The sins of our planners

August 19, 2022

LAHORE: We want to achieve turnaround in the shortest time ignoring the fact that success is not achieved in one day. Decisions taken in haste usually backfire. Prudent planners first test the...

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LAHORE: We want to achieve turnaround in the shortest time ignoring the fact that success is not achieved in one day. Decisions taken in haste usually backfire. Prudent planners first test the strategies at a small scale to eliminate instead of risking total failure.

The issue with Pakistan’s economy is that we do not learn from our failures and successes. Take for instance the issue of public sector companies. The privatisation in the early 90s was done in haste, but it delivered in the long run.

The MCB Bank and the Allied Bank of Pakistan are adding billions of rupees to our exchequer. The loss-making cement sector after privatisation has increased production capacity from million tonnes to 65 million tonnes. Its contribution in federal taxes has multiplied many times.

The Ghee Corporation of Pakistan that enjoyed monopoly in the ghee and oil sector operated in loss. All mills run by the corporation were privatised and the industry has flourished since then.

The employment in all these privatised entities has increased manifold.

While the success of privatisation was visible to all, the rates of the products increased, which some took as undue profiting by the private sector sponsors. We failed to realise that all these units were operating in loss before privatisation and were heavily subsidised by the state. The staff was incompetent and hired on political grounds by each government.

The equipment was inefficient. The private sector engaged competent human resources on higher salaries and upgraded the technology. The quality of products improved, and the prices increased immediately. There were no shortages of ghee, cement and our tractors were cheaper than similar imported machines even when imported on zero duty.

The same government in its second tenure three years later adopted a different approach towards privatisation.

The policymakers thought that they could fetch better prices for the larger public sector companies by first revamping them and inducting professional management. Where needed the equipment must be upgraded to improve their efficiencies.

With this policy they poured in billions on Habib Bank Limited and the United Bank Limited to get rid of redundant human resources through a golden shake hand scheme. The revamping of these banks was not successful and when they were privatised during the Musharaf era both banks were operating at huge losses.

Now both these banks are operating at far higher yearly profit than they were earning before privatisation. The private sector revamped these banks by getting rid of redundant staff and upgrading technology.

Same revamping experiments have been conducted on Pakistan Steel Mills, Pakistan Railways, and Pakistan International Airlines Corporation Limited. After unsuccessful attempts by the past four regimes, the PSM was finally closed, and the total staff was shown the door.

Billions of rupees poured into it have gone down the drain. The government is still looking for a buyer or investor to operate the mill.

Similarly billions were invested in buying or leasing new planes for PIA but many regions in the EU are no-go areas for the national flag carrier. It is one of the worst performing airlines in the world. With few flights the leased planes are a burden on the exchequer.

Similarly, hundreds of billions were provided to the Railways in buying new engines. It is still operating in huge losses. Whenever these big entities are finally privatised the state would not be able to recover even the amount spent on revamping and upgrading of equipment.

We can no longer afford the trial and error approach in privatisation. The planners should operate with a clear head. The new law on privatisation would be difficult to implement.

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