Daily Times

The recent declaration by the PML-N central government to privatise a large number of state-owned enterprises has triggered a heated debate in the form of a blame game in the social, print and electronic media. The co-Chairperson of the main opposition party, the PPP, criticising the decision, has said, “This is not privatisation, this is personalization.” Prime Minister (PM) Nawaz Sharif, reacting to the PPP co-Chairman’s statement and defending his plan, blamed the PPP founder Zulfikar Ali Bhutto’s nationalisation policy for the current economic woes of Pakistan and said that his government wants to end the financial degradation that had roots in the nationalisation policies of Bhutto’s regime during the 1970s.

These arguments are the beauty of a democratic set up but personal accusations are harmful to democracy. Let us keep aside the blame thrown about by the PPP and PML-N chiefs and ascertain whether privatisation can deliver or not, and whether other, better options are available to rescue our fettered economy. There is no harm in partial privatisation of state-owned enterprises when they stop generating revenue owing to their non-performance. There are many bright prospects of privatised enterprises benefiting the state with their taxes, not exploiting the masses and enabling conditions favourable for such a move.

This is not the first time that state enterprises have been privatised. The privatisation of state-owned enterprises began during the government of General Ziaul Haq when he constituted a commission headed by N M Uqaili, chairman of PICIC, to study the condition of state enterprises. It was recommended in 1984 that, “It should be the declared policy of the government to denationalise sick units.” The PPP government in 1988 planned to privatise 14 state units but could privatise just 10 percent of PIA’s shares. However, in the 1990s, the PML-N government marked 115 units for privatization and thus, more than 90 percent of the assets were privatised.

Our economy is still in tatters and the massive privatisation of state-owned enterprises in the 1990s has not worked to improve our economy. Now, reportedly, the privatisation of PIA, the railways, steel mill and other state-owned entities is in the offing

In the developed world, a state earns through bids and tax by partially privatising an entity, but we lack proper pricing for a bid and a tight tax net so we have not benefited from them. Surely, we have lost these public assets to private hands. In July 2013, Model Customs Collectorate Peshawar revealed that 19 steel mills had been evading taxes for the last 11 years. And, according to the National Accountability Bureau (NAB), tax evasion in Pakistan is Rs 7 billion daily.

Privatisation is successful and fruitful only in those countries where there are no trade barriers, and market forces decide prices and control inflation, trying to lower it as well. Pakistan is in the cauldron of terrorism, a worsening energy crisis and unparalleled levels of corruption. Without correcting these conditions, privatisation can hardly be a successful practice. The real industrialists are hesitant to invest in Pakistan with threats to their life and property. The corruption in the country is Rs 12 billion per day which is unfavourable for privatisation.

There is a strong conviction in the masses that every time the privatisation move made by the democratic rulers is on the demand of external forces. No doubt, privatisation works in developed nations so external powers urge for its replication in Pakistan but the external forces must know that terrorism, the energy crisis, tax evasion and corruption can never benefit the state and the masses from that act.

The state enterprises are not actually sick but corruption and tax evasion have been weakening their roots and destroying every institution in the country. A study by M A Kamal titled, ‘Fresh assessment of the underground economy and tax evasion in Pakistan: causes, consequences and linkages with formal economy’ says, “If there is no tax evasion, budget balances could have been zero and positive for some years, therefore removing the need for borrowing altogether.”

We are plagued by the energy crisis so there are no chances of the entities, be they private or public, to deliver. In this backdrop, it is an absurd plan to privatise the state’s assets on the pretext of their being sick. Such thoughts can one day give rise to demands of limiting the franchise right just to families of the lawmakers, citing that only they know the value of democracy.

The writer is a blogger and freelance columnist