The government should at least retain 10-15 per cent of the shares of units of national importance
The final phase of the privatization process has begun with the announcement by prime minister Nawaz Sharif that the government will dispose of all the units in the public sector in next twelve months.
In practice, it has started with the privatization of Habib Credit Exchange Bank last week the 42 million or 70 per cent shares of which were sold to Al Nahyan Consortium of UAE at Rs 39 per share.
The government hopes to raise maximum revenue from the sales of fixed assets and installations the total worth of which is estimated at $1500 billion to save the country from an economic collapse. The question is: At what cost.
The indiscriminate selling of public sector enterprises to foreigners has inherent dangers as conferring of full administrative rights and controlling powers is fraught with risks particularly in a country like Pakistan where the corruption has seeped into all facets of life.
While privatisation has become the vogue of the day to be regarded as a cure-all of economic ills, the privatization process in Pakistan differs from the rest of the world as it being done to generate revenues to honour the foreign debt servicing obligations.
Sources in business community generally agreed that much caution should be exercised by the government in disposing of the national assets, particularly those of national importance, to the foreign investors.
Talking to PAGE a source at Karachi Chamber of Commerce and Industry stressed that extreme caution should be exercised to ensure that controlling powers of financial institutions should not be concentrated in the hands of foreign investors.
The government should at least retain 10-15 per cent of the shares of units of national importance to have a presence in the board of directors to safeguard the national sovereignty, he added.
Furthermore, he said, the privatization of all public sector units should be analysed on case to case basis to only the serious investors who have a proven track record of business in the related business.
A high placed source close to foreign direct investment expressed a different opinion: The ambitious privatization plan of the government should not turn into a ‘distress sales’ for the sole purpose of generating revenues to pay the foreign debts.
It should be ensured, he added, that privatization should be carried out in the best interest of the nation not only to generate revenues from professional investors but also to improve the quality of a product or service.
He, however, said that the pressure to generate money amid existing economic situation would ultimately turn the privatization into a distress sales moreso as political favouritism could not be ruled out.
What happens when one is having a financial problem? He asked and then replied that first one tries to get a loan from a relative, a friend, or an acquaintance failing which he sells the wife’s ornaments. The privatization process in Pakistan is no different, he concluded.
Another well placed source shrugged off the buying of public sector units by the foreigners saying the turning of world into a global village and easy access to information virtually leaves nothing secret anymore.
The public sector enterprises, he said, have failed to perform and are a deadweight loss to the national economy and sales of them to professional investors, local or foreign, would result in better performance for the benefit of the economy and the consumer of a product or user of a service.
Besides, he said, for the country facing serious economic problems such as resource crunch to honour its debt payment, increasing trade deficit and domestic debt and plunder of resources and assets, the privatization remains the only option to mobilise foreign exchange as well as speedy transfer of technology.
It is imperative that privatization in Pakistan attracts the foreign investment as the private sector in the country could not make such big investments, he added.
While the importance, and the necessity, of privatization could hardly be understated the privatization experience in Pakistan calls for a cautious approach to ensure the units are sold only to the serious entrepreneurs with a proven record in the related field.

PRIVATIZATION BY END 1992
Sector Number of Units Bid Value Down Payment Collected
Cement 8 Rs 4658m Rs 2253m
Chemicals 5 Rs 1122m 411m
Engineering 4 Rs 243m Rs81m
Automobile 3 Rs 866m Rs 366m
Fertiliser 1 Rs 457m Rs183m
Ghee 10 Rs 513m Rs 215m
Rice 6 Rs 186 Rs 61m
Roti Plant 10 Rs 63m Rs 57m
Total 48 Rs 8,108m Rs 3,627m
Banking
MCB: 26 per cent sold to the National Group through sealed bidding, 25 per cent shares to the general public
ABL: 26 per cent shares dis-invested to the employees at negotiated price



Regards,
Sardarzada

__________________
God is dead! God remains dead! And we have killed him! How shall we console ourselves, the most murderous of all murderers? The holiest and the mightiest that the world has hitherto possessed, has bled to death under our knife....