Recently, Dr. Abdul Hafeez Sheikh, Advisor to Prime
Minister on Privatization and Investment visited Karachi. He also
visited Karachi Chamber of Commerce and Industry (KCCI) to seek the
opinion and feedback on privatization and investment policies of the GoP.
The purpose of this visit was to let the business community know more
about the ongoing privatization programme, remove the ambiguities so
that the process can be accelerated.
As regards attracting investment in Pakistan, Dr.
Sheikh did not mince his words. He said, "The capital has no
nationality and only reaches those destinations that offer attractive
rate of return." He also suggested that there should not be any
discrimination between local and foreign investors." Therefore, the
policies of any government, including the GoP, should be aimed at
creating conducive environment for investment, letting the private
sector make its investment decisions and removing the irritants, if
there exists any.
As regards the on-going process of privatization, Dr.
Sheikh reiterated the GoP policy. The policy is aimed at encouraging the
private sector to play its due role. Constant injection of funds into
state-owned enterprises is a burden on national exchequer. The global
experience shows that all the stakeholders have benefited from
privatization. The GoP is committed to privatization and also making
concerted efforts but little success has been achieved so far.
Shaukat Iqbal, President, KCCI, in his welcome
address pointed out some key issues the trade and industry facing. His
complaint was that despite injection of billions of rupees in the KESC,
consumers were forced to pay high electricity tariff that erodes
competitiveness of locally produced goods. He also hinted that financial
institutions were reluctant to commit long-term lending, for the fear of
It may be said that the process has moved slow partly
due to geopolitical situation in the region. However, it is also
necessary to identify those who have been resisting the process. It may
be correct to say that those who have vested interest, be it the
management or employees, are the biggest critics and the opponents of
privatization. They try to create hurdles and often divert the attention
of the GoP from key issues to non-issues. This distracts the process and
causes delays in concluding the transactions. Due to the unnecessary
delays the investors also loose interest and/or the price offered
It would not be out of context to refer to
privatization of Pakistan Telecommunication Corporation (PTCL). It is on
the list for almost a decade but the transaction could not be concluded.
Some experts say that it has become a 'lost opportunity'. In the early
nineties, when the buyers were keen in acquiring telecommunication
companies, Pakistan failed in concluding the transaction. Now the GoP is
making desperate efforts but the telecommunication sector has very
little attraction for the global investors.
During the discussion the role of various regulatory
authorities was criticized. Zubair Motiwala, one of the past presidents
of KCCI, referred to a recent decision of National Electric Power
Regulatory Authority (NEPRA). He said, while the KESC had asked to a
tariff hike, the Authority allowed the utility to raise 'Fixed charges'
a request never made by the applicant. Zubair also demanded that there
should be proper representation of consumers on regulatory authorities.
Members of KCCI also suggested for restructuring of
Board of Investment (BoI). It is interesting to note that almost all the
ministries and departments are working for the promotion of investment
in the country. However, the pace of investment is still too slow. One
of the rationalizations is that the various industries are still
suffering from under utilization of installed capacities. Unless these
industries achieve optimum capacity utilization, sponsors may not be
keen making fresh investment. However, the experts strongly believe that
the sufferings of manufacturing sector have intensified due to lack of
timely BMR. They also warn that unless the manufacturing go for massive
BMR and add new capacities, the quality of local products cannot be
Dr. Hafeez Sheikh reiterated the GoP commitment
towards privatization and also said that the process was on track.
Privatization of PSO, HBL and KESC is being actively pursued. The second
pre-bid meeting of PSO bidders is due shortly.
Though one may say that the GoP has succeeded in
concluding only two major transactions (Saudi Pak Fertilizer and United
Bank) in last three years. However, the fact is completion of these
transactions according to a laid down schedule and the transparency of
the process has boosted investors' confidence.