Vested interests hampering privatisation process

LAHORE:  The slowdown in privatisation of the state-owned enterprises (SOEs) by those with vested interests is resulting in continuous devaluation of the state-owned assets, and increased liabilities.

The privatisation process was very fast during the first tenure of the Pakistan Muslim League-Nawaz (PML-N) government, when in a span of less than three years, major state-owned cement plants, most of the ghee mills, and all rice mills were privatised. Two major banks and two big tractor plants were also handed over to the private sector. During that period, the state owned chemical plants, some steel manufacturing units and textile units were also privatised. All these entities were in loss and bleeding the national resources.

Now these entities have created more employment, and deposited billions in government taxes and levies. In fact, some of the privatised units are paying 20-100 times more taxes the amount at which they were privatised. MCB Bank that is half the size of National Bank is paying more income tax. Pakistan had to periodically import ghee and vegetable oil when the industry was run by the government. The availability of cement remained uncertain when plants were run by the public sector. The second privatisation of some significance was carried out during the Musharraf era and even that has paid rich dividends.

Earlier, the entire nation had no issues regarding privatisation, the opposition to this process intensified in the last decade. There is a need to find out the elements that are opposing privatisation. The bureaucracy seems to be the top beneficiary in SOEs. The bureaucrats in the Ministry of Industry control SOEs at lucrative salaries and perks. Despite operating at heavy losses, the perks and privileges of the top management continue to increase annually.

Moreover, they have a stake in the purchases of the enterprise where get commissions. The procurement rules are engineered in a way that only favoured suppliers quote the rates by registering dummy enterprises.

They quote low prices because they supply low grade materials. If an outsider dares do the same quality he is rejected on quality grounds. So the entrenched bureaucracy in the SOE creates hurdles in the privatisation process by creating fear among the workers that their jobs would be in danger.

They also inform the rulers that their prerogative of accommodating friends, family members and party workers would be compromised if the SOE was privatised.

The labour unions are also against privatisation as no private sector operator would succumb to their pressure easily, as is done by bureaucrats with vested interests. The workers under the unions have regularly lost so many privileges, but the perks of union leaders continue to increase. They do not perform any duty and collaborate with bureaucracy in organising demonstrations against privatisation.