Caretaker Federal Minister for Information, Broadcasting, and Parliamentary Affairs has recently informed the Upper House that the government had taken multiple steps to reduce losses in State-Owned Enterprises (SOEs). The Minister claimed that there is consensus on the need to end losses in State-Owned Enterprises (SOEs); wherein some believe that privatization is the sole solution, while others argue for reforms and professional management to enhance their efficiency. Minister told the lawmakers that the caretaker setup has left the final decision on this matter to the elected government and the parliament which will shortly take control of the country.
Pakistan has a total of 212 State owned Entities (SOEs), 85 out of those are commercial. A recent World Bank report revealed that Pakistan’s State Owned Entities eat up more than Rs. 458 billion from public funds on an annual basis just to stay aflot without any productivity and profit. The situation becomes more worst when SOEs combined loan and guarantees climbed to more than 10 percent of the annual GDP or Rs. 5.4 trillion in Fiscal Year 2021, up from 3.1 % of the GDP (Rs. 1.05 percent) in 2016.
The World Bank Group (WBG) declared Pakistan’s SOEs the worst Enterprises in entire Asia. In addition, the fiscal damages becomes higher and higher on yearly basis without any signs of improvement in operation/ service delivery as well as any reduction in loss or institutional depletion. According to government statistics, the South Asian economy experienced a cumulative total of Rs 286 billion in net losses incurred by the State-Owned entities in FY 2018. Meanwhile, almost all of the state run institutions earned no profit except in a few cases.
There had been a nationwide debate regarding dysfunctional state run entities including the Pakistan International Airlines (PIA), Pakistan Railways, Pakistan National Shipping Corporation, Pakistan Post, Pakistan Tourism Corporation, Pakistan Steel Mills and several other Corporations that have now became unproductive and floating on subsidies from the government to pay salaries of their employees, and fullfils over exexpenses Unfortunately, the majority of the institutions could neither overcome their infrastructural drawbacks nor can address their operational deficiencies despite swap of administrations, institutional reforms and frequent funding from the government over the past decades. The public is annoyed of the current situation because those State-Owned Enterprises eat up a big chunk of government resources which can otherwise be utilise on public well-being, education, heath and social security to improve living standards of the masses.
There are diverse opinions regarding the future of the bedt ridden, dysfunction and non productive institutions. Some asked for the privatization of the loss-making SOEs to avoid more burden on the national exchequer.
While others argue for professional management, restructuring and reforms to enhance their efficiency and improve their performance. The World Bank and Global experts recommend informed policy decisions based on strategic importance, Financial performance and social impact to decide retention, dispose off or restructuring of a particular institution. Historically, Pakistani leadership fails in formulatinh a rational policy, wherein important economic and business decisions fell victim to cartels pressure, self perceived security risk throughout the past. Today, a majority of official sensitive correspondence transport through TCS but government resists privatization of Pakistan Post due to attached security hazards, over 90 percent cargo moves through the NLC and private transport companies but Pakistan Railways is not handing over to private sector based on national interest. The same is the case with the PIA, Pakistan Steels, PNSC, and other Corporations including DISCOs, GINCOs etc.
Pakistan is passing through a crucial period of history while economic frailty has become an unceasing impediment for sustainable growth, social uplift and National sovereignty of the country. The newly formed elected government must adopt thorough and prudent policies regarding the fate of State-Owned entities without conceding to pressure groups, bureaucratic hurdles and other delaying tactic. If Pakistani leadership intends to rescue the country from economic crises, debt traps and uncertainty of an unforeseeable future once and for all.
