Re­viv­ing PSEs

The Pak Banker - - FRONT PAGE -

Pub­lic sec­tor en­ter­prises (PSEs) are a big drain on the econ­omy.The Pak­istan rail­way suf­fered a loss of forty bil­lion ru­pee in the fis­cal year end­ing June, 2018. Sim­i­larly, PIA has been per­pet­u­ally in the red prompt­ing the Supreme Court to or­der an ac­count au­dit of last ten years. Pak­istan Steel Mills (PSM) has been run­ning huge losses along­side many other state-owned com­pa­nies. All these en­ti­ties were hugely prof­itable at some point in time hav­ing en­joyed a mo­nop­oly or lim­ited com­pe­ti­tion in their re­spec­tive sec­tors, or decades. But later they be­came a li­a­bil­ity for the coun­try.The rea­son for the re­ver­sal is that although they are com­mer­cial en­ti­ties meant to make a profit these en­ti­ties are run like any other gov­ern­ment depart­ment. Al­most all of them are run by some gov­ern­ment min­istry mak­ing them at­trac­tive tar­gets for politi­cians to milk them through var­i­ous tac­tics.

It is no se­cret that politi­cians of­ten fill these en­ti­ties with po­lit­i­cal ap­point­ments from their own con­stituen­cies.These ap­pointees lack the re­quired skills and are of­ten to­tally re­dun­dant, only adding to the salary and pen­sion obli­ga­tions of the re­spec­tive or­gan­i­sa­tions, be­sides be­ing in­volved in cor­rup­tion. They also re­main ac­tive po­lit­i­cally and of­ten form pow­er­ful link­ages in­side these en­ti­ties, block­ing the way of any re­form as we have seen in the case of PIA and PSM where mul­ti­ple at­tempts to pri­va­tize them have failed be­cause of stiff re­sis­tance from em­ploy­ees and their po­lit­i­cal back­ers.

In to­day's busi­ness en­vi­ron­ment where crit­i­cal de­ci­sions have to be made very quickly one can­not put their files in a bu­reau­cratic process and wait for months to get ap­proval from sec­re­taries and min­is­ters, who work at a snail's pace. More­over, they are not tech­ni­cally equipped nor do they have rel­e­vant qual­i­fi­ca­tions and ex­pe­ri­ence to make such de­ci­sions. PIA has to get ap­proval from the Prime Min­is­ter to buy new planes. Where on earth does this hap­pens? All suc­cess­ful air­lines around the world make their own fleet de­ci­sions, purely based on busi­ness needs with­out the in­volve­ment of politi­cians. There are many air­lines, rail­ways and other or­gan­i­sa­tions around the world which are hugely prof­itable de­spite be­long­ing wholly or par­tially to the pub­lic sec­tor.

Need­less to say, all pub­lic sec­tor com­mer­cial or­gan­i­sa­tions in Pak­istan can be­come prof­itable only if there is a po­lit­i­cal will to do the need­ful.The first step to­wards this will be the de-politi­ci­sa­tion of these en­ti­ties. The state needs to un­der­stand that com­mer­cial en­ter­prises can­not be run like other gov­ern­ment de­part­ments and there is no room for po­lit­i­cal med­dling in busi­ness or­ga­ni­za­tions. In to­day's world, busi­nesses are run by grad­u­ates of top-ranked busi­ness, engi­neer­ing and tech­nol­ogy schools and not by tra­di­tional civil ser­vants. In­de­pen­dent en­ti­ties will be able to get tal­ented peo­ple by pay­ing them in com­par­i­son with the pri­vate sec­tor and ty­ing their em­ploy­ment ben­e­fits with their per­for­mance.

A CEO who is an in­dus­try leader in com­mer­cial avi­a­tion and is of­fered pay and perks in line with the in­ter­na­tional avi­a­tion in­dus­try bench­marks can surely turn the PIA around, if given nec­es­sary pow­ers to make de­ci­sions purely based on the busi­ness needs of the air­line.Be­sides run­ning their core op­er­a­tions smoothly and prof­itably these in­de­pen­dent en­ti­ties will be able to uti­lize their huge re­sources to the op­ti­mum. For ex­am­ple, Pak­istan Post owns prime land in al­most all cities around the coun­try.A sin­gle high rise build­ing built on one of its plots, say in La­hore or Karachi, can give it mil­lions in rent every year. Sim­i­larly, all other or­gan­i­sa­tions have an enor­mous amount of re­sources, in­clud­ing land and other as­sets, ly­ing unutilised. The new PTI gov­ern­ment can eas­ily con­vert the chal­lenge of PSEs into an op­por­tu­nity for the na­tion.

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