Reviving PSEs
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.