‘Privatisation necessary to bring management efficiency’
KARACHI: Financial experts have stressed that the prime purpose of privatisations is not earning proceeds or money, not even to run the capital market, but to bring management efficiency in the system, which would ensure profitability for all stakeholders of leading banks.
“You have a crystal clear comparison of privatised entities like United Bank Limited (UBL), Allied Bank Limited (ABL), Habib Bank Limited (HBL) and Muslim Commercial Bank (MCB) versus state run organisations like Pakistan International airline (PIA), Pakistan Steel Mills (PSM), Pakistan Railways and Pakistan Post,” reasoned Fortune Islamic Services Chief Executive Faraz Younus Bandukda.
He said that the purpose of privatisation is to gradually reduce the role of government in business so it could concentrate on its main functions of running a state. “If a state-owned enterprise, for example PSM, is not running efficiently, the government should give its management control to the private sector and can benefit from the shares under its hold,” he added.
Ultimately, he said its benefit would be transferred to the public at large. “The government must retain itself on the direction of privatisation, being witnessed across the world, mainly in the shape of complete privatisation or in the form of public-private partnership,” he added.
Faraz said it is unfortunate that previously privatised entities that are now success stories in global arena are being criticised, adding that the results would be detrimental as confidence of not only local but also foreign investors would be shattered and they’ll shy away from further investment.
Raising questions over the privatisation process is possible but not after a long time as there is a law in all commercial deal that you can’t investigate the process after a certain period, he said, adding that it is also important that action against transaction after many years would reduce the credibility of future privatisations.
Faraz said privatisation of entities is carried out because the role of a political government was not good for any public sector enterprise, in which employees were recruited beyond needs of the corporations, which ultimately hits their performance.
“Privatisation of public sector enterprises (PSEs) raised eyebrows in the past with the suspicion of corruption and favouritism. By making the process further transparent can save governments from such charges while gaining public and investors’ trust,” he suggested.