past 25 years had opposed privatization.
“Yet the truth is that we have not followed any privatization policy,” he declared, contending that not a single major public sector enterprise, barring the United Bank Limited, had been privatized so far.
He enumerated four steps that must be taken for successful privatization. First of all, he went on to state, the top man should consistently proclaim himself in favour of privatization. In such a case, no minister or bureaucrat would dare oppose it.
Secondly, any head of public enterprise, who opposes, should be sacked on 24-hour notice. The third step was a transparent implementation agency so that the people do not apprehend any foul-play in the divestiture of these enterprises.
Under the fourth step, the government should put in place a good communication strategy for projecting privatization as “pro- poor”.
Talking to Dawn later, he said he would review the privatisation programme of previous regime except in case of enterprises whose process of privatisation had reached the advanced stage.
The PSDE meeting was inaugurated by Mr Shaukat Aziz, Adviser to the Prime Minister on Finance & Economic Affairs. While he was long on enumerating achievements of the past three years, a former Secretary remarked that “poverty” was conspicuous by its absence in his speech.
Earlier, Dr A.R. Kemal, Executive Director, Pakistan Institute of Development Economists (PIDE), in his Presidential Address on Regulatory Framework in Pakistan”, said privatization policy was pursued in the hope that it would help in improving the levels of efficiency.
However, while in several advanced countries it had brought down costs and improved services, in many developing countries, the efficiency levels did not improve after divestiture and private sector resorted to monopolistic practices.
In Pakistan, privatization of the banking sector seemed to be a big success, but in most of the manufacturing industries formation of cartels had led to higher prices by restricting output levels, Dr Kemal remarked.
At the same time, legislation relating to competition was either non-existent or was implemented poorly. In Pakistan, there has existed the Monopoly Control Authority since 1971, “but it has seldom been able to use its influence to protect the consumers,” he added.
Commenting on the regulatory aspects, the PIDE chief described autonomy of the State Bank as a major achievement. The reforms in exchange market would ensure exchange rates in line with long-run equilibrium, he added.
He, however, cautioned that regulatory agencies over time degenerate into protecting the organisations which they are supposed to regulate. Checks and balances must be put in place so that persons in responsible positions in these authorities are not corrupted, Dr Kemal stressed.
The second paper too was on privatisation & regulation and it was presented by Professor T.N. Srinivasan from the Yale University, USA. After a review of the regulatory experiences of Pakistan and India, he said a “convincing case is yet to be made in both countries, based on their own experience, that privatisation has by and large achieved its objectives once the debilitating effects of still existing distortions are allowed for.”
Dr Sobur Ghayur, a prominent economist remarked that Prof. Srinivasan’s paper neglected human dimension in what appeared to be an attempt to replicate in the backward south Asian countries the conditions prevailing in Europe, for example.
Emphasising the negative impact on labour of privatization, he said the international financial institutions were pressing the developing countries to privatize water, sanitation, education, health, etc. Quoting an eminent social philosopher, he said, it was not privatization but ‘barbarisation’.
Prof. Rafique Ahmad, former Vice Chancellor of Punjab University, said ever since the induction of privatisation as state policy, poverty had increased. He wished that Prof. Srinivasan had also paid his attention to the ethical and moral regulation.
Prof. Naseem said Pakistan neglected human development in contrast to the East Asian countries. While conceding that privatization as such was not bad, he disagreed with the view that the privatization be accelerated. This was full of risk because of the experience with privatization thus far.