Pakistan came into being without a resource base. Quaid-e-Azam Mohammad Ali Jinnah thus approached the USA to extend a helping hand. The USA responded positively, but conditional upon Pakistan extending cooperation to the US in the region. Pakistan has been a US camp follower since then. However, Pakistan inherited a strong framework of Central Superior Service - recruited, educated and trained on the British pattern of the Indian Civil Service. This included stalwarts like Ghulam Mohammad and Chaudhry Mohammad Ali from the Audit and Accounts Services. Among them was also Ghulam Faruque, an All India Railway Service officer. While Ghulam Mohammad and Chaudhry Mohammad Ali laid out a broad economic base, Ghulam Faruque set up an industrial base called the Pakistan Industrial Development Corporation (PIDC).

Entrepreneurs poured into Pakistan from all over the world with capital and talent. The policymakers set up the necessary framework of serving units such as the Planning Commission, the Industrial Development Bank of Pakistan and the Pakistan Industrial Credit and Investment Corporation (PICIC). While Pakistan’s private sector relied upon aid, loans and credits from International Finance and Investment Services (IFIs) under the influence of the US, the PIDC set up several industries throughout the country - from oil refineries, textile mills, sugar mills, and what not. These units were then offered to the entrepreneurs on easy terms to buy.

On the other hand, the aid, loans and credits flowing in to support the private sector were not utilized to develop the much needed socio-physical infrastructure. The aid, loans and credit have actually been a misnomer and a curse on the recipients. The recipients have to buy against such inflows machines, parts and raw materials at exorbitant rates while a substantial part of the aid, loans and credits is consumed by the consultants who administer them. Thus, the actual receipts are less than the sum offered.

The payment of these aid, loans and credits is, however, payable entirely in foreign exchange by the recipients from their own earnings. They are thus a trade mechanism to boost the donors’ trade revenue, which continues to this day. The Kerry-Lugar Bill, the Coalition Support Fund and such other programmes are euphemisms for aid, loans and credit.

The remedy lies in taxing the untaxed, undocumented economy constituting 57 percent according to World Bank and now estimated to be 79 percent by the present chairman of the FBR himself. Such reforms will be more than the current revenue and will give Pakistan access to our own economy, including creation of the much-needed socio-physical infrastructure, inter alia, through Public Private Partnerships. Such an economic doctrine will make Pakistan self-sufficient and allow us to become masters of our destiny enabling us; for once and for all, to avoid and reject aid, loans and credits.

Some of the economic development took place between 1947 and 1958. The industrial development accomplished between 1958 and 1968 was so good that the export of Pakistani-manufactured goods during that period was higher than goods, from the Philippines, Malaysia, Thailand and Indonesia. The GDP growth on average was 6.8 percent. The economy was so vibrant that when India devalued its currency, Pakistan did not.

It was during the Ayub reign that the seeds were sown of the separation of East Pakistan and nationalization. Dr. Mahboobul Haq, chief economist to the government at that time, came out with a study suggesting that there was a gross concentration of wealth in the hands of the so-called “22 families.” Interestingly, their wealth, cumulatively, was less than that of an Indian conglomerate then. However, in the name of social equality and balanced distribution of wealth, 31 key industrial units, 13 banks, over a dozen insurance companies and even cotton-ginning factories and rice husking mills were nationalized, as were two petroleum companies.

The average GDP growth came down to 4.8 percent from 6.8 percent. Nationalization of industries hurt industrial growth and the framework of the respected services were destroyed during the Ayub and Bhutto regimes. Many officers were removed for little reason, weakening the steel framework of the civil services inherited from the British. As a result, government service, once seen as a cerebral and prestigious institution, became second choice for the best and brightest young minds.

Thus the public sector imposed itself on the private sector. The socio-physical infrastructure remained unattended both through the advent of aid, loans and credits and also since the public sector itself was focused more on putting up industries than setting up units to produce water, gas, oil and electricity, let alone roads, buildings and communication. Later, during the reign of Benazir Bhutto and Pervez Musharraf denationalization gathered steam, but even during this period, setting up socio-physical infrastructure did not attract much attention. It is in this background that economics of public-private partnership has come out. Indeed it is desirable.

The idea of Public-Private Partnerships (PPP) was pioneered by the United Kingdom through the Private Finance Initiative (PFI). PFI projects now represent 10 to 13 percent of all UK investment in public infrastructure. PFI in the UK has mostly consisted of Design, Build, Operate, Finance contracts, which typically lasted 20-30 years. The PPPs have been bringing forward the delivery of major projects. The model was designed to achieve value for money, reducing procurement costs, and delivering more projects on time and within budget than traditional methods. Present market conditions do not close the door on PPPs but do provide an opportunity for both government and industry to develop a more refined model that is appropriate for the new environment.

The World Bank estimates that about 70 percent of infrastructure investment comes from the public sector, eight percent from official development assistance and 22 percent from the private sector.

While the bureaucratic management model has its strengths, what it can take from corporate culture is the business acumen: business management is a refined science in its own right in an age of specialization of finance, management, supply chain, human resource and marketing. There is now an increased understanding at the highest governmental level that the private sector is able to introduce efficiency, skill, innovation, technology, finance and most importantly the project risks.

n    The writer is a freelance columnist.