Privatisation in Pakistan
From Wikipedia, the free encyclopedia
The poverty expenditure rate statistically dropped to 34.5%—17.2% in 2008 as part of
the privatization programme.
The Privatization process in Pakistan
(sometimes referred to asDenationalization
or simply the Privatization in Pakistan)
) was a policy measure programme in
the economic period of Pakistan. It was first conceived and implemented by the then-people-
elected Prime Minister Nawaz Sharif and thePakistan Muslim League, in an attempt to enable the
nationalized industries towardsmarket economy, immediately after the economic collapse of Soviet
Union in 1989-90.
The program was envisaged and visioned to improve the GDP growth of the
national economy of Pakistan, and reversal of the nationalization programme in 1970s— an inverse of
the privatization programme.
In the period of 1970s, all major private industries and utilities were put under the government
ownership in an intensified programme, called the nationalization programme that led the economic
disaster in Pakistan. Since then, the demand for denationalization gained currency towards the ending
of the government of Pakistan Peoples Party in 1977, although a commission was set up by General
Zia-ul-Haq government but no denationalization programme began until 1990.
The privatization programme was launched on 22 January 1991
by Prime minister Nawaz Sharif in a
vision to promote free-market economic principles, private-ownership and the mainstream goal to
attract foreign investment in the country.
But, as a result a good deal of the national wealth fell into
the hands of a relatively small group of so-called business oligarchs (tycoons), and the wealth gap
increased dramatically in 1990s that halted the programme by Benazir Bhutto.
Revisions were made
in 1999, and finally launched the much more intensified privatization programme under the watchful
presiding leadership of Prime minister Shaukat Aziz in 2004.
Finally, the programme was ended
effectively at the end of 2007 when ~80%-90% of the industries were put under the management
ofprivate ownership of enterprises by Prime minister Shaukat Aziz.
1 Privatization (Spontaneous phase: 1989-1993)
o 1.1 Privatization phase (1993-1999)
o 1.2 Privatization (intensified phase: 1999-2008)
o 1.3 Public perception
o 1.4 Adversary opposition
2 References and Sources
o 2.1 Notes
3 External links
o 3.1 Documentation
4 See also
Privatization (Spontaneous phase: 1989-1993)
The privatization programme launched in Punjab which had the higher GDP growth than
any province of Pakistan.
The momentum and demands for denationalization gained currency towards the end of the
government of Prime minister Zulfikar Ali Bhutto and Pakistan Peoples Party who under intensified
their nationalization programme had effectively the government-ownership management in the private
industries of Pakistan; it had built a strong public-sector with priority on cement, steel and fertilizers.
After the end of government of peoples party, a white paper was issued by General Zia-ul-Haq's
government, followed by setting up the commission under Pakistan Industrial Credit and Investment
Corporation (PICIC) chairman N.M. Ukailie.
However, only three industries were returned to its
rightful owners, namely Eittefaq Group of Industries to Mian Mohammed Sharif whilst others remains
under government controlled.
Nawaz Sharif lacked Bhutto's
chrisma but he countered Bhutto's
ideology, by imitating him. In
many ways.... he imitated Bhutto
better than Bhutto's own daughter
—Tripod Publications, Cited source
As an aftermath of 1988 general elections, Benazir Bhutto and the peoples party returned to power,
promising to denationalized and replace with the industrialization programme by means other than the
But controversially Benazir Bhutto did not carried out the denationalization
programme or liberalization of the economy.
No nationalized units were privatized, few economic
regulations were reviewed.
The partial privatization began to kick off by Chief Ministerof Punjab
Province Nawaz Sharif who presided the liquidation of many industrial units put under provisional
government to private sector.
All industries based on Punjab government ownership were returned to
its rightful owners on a mutual understanding; the prices on units returned to industrialists are still kept
as "top secret" by the provisional government.
A large-scale privatization programme was launched on 22 January 1991 as the primary economic
policy by Prime Minister Navaz Sharif who came to national power after securing a flight-winning
victory in the 1990 general elections.
The privatization programme was inspired and influenced in its
nature after witnessing the success of the privatization in Great-Britain byBritish Prime
minister Margaret Thatcher. The first phase of the privatization program covered the half of the public
sector industries in terms of total employment,
and the programme was in a direct response to
Pakistan Peoples Party and Zulfikar Ali Bhutto, and for instance Sharif's privatization programme was
swift as nationalization programme.
