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Old Wednesday, November 24, 2010
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Privatisation through IPOs

November 24th, 2010


The decision by the government to use the stock exchanges to privatise state-owned enterprises is one that deserves to be welcomed. President Zardari indicated this the other day in a statement that he made on the subject saying that government organisations could be sold off using initial public offerings (IPOs) via the country’s bourses. If this plan is realised, it will turn out to be an important one in helping to develop avenues for small investors in Pakistan. State-owned enterprises are some of the largest companies in Pakistan. And while most of them make losses, they are all likely to attract substantial investor interest. If the administration follows through on this suggestion, then it will mean that foreign investors will have to channel their investment through the local exchanges.

Any foreign investment banks involved in underwriting the transactions will have to increase their presence in Pakistan, or create a presence from scratch. Local investment banks will also have a chance to burnish their credentials and add revenues. There may even be room for healthy collaboration between local and foreign banks, as was the case during the heyday of privatisation during the Musharraf era. So in addition to getting troublesome assets off the government’s books, the government would promote Pakistan as a destination for global financial institutions to invest.

There is a second, and perhaps more significant, advantage to privatisation through KSE listings. Local investors will have the opportunity to take advantage of initial public offerings that tend to be highly profitable. This will promote the idea of capital markets as an investment avenue for ordinary Pakistanis while also ensure the most lucrative returns are not restricted to highly connected insiders. A more transparent, functioning capital market that has the confidence of the public is in the national interest and this policy would go a long way towards ensuring that. In short, we welcome the president’s suggestion and hope that the administration will make it official policy. Pakistan’s economy needs a financial system that can help it grow.


The way of justice

November 24th, 2010


he acquittal of lawyer Chaudhry Muhammd Naeem and his family accused early this year of the brutal murder of their 12-year old maid Shazia Masih in many ways adds to the risks faced by other domestic workers and especially children working in homes. The sessions court which heard the case in Lahore ruled that the girl had died of natural causes. It based its judgment on the evidence presented before it including a medical report from a local Lahore hospital. The courts of course are bound to go on what is presented before them. We have no way of knowing the accuracy and quality of investigations by police and other findings in the case. However it is apparent that the matter perhaps needed stronger inquiry and a greater desire to obtain justice for the underdog. At the time of the death there had been a public outcry over the death to the maid who it was alleged had died as a result of torture. A campaign by lawyers in favour of the accused appeared to tilt matters his way as far as police were concerned.

More worrying is the plight of all domestic workers across the country. Surveys have found up to 80 per cent of female workers in homes suffer harassment or other forms of abuse. It now seems this occurs not only in the citadels of feudal overlords but also in the residences of educated, and presumably civilized, professionals. Just days ago a horrendous account came forward of another young maid being sacrificed by her employers as part of some bizarre ritual. There is quite obviously a need for laws to better protect domestic workers who are not covered by any regulation or the rules that guarantee at least some rights to workers in other categories. There also needs to be a crackdown against domestic work by children who are least able to protect themselves, to draw attention to their plights and as such have been repeatedly subjected to the most brutal crimes.


Watan cards fiasco

November 24th, 2010


There seems to be a significant disconnect between what Prime Minister Yousaf Raza Gilani announces and what the government is actually able to deliver in terms of services to citizens. This became especially apparent on the prime minister’s recent visit to Dadu where he was forced to explain the delay in the distribution of Watan cards. The scheme is a good idea in that it allows the government to efficiently disburse aid while minimising the chances of theft and helping to document the undocumented. However, all of those benefits rely on the government actually distributing them amongst flood victims, which seems to be beyond the capabilities of the bureaucracy at the moment. While the prime minister distributed some in Dadu, the task of aid disbursement cannot be accomplished by him alone.

The prime minister has on several occasions expressed his frustration at the inability of the bureaucracy to follow through on his orders. One can understand his frustration and appreciate it as a sign of sincere effort. However, as prime minister he has powers beyond expressing frustration and he can order disciplinary action against any official. There also seems to be a certain adhocism to the government’s relief efforts. For instance, eight newly-wed couples were given Rs200,000 each as part of the flood relief effort. But there have not been any reports of any other flood victims being given the same. Such discrimination serves to further the impression that the current administration takes care of only well-connected supporters. Of late, the prime minister has often spoken that the government will complete its term and those who want to see a new one in power could then use their vote at the next election. The performance of the ruling party at the next polls depends to a great extent on how it oversees the flood aid and relief distribution.
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