PRIVATIZATION POLICY IMPROVES INTERACTION WITH REST OF THE WORLD

By AMANULLAH BASHAR
May 08 - May 14, 2006

One of the major achievements of the Privatization Policy being carried out by the present government in Pakistan seems to have enhanced the inter-action with rest of the world especially with the Gulf countries. A major chunk of investment through privatization has arrived from the Middle Easter countries, which has essentially resulted in bringing the gulf countries closer to Pakistan.

Resultantly, the air traffic between Pakistan and the Middle East has taken a quantum jump on one hand and the arrival of new private line within Pakistan on the other hand besides those international airlines which had stopped operating from Pakistani airports have once again started to return to this country. Of course, this could be considered a major success of the privatization policy of the government.

LIST OF SCHEDULED BANKS OPERATING IN PAKISTAN
Sr# Name of Bank
NATIONALIZED COMMERCIAL BANKS
1 First Women Bank Ltd
2 Habib Bank Limited
3 National Bank of Pakistan
4 United Bank Limited
DE-NATIONALIZED BANKS
5 Allied Bank of Pakistan Ltd
6 Muslim Commercial Bank Ltd
SPECIALIZED SCHEDULED BANKS
7 Agricultural Development Bank of Pakistan
8 Federal Bank for Co-operatives
9 Industrial Development Bank of Pakistan
10 Punjab Provincial Co-operative Bank Ltd
PRIVATE SCHEDULED BANKS
11 Askari Commercial Bank Ltd
12 Bank Alfalah Limited
13 Bank Al-Habib Limited
14 Bolan Bank Limited
15 Faysal Bank Limited
16 Meezan Bank Limited
17 Metropolitan Bank Limited
18 PICIC Commercial Bank Ltd
19 Platinum Commercial Bank Ltd
20 Prime Commercial Bank Ltd
21 Soneri Bank Limited
22 Union Bank Limited
PROVINCIAL BANKS
23 The Bank of Khyber
24 The Bank of Punjab
MICRO FINANCE BANKS
25 The First Micro Finance Bank Limited

DEVELOPMENT FINANCIAL INSTITUTIONS

26

Investment Corporation of Pakistan

27

National Investment Trust Limited

28

Pak Kuwait Investment Company(Pvt) Limited

29

Pak Libya Holding Company (Pvt) Limited

30 Pak Oman Investment Company (Pvt) Limited
31 Pakistan Industrial Credit & Investment Corp. Ltd.
32

Saudi Pak Industrial & Agricultural Investment Company (Pvt) Limited

33

SME Bank Limited

INVESTMENT BANKS

34

First Standard Investment Bank Limited

35

Asset Investment Bank Limited

36

Atlas Investment Bank Limited

37

Crescent Investment Bank Limited

38

Escorts Investment Bank Limited

39

Fidelity Investment Bank Limited

40

First International Investment Bank Limited

41

Franklin Investment Bank Limited

42

Islamic Investment Bank Limited

43

Jehangir Siddiqui Investment Bank Limited

44

Orix Investment Bank (Pak) Limited

45

Prudential Investment Bank Limited

46

Security Investment Bank Limited

47

Trust Investment Bank Limited

VENTURE CAPITAL

48

Pakistan Venture Capital Limited

49

Pak Emerging Venture Limited

DISCOUNT HOUSES

50

First Credit & Discount Corporation (Pvt) Limited

51

National Discounting Services Limited

52

Prudential Discount & Guarantee House Limited

53

Speedway Fondmetal (Pak) Limited

HOUSING FINANCE COMPANIES

54

Asian Housing Finance Limited

55

Citibank Housing Finance Co. Limited*

56

House Building Finance Corporation

57

International Housing Finance Limited

However, some quarters have their own concerns regarding privatization process especially in the telecom sector. It is said that the government deal of handing over Pakistan Telecommunication Company Limited (PTCL) to Etisalat has started hurting the "telecom deregulation policy 2004" that supported the phenomenal increase of telecom sector and grabbed potential foreign investment in the country.

This step has raised some serious concerns in the telecom sector and its allied industries over the restrictions on "open licensing regime" for the next few years and secondly unjustified broadband bandwidth tariff structure.

The PTCL is the country's only and largest service provider of all kinds of telecom and allied services to the consumers.

The allied telecom industry had concerns about the working of telecom watchdog agency (Pakistan Telecommunication Authority) as a regulator considering its marginal role in finalizing the privatization deal of the country's largest phone utility.

The PTCL's privatization deal was handled at the highest "government level" in which the power corridors had to accept a number of terms and conditions from its buyer (Etisalat), which could also seriously hurt the growth of various telecom services in the country.

Experts believed that such undisclosed deal further left the country's consumers at the mercy of a new "monopolistic regime" that was also a clear-cut negation of telecom deregulation policy.

The worst sufferers are those allied industries that use the PTCL infrastructure and service like internet service providers (ISPs), information technology & enable services (ITeS), business process outsourcing (BPO), call centers and software exports.