During the course of first phase, Sharif presided the
denationalization of banking sector and industries to private sector, starting first with MCB limited.
Sharif termed his privatization programme as "turning Pakistan into a (South) Korea by encouraging
greater private saving and investment to accelerate economic growth.".
The second phase was promulgated by Sartaj Aziz with the goal to transform the enterprises into
profit-seeking businesses, not depended to the government subsidies for their survival. The mega-
energy corporations such as Water and Power Development Authority (WAPDA) andKarachi Electric
Supply Corporations, and the Pakistan Telecommunication Corporation were set off to private sector.
From 1990-93, around 115 industrial units were hastily privatized, including the privatization two major
banks, 68 industrial units and 10% Shares of Sui Northern Gas Pipelines Limited.
The privatization programme came with great surrounding controversies with lacked competition as the
programme was largely controlled by favored insider.
The recklessness and favoritism shown in
privatization of the industrial and banking units by Prime minister Nawaz Sharif was to become the
hallmark and the rise of strong business oligarch who have concentrated enormous assets, further
increasing the wealth gap in Pakistan and contributing to the political instability.
Privatization phase (1993-1999)
In 1992, the Leader of the Opposition in the Parliament, Benazir Bhutto, vehemently criticized the
whole policy measure program at the public circles.
While Commerce minister Faisal
Hyatt and Finance minister Sartaj Aziz enthusiastically projected the privatization as a "success
Benazir Bhutto had, with a touch of drama in the state parliament, maintained that
"while one brother was selling, other was buying."
After 1993 general elections, the second phase of the privatization programme began in 1993 under
the "disciplined macroeconomics policy"
of Prime minister Benazir Bhutto.
Her programme aimed
to capitalize on the rising business oligarch class but the programme suffered with great difficulties and
problems even inside the peoples party.
The second phase involves the privatization of financial
institutions, several telecommunications corporations, thermal power plants, oil and gas sectors.
Benazir's government did not privatize all state corporations, especially those who were collecting
large revenues abroad; only certain industries were privatized which were at the brink of financial
The first attempt was made to privatize the United Bank Limited but the proposal met with great
hostility by the workers union and opposition.
Proposals were also made to put the private-
ownership to Pakistan Railway but it was rebuffed by Prime minister Benazir Bhutto who quoted:
"Railways privatization will be the "black-hole" of this government. Please never mention the railways
to me again."
The economic growth declined when the US embargo began to bite the government of
By the end of 1996, ~20 industrial units, one financial institution, one electric power
plant and 12% shares of Pakistan Telecommunications Ltd. were privatized by Benazir Bhutto.
The second phase remained continued until 1998 when it was abruptly ended by Prime Minister
Nawaz Sharif after imposing economic emergency after ordering to perform capability of nuclear
deterrence in response to Indian nuclear aggression.
All stock exchange, stock markets and the
second phase of the privatization programme were immediately halted by Prime minister Nawaz Sharif
until his government was ended in 1999.
Privatization (intensified phase: 1999-2008)
After the end of government of Prime minister Nawaz Sharif, Pervez Musharraf invited Shaukat Aziz to
take the control of declining economy of Pakistan.
The GDP rate had declined from 10.0% in 1980s
to 3.6% in 1999, with foreign debt increased to 44% up as compared to 1986.
reforms were introduced by Shaukat Aziz who first consolidated the industries under one platform and
restructured them before setting them to privatization market.
Numbers of controversial sales tex
were enforced by Shaukat Aziz, mostly on import duties; and based on these reforms, patronage-
based industries remained under serious threat and privatization discussion began to take place on
Aziz consistently worked on to restructured the industries and provided a vital
leadership andeconomic relief after 2001 also played an important role in strengthening the patronage-
based industries financially and physically.
In 2004, Aziz became Prime minister and initiated an intensified privatization programme in order to
grow the GDP rate annually.
Aziz forcefully and aggressively pushed 100% privatization of state-owned corporations while virtually
planned to privatized 85% of banking sector.
