Dec 31, 2007 - Jan 06, 2008

The single largest achievement of outgoing Prime Minister, Shaukat Aziz is transformation of a 'failed state' into a vibrant economy and the preferred investment destination. The faith in his policies is evident from record inflow of foreign direct as well as portfolio investment. All the sectors of GDP are registering substantial growth but financial sector emerged the strongest.

Commercial banks attracted the largest investment with privatization of mega entities like United Bank and Habib Bank. Raising minimum paid-up capital requirement for commercial banks led to merger and acquisitions. Standard Chartered Bank acquired Union Bank and now operating as a local bank listed at stock exchanges. SAMBA Group of Saudi Arabia acquired majority stake in Crescent Commercial Bank. Temasek Group of Singapore initially acquired majority stake in NIB Bank and then taking over PICIC ownership and management control. The last acquisition was of Prime Bank by ABN Amro Bank and latest news is grant of banking license to Barclays Bank to operate in Pakistan.

Privatization of Pakistan Telecommunication Company may have helped the government in attracting substantial payment in dollars but also a lot of criticism. There is growing perception among the subscribers of land lines that they are ignored the most despite paying high line rent. Phones remain out of order for months despite collection of line rent.

In an attempt to attract investment in oil and gas exploration sector the government continued to improve incentives through successive Petroleum Policies. By this time over two dozen companies are involved exploration of hydrocarbon in the country but OGDC, a public sector company, remains the key player. It has the largest share in oil and gas production. It also has the enviable success record but Pakistan government has not been able to market it properly.

During Shaukat Aziz's regime the Karachi Stock Exchange (KSE) not only registered new records but keeping track of such achievements also became difficult. If market created history of highest daily trading volume and highest single day gain of the KSE-100 index it also broke single day plunge record, lowest trading volume and also witnessed various crises. However, after every crisis the index recorded new gains and investors" confidence remained steadfast.

During five years focused attempt was made to bring transparency in the equities market through capital reforms. On the one hand companies were made to make appropriate disclosures, submit timely reports and hold annual general meetings and on the other hand regulatory regime was improved. Despite this various crises emerged. The bottom line was that all the crises were broker-led and the regulators failed in reading bubble formation. The regulators continued to play the role of fire fighters rather.

The credit of establishing Textile Ministry also goes to Shaukat Aziz but the industry continue to suffer from serious structural problems. Invariably each year began with bumper cotton crop estimate but somewhere in the middle it always transpired that cotton has to be imported in huge quantity. Spinning remained in shamble, inefficiency prevailed in weaving and processing and exporters continued to grudge about eroding competitiveness. The government faced criticism for rising cost of doing business but industry hardly took any initiative to improve efficiency, production and productivity.

Most of the critics never applauded effort of Shaukat Aziz and the central bank for taking Pakistan's foreign exchange reserves to new highs. Their point of view has been that record foreign exchange reserves have not helped in poverty alleviation rather poor have gone poorer and rich became richer. Even the rise in the sale of consumer durable, cars and motorcycles was termed 'extravaganza' and living on borrowed money. Their view was that credit card and consumer finance is eroding the savings, already low in the country. However, these cynics completely ignored the fact that consumers were enjoying the benefits of these products, which they could not afford to own and also paying the cost through affordable monthly installments.

The historians will write the name of Shaukat Aziz for undertaking the largest privatization program. A number of large transaction were executed that included Habib Bank, United Bank, Saudi Pak Fertilizer, sale of management rights of mutual funds managed by ICP, KESC and PTCL. Pakistan Steel attracted a lot of criticism and ultimately the transaction has to be scrapped.

Some of these transactions brought in substantial foreign exchange but one of the points of view was that sale of strategic assets, particularly commercial banks to foreign investors, was against the national interest. Pakistan Steel transaction was also stopped by the apex court on the same ground. However, one could not find a plausible reason for the delay in privatization of NIT.

One of the brightest aspects of privatization program was 'Privatization for People' strategy. Under this plan some of the state owned entities were listed on local stock exchanges and their shares were offered to general public through IPOs. Similarly, secondary offers were also made of the already listed public sector entities.

Attempts were also made to sell GDRs and Sukuk in the global markets. The results were encouraging and it would be much easier for the new governments to complete the transactions in the pipeline.

Shaukat Aziz has prepared the architectural design, laid foundation and constructed the basic structure of Pakistan's economic plan. There is always room for improvement but how soon the next elected government could resume and move at what speed remains to be seen.