During his state visit to one of the industrial ventures in Lahore in 1964, Chinese prime minister was so impressed with its standards that Chou-en Lai expressed his desire to send Chinese engineers to the Pakistani industrial unit for training. The name of that industrial venture was BECO (Batala Engineering Company). At that time, it produced everything from diesel engines to aircraft parts and the material built by it was also exported abroad.

At its peak, BECO employed 6,000 workers, including German and Japanese engineers numbering over 20. Besides, it had a German general manager. As one of the leading industries of the country, BECO was shown to foreign dignitaries as a national asset.

Following Pakistan’s independence, BECO’s Chairman and Founder, Chaudhry Muhammad Latif, donated a large sum of money to the Pakistan government so that its institutions could start working. Latif was a towering personality of Pakistan industry, both in physique and achievement. He had set up Batala Engineering Company, in Batala, East Punjab (India), in 1933 and in less than a decade BECO came to be ranked as one of the India’s top three machine tool companies.

In 1947, Latif migrated to Pakistan and set up his company with the same name in Lahore. By the time it was nationalised in 1971, it had become one of the biggest engineering complexes in Pakistan, which was on the threshold of launching the domestic manufacturing of textile machinery in collaboration with Japan’s Toyota Corporation.

Latif was a man of great genius and dedication. Ahead of its time in terms of technology, Latif had brought BECO to the heights of glory. He soon became known as a visionary among businessmen around the world. He once said: "I believe in creating money and not in making money. We can create money by employing more people and by expanding our business…Money as such should have no attraction for any reasonable person. What should really move us is the task of adding to our national wealth."

But, on January 1, 1972, the government promulgated "The Nationalization and Economic Reforms Order," nationalising 31 key industrial units, including BECO. After nationalisation, the company’s name was changed to PECO (Pakistan Engineering Company).

The nationalised industrial units included 13 banks, over a dozen insurance companies, 10 shipping companies and two petroleum companies. Among the taken-over ventures, some 22 industrial units, nine banks, nine insurance companies, three shipping companies and two petroleum companies belonged to 22 families, who lost most of their assets in the nationalisation process.

The privatisation order also barred the private sector from operating in key industrial fields, like production of tractors, automobiles and fertilizers. Consequently, in those fields the industrialists had to abandon even capital intensive and employment-generating projects that were already 50-75 per cent complete.

Broken financially as well as in body and spirit, top Pakistani industrialists not only lost their industrial units, but also the urge to make further investments in the country. That explains why leading industrial families of the 1970 era, who stayed back (like Gul Ahmad, Fateh, Adamjee, Bawani, Dadabhoys and Dadas), did not set up even a single big industrial project in the country during the next 2½ decades. Rather, they resigned themselves to becoming traders or spinners of yarn and processors of sugarcane.

The country’s leading industrialist of that era, Ahmad Dawood was imprisoned and put on the exit control list. It was only in 1974 that he managed to go abroad, not to return till General Ziaul Haq’s ascendency to power in 1977. While in USA, Dawood set up an oil exploration company. The company carried out explorations at six wells, all of which proved oil bearing. Recalling those days, Dawood said: "He had decided to carry out exploration despite advice to the contrary from American officials and friends, who believed that it would be sheer waste of money since the American shelf did not possess oil." But, Allah had gifted Ahmad Dawood with a magical touch, anything that Dawood handled turned into a profit-yielding goldmine.

In Pakistan, Dawood group companies that were nationalized, in 1972, included: Memon Cooperative Bank, Lahore Commercial Bank, Punjab Cooperative Bank, Pakistan Bank Limited, Bank of Bahawalpur, Central Insurance Company and 25 shipping vessels. Dawood also lost two oil companies, namely Dawood Petroleum and Pakistan National Oil, under Marketing of Petroleum Products Ordinance, 1974.

Several other leading figures, like Haroon, Jaffer, C.M. Latif, Rangoonwala, Saigols, left Pakistan. After regime change in 1977, a couple of them did return to Pakistan, to indulge in trading only.

