One of the important concern and duty of modern governments is to regulate and ensure economic growth. The goal is achieved through socialism, nationalization, and privatization. The recent failure of communism to deliver the goods, and past poor performance of state sector, have given a flip. to privatization, particularly in the developing countries.
It is rather difficult to define the term privatization due to its complex nature. It ordinarily means to eliminate the welfare state by encouraging self-help and voluntarism. In a strict sense, it stands for using private organizations to manage and deliver public goods or to replace civil servants with private workers by selling public assets to the private sector.
In Pakistan, the public sector has the upper hand in controlling the industrial units through using the country’s natural resources. The private sector has been, thus at the mercy of the government. The market mechanism is also not liberal for the success of private producers. The public sector begs the major inputs; and the private sector, thus, is badly starved and kept down.
The residuals go the private organizations that are at the mercy of various government departments. The official involvement and red-tapism in the government offices lead to corruption, bribery, favoritism, leg pulling. Due to the lack of accountability in the public sector, the government managed industries have a poor graph of performance. Without interest and personal involvement, economic progress is impossible.
All these drawbacks can be counter-acted through privatization. It may take or assume different forms.
- selling of the assets to the general public
- to the managers
- to the employees
- foreigners and
- mutual funds or banks.
[the_ad id=”17141″]The transfer can also take place by selling shares through auction or private negotiations. Another way is contracting. out the public-owned units to the private sector. Privatization, therefore calls for clearly defined objectives and well-considered policies.
Privatization can be justified on the following economic grounds:
- It is more effective and efficient
- It is disciplined and responds well to the choices of the consumer’s needs
- It helps in reducing waste and improvement in public services
- As a political ideology, privatization has been practiced to raise revenues and to get rid of debt-ridden organizations. A sound economic policy of privatization evaluates each industry on the bases of effectiveness, efficiency; equity, reliability, accountability, and choice, and follows and adopts ways and means according to well-defined objectives.
The current steps towards the privatization aim to put the national economy on a sound basis. The progress and prosperity of the three little tigers (Korea, Taiwan, and Singapore) is due to the active participation of the private sector and liberal marketing policy. The IJI government had undertaken to privatize 105 units.
The Far, Eastern countries and England during Mrs. Thacher’s government have achieved the economic goals through well-planned privatization policies. So far 54 units have been privatized (sold at the cost of ten billion) and the results have been good. It is the most daring economic reform of the IJI government. The MCB and some large engineering industries have taken the lead in the right direction. The method followed is selling the shares to the employees and the public.
The Chairman Privatization Commission Gen. Saeed Qadir aims at quick transfer or sale of units at the highest bid, but the present climate is not conducive to it, nor is the time ripe. PIA, PNSC, Habib and UBL, KESC, Telecommunication, some heavy engineering completes may be privatized in phases or gradually, and sanctions to effect gainful change. It is, indeed, a very daring and bold programme of the decade in the economic field. Only sustained and patient efforts can bring success and bear fruits. Much depends on the continuity of the government and political stability.
Unless the government provides good management for the privatized units, mobilize large funds to operate them through sound financiers, and puts them under honest and devoted workers, the reforms cannot achieve the desired economic goals. It must guard against the pitfalls.