King Richard, aka the Lionheart, once declared, “I would have sold London if I could find a buyer.” London was spared; instead, bishoprics were sold, gold and silver treasures of churches were confiscated, and Carucage, a crushing land tax, was imposed to finance the Crusade. Pakistan has recently leased out berths 6-9 at the Karachi Port’s East Wharf for a period of 50 years to the UAE’s AD Ports Group. The Group will invest a sum of $220 million in new concession and growth capital expenditure over the first 10 years. It is pertinent to note that this terminal has been generating annual revenues of $55 million.
The mismanagement of Pakistan’s economy is being compounded by the sale/lease of our limited assets to enable the country’s survival. The other dilapidating effect is bowing to the IMF diktats to keep the cash-strapped country barely afloat. IMF and World Bank loans remain the gold standard of international finance, depicting countries in economic servitude. Like our governing dispensations, their fiscal policies, too, have proven to be nothing but smoke and mirrors. The recently established Special Investment Facilitation Council (SIFC) has set an ambitious target of attracting $100 billion in FDI within three years and achieving a GDP of $1 trillion by 2035. In the recent past, we all know how the NAP was treated despite the APS heart-rending tragedy and the specter of terrorism throughout the country.
The CPEC Authority, created with the same claims and fanfare, met an equally ignominious end. Forums like the CCI and the Planning Commission have failed to deliver or justify their burden on the national exchequer. What magic then can the SIFC weave to rake in the billions and trillions that too when sectoral policies, rules of business, and non-representative governance compounded with cronyism remains a lethal concoction that has proven to be the end of the mightiest in anything and everything?
Strong regulatory and institutional oversight is imperative for the transparent sale of SOEs, as for every other facet of governance. Pakistan has seen two distinct phases of privatization. The first started by General Zia ul Haq made denationalization a medium of passing economic basis to a select few. The second phase, beginning in the early 1990s, has been implemented by successive regimes across the political divide. Successive governments have vigorously pursued this as a cherished conduit to crony capitalism. This has resulted in what the English poet Percy Bysshe Shelley said: “The rich have become richer, and the poor have become poorer, and the vessel of the state is driven between anarchy and despotism.”
In our privatization rounds, business groups that acquired banks also successfully acquired other major industries. In many countries, ownership/control of financial institutions is an automatic disqualification from owning other major business concerns. The feeding ground for the concentration of economic power was established in the privatization round of the first government of Nawaz Sharif. The criterion for bank ownership was loose, and there was no restriction on the control of banks by industrial groups. This lethal combination gave buyers of the first round an unfair advantage over the rest, the former acquiring multiple assets within and outside the privatization process. As a result, the business landscape of Pakistan has been profoundly impacted. A large number of industrial groups without a stake in banks have generally regressed, while those owning banks boast the Midas touch.
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