In addition to vast assets, the nationalization fetched the government a couple of hundred billion in profits and annual dividends, thus bolstering its revenues. However, due to mismanagement, inept handling, lack of business acumen and over-staffing most of those units turned into loss-making enterprises, arresting Pakistan’s economic growth and turning a fast developing country into a basket case.

According to official sources, total net profits of state-owned enterprises (SOEs) nosedived to Rs52.934 billion in FY 2015 from Rs193.5 billion in FY 2014; while for the first time in the country’s history 197 SOEs turned from profit-earning to net loss-making entities with whopping deficit of Rs44.772 billion in FY 2016.

Top ten cash bleeding SOEs caused cumulative losses of Rs225.9 billion in FY 2016. With a deficit of Rs45.276 billion, PIA topped among these loss-making entities. Pakistan Steel Mills (PSM) suffered a loss of Rs18.757 billion during the year, while the losses of DISCOs and other power sector companies stood at Rs161.867 billion. Over the last 10 years, PIA and PSM have burdened the national exchequer with a loss of Rs361 billion and Rs191 billion respectively. Thus, the aggregate of the losses of the two entities come to Rs552 billion.

Among top ten profit-making companies during the year; OGDCL made a profit of Rs59.971 billion and National Bank of Pakistan Rs22.752 billion. Other profit-making ventures included: WAPDA, PARCO, PPL, PSO, GEPCO, NTDCL, Pak-Kuwait Investment Company and Government Holding (Pvt) Limited.

In October 1977, Gen Ziaul Haq offered to return PECO to Latif and his management, but Latif refused to accept the offer unless the same was extended to the owners of all nationalised industries. Finally, the government abandoned BECO, which had accumulated loss of Rs 761.58 billion. Every single shed of the company was taken apart and the steel used in its construction was sold off and the sale proceeds pocketed. Now, what remains of this once glorious industrial empire gives the look of an Industrial graveyard. Latif went to Germany where he reportedly spent the rest of his life. Meanwhile, the state sponsored theft of assets and later privatization of some units gave rise to a new trend, obtaining wealth by any means and stashing the booty abroad.

After nationalisation, those among the top 22 industrial families that stayed back in Pakistan did not launch any new mega industrial venture, rather they opted to indulge in trade only. As with the exception of textile, sports gear, cutlery and leather goods, the country had little to export; while to meet the domestic demand, it had to import machinery, tools and bulk of goods from abroad. Consequently, it started facing a trade deficit, which kept rising continuously as the years rolled by.

This explicitly shows that the 1972 nationalisation is a sad commentary on hasty decisions taken on the whims of an individual and his coterie and experimentation with economic models. With no monetary stakes in the industrial units, how could ‘money-making’ Babus, compared with ‘money creating’ industrial tycoons, run the taken-over industries efficiently and profitably? Consequently, those industrial ventures started suffering from obsolesce, gradually turning into loss-making units, scuttling Pakistan’s industrial growth and degenerating it into an agrarian slum.

How nationalisation affected Pakistan’s economic growth can also be illustrated from the simple fact that in 1947 Pakistan had inherited three aging vessels, but their number had increased to 75 when nine shipping companies were nationalised and merged into Pakistan National Shipping Corporation (PNSC). But, in 1992 when the government finally licensed private shipping companies, the number of vessels with PNSC had come down to 25 only.

On the other hand, to safeguard their stakes and earn good profits, the private investors give their best to the ventures. For example, after reforms and opening up, the private sector in China has experienced impressive growth, generating over 50 percent of the country’s GDP in 2015 from a mere once percent in the early days of the reform and opening up. Now, 20 Chinese private enterprises rank among the top 500 companies in the world, up from just one in 2010. Furthermore, by the end of 2016, non-State enterprises employed up to 310 million people - 150 million more than in 2010.

We need to learn from the Chinese experience and entrust the management of loss-making SOES to businessmen who agree to invest in them and run these in partnership with the government. Furthermore, with a view to putting an end to the tendency of raising fingers at the previous rulers after every change in government, the policy of turning-around SOEs may be made with the consensus of all stakeholders.

The writer is a freelance columnist based at Islamabad: alauddinmasood@gmail.com