The experts said, in Pakistan the Internet and data communication industry was deregulated in 1994 much earlier than in India where such step was taken in 1999.

"Unfortunately, we are unable to nurture such a time span of five years than India, and we are far behind from their service level, overhead cost and growth of broadband services," they said.

The unfriendly aspect is the continuos non-professional approach of the government officials, dealing and planning such broadband policies and above all high tariffs that kept the growth at a very slow pace.

The Ministry of Information Technology and Telecom announced the Broadband Policy 2004, which defines that the broadband access is widely recognized as a catalyst for the economic and social development of a country.

Broadband rollout has a more powerful impact than the spread of basic telephony.

The policy further says that the country should achieve DSL user base to 100,000 by December 2006, but the tariff is considered a major factor in the slow growth of such services.

FOREIGN DIRECT INVESTMENT (SECTOR WISE) (BY ECONOMIC GROUP)
1996-97 to July-March 2006 (Million US $)

S.No

Economic Group

01-02

02-03

03-04

04-05

July 05 - March 06

1

Food

7.6

6.0

3.3

10.0

45.3

2

Beverages

(13.6)

1.0

0.7

6.2

5.5

3

Tobacco

0.9

0.0

0.5

6.7

1.9

4

Textile

18.5

26.1

35.4

39.3

32.3

5

Mining & Quarrying

6.6

1.4

1.1

0.5

4.6

6

Oil & Gas exploration

268.2

186.8

202.4

193.8

216.9

7

Petrol-Chemical

2.2

0.8

1.5

1.1

5.3

8

Petroleum Refining

2.8

2.2

70.9

23.7

18.7

9

Machinery other than electrical

0.1

0.4

0.7

2.8

1.0

10

Electronics

15.9

6.7

7.5

10.3

15.8

11

Electrical Machinery

10.5

10.5

8.7

3.4

1.1

12

Power

36.1

32.8

(14.2)

73.3

304.0

13

Chemical

10.6

86.2

15.3

51.0

44.7

14

Pharmaceutical

7.2

6.2

13.2

38.0

24.8

15

Fertilizer

0.0

0.0

0.0

3.5

(108.6)

16

Construction

12.6

17.6

32.0

42.7

54.4

17

Transport

0.1

0.1

8.8

10.6

6.0

18

Storage Facilities

0.0

2.4

0.0

3.7

0.2

19

Communication (IT & Telecom)

12.7

24.3

221.9

517.6

1,035.6

20

Financial Business

3.6

207.5

242.1

269.4

265.5

21

Trade

34.2

39.1

35.6

52.1

81.9

22

Tourism

21.4

87.4

0.1

0.0

2.5

23

Paper & Pulp

0.7

1.4

1.7

0.0

0.1

24

Cement

0.4

0.4

1.9

13.1

33.6

25

Sugar

0.1

0.9

0.4

4.2

4.3

26

Others

24.8

49.8

57.9

147.2

127.3

 

Total

484.2

798.0

949.4

1,524.2

2,224.7

"Presently," the sources said, "there are only 15,000 DSL broadband connections activated in the country after the announcement of the policy. It means that at the current speed of deployment the conservative target for 100,000 DSL users set by the government will be achieved by 2013."

According to Internet Service Provider Association of Pakistan (ISPAK), the tariffs for Japan, South Korea, Hong Kong, Singapore, Malaysia and India reveal that India is most un-competitive in international and domestic bandwidth pricing.

The ISPAK did a price comparison with the least competitive country in international and domestic bandwidth pricing i.e. India and defines that in Pakistan, "We are 240 percent higher in DS3 (45Mbps) international IPLC price, 226 percent higher in STM-1 (155Mbps).

"A 155-mbps circuit of 1000KM will cost 94,000 dollars per month in Pakistan whereas in India, it will cost only at 38,000 dollars," said the ISPAK.

The ISPAK also observed that there were some serious disparities in tariffs in Pakistan. For example, a full circuit of 155-mbps will cost 76,000 dollars per month, whereas 155Mbps 1/2 circuits (IPLC) will cost 185,000 dollars.

Another interesting fact in tariff disparity is that an international full circuit of 155-mbps from Pakistan to United Kingdom is priced at 76,000 dollars, whereas the same capacity between Karachi and Islamabad costs 123,500 dollars per month.

The ISPAK further said no action had been taken by the Ministry or the PTA to address this great anomaly in tariffs, which was the greatest impediment in the proliferation of broadband services in Pakistan.

By January this year, 96 percent Internet users were using broadband in South Korea; 47.75 percent in China; 14 percent in India; seven percent in Malaysia and only 0.63 percent in Pakistan.

TOP INVESTING COUNTRIES

U.A.E

653.8

29.4

U.S.A

369.3

16.6

Saudia Arabia

272.0

12.2

Switzerland

156.9

7.1

U.K

136.7

6.1

Netherlands

66.5

3.0

Others

569.5

25.6

Total

2224.7

100.0