PM adviser says privatisation essential for growth, revenue, innovation

LAHORE: Privatisation creates wealth, jobs and revenue. It also drives innovation and competition by ensuring a level playing field for all stakeholders -- resulting in accelerated growth.

This was said by Adviser to the Prime Minister on Privatisation Muhammad Ali during a presentation at a seminar organised by CFA Society Pakistan. He said that in most sectors where public-sector companies operate, competition and a level playing field are denied.

Citing previous examples of privatisation, he pointed to the banking sector, where the introduction of credit cards by Shaukat Tarin in the early 1990s marked the beginning of consumer financing in Pakistan. Subsequently, various banks introduced their own innovative products and services, improving customer experience. This, he noted, not only led to significant growth in the banking sector but also increased its profitability, despite the payment of over a trillion rupees in taxes to the national exchequer. At the time of privatisation, many of these banks were either loss-making or contributing minimally in taxes. A similar transformation occurred in the telecom sector following the privatisation of PTCL.

Ali argued that government-owned entities routinely deny private players a fair chance to compete. “There is a pressing need to remove the government from doing business altogether -- not just from loss-making enterprises, but also from profit-making ones,” he said. In public-sector companies, he added, appointments and promotions are often based on personal influence rather than merit. In contrast, the private sector rewards competence and qualification.

Privatisation in Pakistan remains a challenging task due to resistance from workers, bureaucrats and politicians. As a democracy, Pakistan’s government must consider the sentiments of its electorate and make decisions through public engagement. Ali criticised comparisons with public-sector companies that operate in countries that are governed by monarchs or authoritarian regimes, where dissent is limited and orders are implemented without delay.

He said decision-making in state-owned enterprises (SOEs) is hampered by bureaucratic red tape, and these entities typically lack the innovation needed for growth. If privatised, they would attract both investment and innovation, leading to expanded business activity and increased government revenue.

Ali emphasised the need for full transparency in the privatisation process. Any new owner must operate within a strong regulatory framework, and there should be no guaranteed returns. Efforts must also be made to build political consensus and engage people throughout the process. He noted that over 100 SOEs are slated for privatisation, with the Privatisation Commission aiming to divest 24 in the first phase. These include Pakistan International Airlines (PIA) by year-end, the Roosevelt Hotel in New York, power companies such as IESCO and Genco (after resolving regulatory issues), and State Life. Currently, the commission is focusing on domestic investors, given the unfavourable conditions for foreign investment due to ongoing tensions. However, he added, a foreign partner may be necessary for PIA to provide technical support.

Abdul Rehman Warriach, commissioner at the Securities and Exchange Commission of Pakistan (SECP), also spoke at the seminar, highlighting the need to deepen capital markets and to privatise provincial commercial banks.