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June 6, 2020

No option but to privatise Steel Mills, govt tells Senate

Top Story

June 6, 2020

ISLAMABAD: Adviser on Commerce Abdul Razak Dawood informed the Senate Friday that Turkey was indeed very close to Pakistan as a friend but very tough when it comes to negotiations regarding trade and duties.

The government justified the decisions regarding the fate of the Pakistan Steel Mills, saying the past two governments failed to revive or privatise and that stuffing the state-owned enterprises (SOEs) could not be continued in the name of job creation. The House was told that the SOEs accumulated losses were now more than the defence budget of the country.

Leader of Opposition Raja Zafarul Haq and other opposition senators called for referral of the Mills matter to the House standing committee and the chair did so.

During the question hour, the adviser maintained that Turkey was scared of not being able to compete with Pakistan because of its strong textile industry and their minister announced to clamp more duties on Pakistan’s textile exports. The SOPs were strictly observed in relation to protection from the coronavirus inside and outside the Parliament.

He pointed out to having met Turkey’s commerce minister thrice but the minister was not ready to change their position in relation to the duties. The PTI Senator Zeeshan Khanzada had asked had Pakistan taken any initiative to convince for special concessions to its products in view of their close friendship and brotherly relations. He acknowledged the fact that Turkey had imposed 18 per cent duty on products of countries.

The advisor also clarified Pakistan had no free trade agreement with Turkey but there had been negotiations on this count. Chairman Senate Muhammad Sadiq Sanjrani, who presided over the session, referred the matter of sending over 9,000 employees of Pakistan Steel Mills home to the House standing committee for deliberations and report, after opposition senators agitated on the government decision, reminding the ruling PTI leadership of expressing resolve repeatedly to revive the Mills.

The PML-N Senator Mushahidullah Khan questioned why Asad Umar was not tendering resignation, who had vowed to revive the mills, otherwise, he would be standing with the employees. “They had talked big while begging votes and now firing its employees. What is the fault of 9,350 employees. This government is doing nothing. The country is going towards default and they are blaming either the past governments or the coronavirus for everything,” he alleged.

He noted that the video of Imran Khan would be available in which he had pledged to ensure the mills running and now why were not they running it and added they should admit that either they were wrong at that time or now they were saying something incorrect.

The PML-N Senator Abdul Qayyum, who remained PSM chairman from 2004 to 2006, there was no harm in privatisation of the mills, and insisted that the manpower, which included seasoned experts, should be retained in the new arrangement and they should not be removed from service with one stroke of the pen.

Senator Sirajul Haq reminded the prime minister of his pledges to create 10 million jobs but in contrast over 9,000 employees of the Mills, who were source of food for their family members, were being shown the door.

Minister for Industries and Production Hammad Azhar told the House that tax collection also witnessed 27 percent growth before the breakout of COVID-19 while the post pandemic period had seen 30 percent decline in tax collection but expressed the confidence that the situation would improve as the business activities were being resumed.

The minister said databases were being used to improve the tax collection and added the government planned to phase out import based duties and focus on domestic taxation, which was never done in the past.

Responding to a supplementary question, he said that the losses of state owned enterprises surpassed the annual defense budget due to the indecisiveness and regressive policies of previous governments and their lack of vision. He added the previous governments failed to revive or privatise Pakistan Steel Mills.

“Today the debt of Pakistan Steel Mills stands at Rs230 billion. The government has now decided to lease out the core steel mills operations to revive Pakistan Steel Mills. After the mills loans structuring, we will move towards its privatization,” he said. He noted the practice of the past governments to stuff more and more people in SOEs in the name of giving employment could not be continued, which had brought these entities to the present situation.

Replying to questions, the minister noted that despite the situation, arising out of the virus, the foreign exchange reserves sustained and among others, record wheat would be procured this year and there would be the reflection of the stimulus package in the budget.

Adviser on Parliamentary Affairs Babar Awan laid before the House a copy of the Money Bill, the Members of Parliament (Salaries and Allowances) Amendment Bill, 2020. The adviser clarified that the government would not support this bill.

Earlier, the House, commencing the 299th session, offered Fateha for those who died of the coronavirus including the parliamentarians and the victims of recent Karachi plane crash.

The Senate was also told that around three million jobs were feared to be lost in the initial round of the coronavirus pandemic. The Ministry of Finance in a written reply to a question by JI Senator Mushtaq Ahmad during the question hour, explained out of the three million jobs, the industrial sector was likely to lose one million and the remaining two million will be lost in the services sector. The government also informed the House that it wanted to run the Pakistan Steel Mills in partnership with private sector, as opposition senators agitated on the decision and firing of its employees.

The Pakistan Institute of Development Economics (PIDE), the ministry said, estimated a loss of 18 million jobs in agricultural, services and industrial sectors collectively. Senator Mushtaq Ahmed had asked about the estimated loss to the economy, increase in budget deficit, debt and dollar value, and the government's plan to cope with the challenges.

The ministry said the proportion of those living in poverty will increase from 24.3 percent to 33.5 percent. The fiscal deficit was also expected to rise from the initial target of 7.5 percent to 9.4 percent of the gross domestic product due to revenue shortfall and an increase in public spending owing to fiscal stimulus package and that the increase in debt burden would depend on the fiscal deficit.

Likewise, exports might fall to $21-22 billion because of low commodity prices and decreased economic activity in the US, European Union, United Kingdom and the Middle East, whereas before the pandemic, these amounted to $25.5 billion.

Moreover, remittances are also expected to fall from $23 billion to $20-21 billion. Federal Board of Revenue may also not be able to achieve its target and tax revenue is expected to fall from Rs4,800 billion to Rs3,905 billion. Between April and June, the FBR is expected to incur a loss of Rs700-900 billion.

The ministry said that before the pandemic, GDP growth for fiscal year 2020 was estimated at 3.24 percent out of which agriculture sector was expected to record 2.85 percent growth, industrial sector 1.95 percent and services sector 4.04 percent growth. However, the year posted a negative growth of 0.4 percent out of which industrial sector recorded 2.64 percent, agricultural sector 2.67 percent and services sector -0.59 percent.

Hammad Azhar informed the House that the government wanted to run Pakistan Steel Mills in partnership with private sector.

The Senate also unanimously passed a resolution expressing serious concerns over Indian barbaric atrocities and human rights violations in Indian Occupied Jammu and Kashmir, saying plebiscite 'is the only way out'.

The resolution moved by Raja Zafarul Haq and carried signatures of newly-appointed Leader of the House Dr Shehzad Waseem strongly condemned the extra judicial killing of 13 unarmed Kashmiris in occupied territory the other day.

The House, through the resolution, demanded immediate action from the United Nations Secretary General in this connection. The House also fully sported the strong stance against the illegal incursions into Chinese territory.