Starting from 2003 until 2007, Aziz successfully
of the banking industry into private-ownership enterprises, while privatizing the
numbers of shares of Pakistan International Airlines and other mega-corporations into the public
Nothing is sacred... We are packaging up our companies. (....).... These state-owned corporations
(SOEs) have been well-run for the past few years.... and now we are offering them to investors from all
over the world....!
—Shaukat Aziz, 2006, source
The intensified privatization programme led the economic boom of Pakistan's economy
which was at the range of 8.96%-9.0% in 2004.
Intensified privatization policies had major impact on public sector organization which diminished with
the privatization of the state-owned corporations. Prime minister Aziz defended his privatization
programme as he maintained that "these institutions viable while they were on the verge of collapse.".
Aziz's privatization programme subsequently improved the country’s growth rate by 6.4%—8.6% a
year. Inflation rate dropped to 3.5% in last 3 years as against 11-12% in 1990. However in the end of
2007, Aziz's privatization programme suffered a major set back which initially halted the privatization
programme in the country.
The Supreme Court halted the privatization of Pakistan Steel Mills after
transferring the inquiry from FIA to NAB, while issued standing orders to keep the Steel Mills under the
The proceedings and Supreme Court's decision initially halted Aziz's
intensified and aggressive privatization programme at the end days of his tenure.
The privatization programme still marks the question of "big" controversies.
In public circles, it has
generated much more heated debates where it is perceived to have more negative impact on civil
The general perception remains highly contentious and polarizing issue in the civil society,
gearing up the negative sentiments among the population, including the continued injection of public
money in many privatized entities and less than expected improvement in the services.
the programme produced a relatively faster and efficient way of promoting competition and enhancing
growth, on other hand, the programme experienced the exponential increase in unemployment,
reducing the access of worker's class to the basic needs of life and contributed in declining the social
status of workers' class in to poor get poorer.
But on other hand, a significant support for privatization programme has been raised in the media. In
an editorial written at the Dawn, it argues that the privatisation programme has been a key "constituent
of structural reform" programmes in both, the developed and developing economies, in order to
achieve greater microeconomic efficiency as oppose to macroeconomics.
Overall, the GDP rate
grows smoothly with privatization programme remains in effect as oppose to nationalization
programme that it had dropped the GDP growth rate of Pakistan, Dawn maintained.
were made to privatized the major and most-profitable industries of Pakistan, namely the Pakistan
Railways (PR) where The Express Tribune argued that the national railways' condition has gotten from
bad to worse under the government-ownership, and only privization programme can save the railways
with the creation of sense of competition that would drive improvement.
Despite its success, the public sector organizations, labor and workers unions remained extremely
hostile towards the privatization programmes.
In 2005, major demonstrations and worker's revolt
took place in Islamabad by the PTCL Workers Unions Action Committee, in an attempt to privatized
the Pakistan Telecommunication Company Ltd (PTCL).
Despite the demonstrations the state-
corporation was privatized by Shaukat Aziz which resulted in workers’ losing their jobs.
In 2012, an unsuccessful attempt was carried out by current government of Pakistan Peoples Party
when the government sought to privatize the mega-state corporations, particularly the power sector;
major nationalized industries such as WAPDA, IESCo, TESCo,PEPCo were proposed by the finance
ministry to privatize the power distribution companies.
Major worker's strike were initiated by the
central labour unions, and after receiving much criticism, his government halted the privatization
programme of energy sector, and nationalized the remaining power sector industries due to public
The Pakistan Peoples Party's intellectuals remains skeptical about the privatization programme and
targeted the controversial implementation on numerous occasions.
The peoples party maintained
that "an elitist or top-notch educational system" which exceedingly comprises private sector’s foreign
affiliated schools and universities, has built the "sole source" of producing some proficient minds.
While on other hand, the privatized Madrassah system of education has been patronize different sects
of religion, patronize different sects of religion, and further exploited as source of religious extremism
and associated with terrorist outfits and their offshoot.
The private sector education system negative
effects of private sector education and it hashas created a disparity between the rich and the poor.
Dr. Professor Athar Maqsood of School of Business of the National University of Sciences and
Technology (NUST), set forward his argumentative thesis that there are two reasons behind why the
privatization has not been successful as was originally perceived are economic reasons and socio-
psychological and political reasons.
In 1990s, the privatized enterprises have laid off employees by
introducing schemes like golden hand shake.
References and Sources