PRIVATIZATION

INTRODUCTION In 1952 , Pakistan Industrial Development

Corporation was established.

Main aim was to boost up industrial development.

Privatization of State Owned Enterprises {SOE} became an important instrument of economic policy.

Privatization of SOEs are multi-faceted, complicated, politically and socially sensitive process.

It takes care of all stakeholders

Helps to promote capital , goods and labor markets in the country.

The privatization commission is entrusted with selling government property

It may also offer concessions or the right to operate publicly owned assets.

In November 2000, Ministry of privatization was created. The chairman of PC was appointed as minister for privatization.

PRIVITISATION TEAM

The staff of privatization comission comprise of civil service officers and transaction managers

It currently employs 11 civil service officers and 11 transaction managers

Role of transaction managers hiring external consultants communicating with regulators and relevant

ministry staff providing legal and accounting support.

PRIVATIZATION TEAM

THE BOARD OF THE PRIVATIZATION COMMISSION

CABINET COMMITTEE ON PRIVATIZATION Created in 1991. Headed by the prime minister

PRIVATIZATION PROCESS

IDENTIFICATION Identification of entity or list of entities to be

privatized.

HIRING OF A FINANCIAL ADVISOR

DUE DILIGENCE For major privatizations, the financial advisor carries out

this function.

VALUATION OF PROPERTY

NATIONALIZATION VERSUS PRIVATIZATION

Zulfikar Ali Bhutto on December 21, 1971 and on January 1, 1972 nationalized 31 key industrial units

Nationalization of industry in iron and steel sector, basic metals, heavy engineering, heavy electrical etc.

The banning the managing agency system under which companies were appointing persons to be sole purchasers for sale or distribution.

The corporate sector was controlled by a handful of managing agents who perpetuated their control over the affairs of the companies

The objective of the government was for a good cause but could avail the fruits of it. Nationalization caused administrative nightmare and wide spread public resentment.

Privatization on the other hand is a better and efficient method of running industries

Privatization has been a key component of structural reform programs in both developed and developing economies.

Generally believed that privatization leads to a fall in employment and wages at least in the short term, among others, point out that privatization may even increase employment

Graphically present the dynamics of employment changes over the three periods, i.e., pre-privatization, privatization and post-privatization, and show that the level of employment

HISTORY OF PRIVATIZATION POLICIES

Privatization policies during the 1970’s

Privatization policies during the 1980’s

Privatization during 1988-90

Privatization during 1991-93

Privatization during 1999-2008

Former prime minister Shaukat Aziz announced that country earned $6.41 bn

Record looting of about $10.76 billion to place when 51% shares of habib bank were sold to Aga Khan Fund.

Another was the privatization of 26% shares of Ptcl to Etisalat.

Pak- saudi fertilizer was handed to Fauji foundation in 2002 for just 8 billion. Pak Arab fertilizer was handed to Arif Habib Group for only 13 billion.

ACHIEVEMENT OF PRIVATIZATION

PRIVATIZATION AND LABOR Among the factors of production, labor occupies a very

special position

In most of the cases the government has encouraged the workers management group to purchase the privatizing unit by putting competitive bid

Most of the units transferred to the workers group have been very successful

However, privatization of SOEs is an important instrument to remove most of the ills of the economy.

Government gives high importance to the genuine interests of the workers and wants to make them a partner in its endeavor to reform the economy.

CONCLUSION

It has been institutionalized with the passage of time and rules and procedures have been defined for transparent and competitive privatization process.

Steps are being taken to expedite the privatization process as well as to rationalize the macro economic environment for speedy economic development of the country