The Asian Development Bank (ADB) has come to Pakistan’s rescue by offering technical assistance for reforming state-owned enterprises (SEOs) in a way that provides clear directions for the state’s role as the owner, the legal framework for operations as well as privatisation. For too long, a lax approach towards SEOs has resulted in billions of rupees in losses and even now, there are over 212 companies in Pakistan that have to be accounted for.
The ADB highlighted three fields within which it wanted to work; creating a policy framework for each SEO, establishing regulatory standards, incorporating corporate governance that produces some profits and increasing their institutional capacity. If headway is made on each of these highlighted objectives, the overall mode of operation will improve drastically enough to overturn the perception of Pakistan SEOs being a burden rather than an asset for the government.
Furthermore, the level of transparency that this new system supports will ensure that whenever a point comes when the prospects are not looking promising, decisions can be taken to resolve pending issues and introduce new initiatives or policies that help the company evolve according to the changing environment.
At the same time, there are companies like the Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM) that have been accumulating debt and emptying out the national treasury, prompting the government to consider privatising them. Even though announcements have been made and bidding ceremonies for their shares have been announced, not much progress has been made. This is something that has to be addressed as a major problem and solutions must be proposed as part of the same assistance being offered by the ADB currently.
At this point, we must take advantage of the resources being offered and restructure the system under which these SEOs operate. In the process, the government must also absorb as much as it can so that in the future, it is self-sufficient and can manage these tasks on its own.