After much hubbub over the privatisation of the largest state-owned companies, better sense seems to have finally prevailed as the federal cabinet on Wednesday has dropped the idea of privatizing eight companies, including Pakistan Steel Mills (PSM), Pakistan International Airlines (PIA) and Pakistan Railways (PR). However, the decision has irked many liberal economists who deem privatisation as the one and only solution to the revival of ailing industrial units and companies. It should not be forgotten that this neo-liberal economic policy has been tested and tried by previous governments in the 1990s and earlier as well. This government adopted and followed this legacy without examining its wisdom, which is conspicuous by its absence if seen in the particular perspective of the track record of privatization, our country’s economic dynamics and functioning. Unfortunately, it has been a general belief that companies and systems work comparatively more professionally and efficiently under private ownership. Keeping faith intact in this belief, the government privatized the Karachi Electric Supply Company (KESC) and the Pakistan Telecommunication Company Limited (PTCL). Unfortunately, the private managements of both the companies have failed in fulfilling the promises and expectations the government had from them. The KESC is in a fix since it was privatised. It is running far below its actual generation capacity. There remains a continuous tussle between the workers and the new management, which has also not met many other contractual obligations. Similarly, bureaucratic cultural practices still continue in the profit-making company, PTCL. On the other hand, the government is also facing protests from the workers’ unions against the privatisation of the Pakistan Electric Power Company (PEPCO). Privatisation schemes have always run up against criticism and acceptance issues from the working class, which sees the private sector as an exploiter and against their interests. The way the new KESC management has been treating its workers says it all. Former Prime Minister Zulfiqar Ali Bhutto’s government in the 1970s tried the exactly opposite economic policy and nationalised the commanding heights of the economy, including industry, banking and insurance. His policy proved futile as all enterprises were handed over to the bureaucracy, which is infamous for its corrupt practices, nepotism and red-tapism. Bhutto’s bureaucratization of the national enterprises left its long-lasting effects and unfortunately, the situation has gradually degraded over the decades. The once profit making companies like the PSM, PIA and PR cost the national exchequer an estimated Rs 250 billion, which is about 1.4 percent of the total size of the economy in annual bailout costs. PIA alone has swallowed over Rs 100 billion during the last five years and the government has already given two bailout packages of Rs 30 billion to the PSM. The PR has also asked for about Rs 50 billion worth of bailouts in the last two years alone. Surplus staff, corruption and undue privileges to the higher officials are a constant burden on these units, which have become a white elephant for the government. Now in the absence of buyers offering good deals owing to an overall strained investment environment at the international and domestic level, the government, earlier wedded to the privatisation policy, has realised that throwing good money after bad would not serve the purpose. The Cabinet’s decision is a sound recognition of necessity. It also provides the opportunity to revisit the whole shibboleth of privatization. Businesses in the modern capitalist economy the world over are seldom run by their owners any more. Instead, this is handled by professional management. A turn around can be expected if the government promotes a professional corporate culture and appoints competent management on merit. Such management must be held accountable by the owners, the government, as is the norm in all business. Only in this manner can the conundrum of ailing state-owned enterprises be tackled successfully. *