LAHORE: Economy without fully functional regulatory institutions as mandated by law sails like a rudderless ship that finds an anchor on any favourable tide or can crash into the rocks.
Regulatory institutions keep a vigilant eye in the domain they look after. These regulators enjoy reasonable autonomy to ensure that the sector they regulate strengthens it.
There is no dearth of regulatory institutions in Pakistan. All were instituted by governments in Pakistan through legislation to streamline different sectors of the economy.
Unfortunately, most institutions failed to live up to their mandate. These institutions remained weak because appointments to the regulatory posts remained vacant for long periods. A fair and transparent mechanism is missing. So, posts remain vacant instead of getting filled automatically.
Appointing authorities usually wait for the retirement of each regulator and temporarily fill it with an acting regulator who may continue indefinitely. The acting regulator appointed on ad hoc basis without merit tends to toe the line of the government to continue enjoying the post indefinitely.
Despite the discretion of appointing acting regulators, there are many regulatory bodies where some positions are lying vacant for a considerable time.
National Electric Power Regulatory Authority has five sanctioned members including its chairman and one member each from the four provinces. The posts of member Punjab and Balochistan are vacant. The Oil and Gas Regulatory Authority is operating without member finance.
Water and Power Development Chairman resigned over a month back and is being managed by a member of the authority. The posts of member finance and member power are lying vacant according to the web page of the authority.
Competition Commission of Pakistan is short of two members and is currently managed by its chairman and one member. The same is the case with the Security Exchange Commission of Pakistan that is short of two regulatory members. It is also being managed by its chairman and one member. State Bank of Pakistan is functioning under an acting governor.
It is not possible to regulate the economy with so many truncated regulatory institutions. The decisions are delayed and in some cases the strength of the regulatory members is not sufficient to initiate proceedings against violators.
Frequent ups and downs in our economy are mainly because of weak institutions. Regulatory institutions function in their respective sector considering ground realities.
Truncated regulatory institutions create a regulatory vacuum. Smooth functioning is possible for a state even during political uncertainty, if regulatory institutions are strong and enjoy reasonable autonomy.
If that happens, the ups and downs in the economy would stop and we may see sustained growth.
It has been pointed out many times that the state should call applications for each regulatory position and shortlist 10 candidates through a transparent and fair process.
Interviewers must have impeccable reputation (we can find a few among the qualified professionals). One member of the interview committee must be outside of the regulatory sector. These names should be placed in the national gazette.
The appointing authority must enjoy the discretion to appoint anyone from 10 short-listed candidates at least two days before the retirement of the regulator. Failing to do so the top name on merit list be allowed to assume the charge. This will ensure smooth functioning of regulatory institutions.