History of Privatization in Pakistan

1. Gen. In the world Pakistan is a county that is facing one of the most critical conditions of terrorism. Pakistan is on an urge of war against the terrorism since more than 15 years that has been killed thousands of innocent citizens and several hundred of soldiers and law and enforcement agencies' personnel during fighting against terrorism. This irritation has not only affected the peoples of Pakistan, but it has been also very bad effects upon the economy of Pakistan. These things have made the economic situation of the state unsteady and unsecured.

The military government economic reform plan was a two-fold program geared to tackle stabilization and liberalization issues simultaneously. There were two main stabilization policies, one a more orthodox approach to reducing inflation and budget issues and one an experimental approach using exchange rate targets, and liberalization policies to deregulate trade, commodity markets, and financial markets.

In order to understand the reasons behind privatisation of public services, it is essential to study the socio-political environment of the UK in the 1970’s. During this period of time, the UK was hit by the post-war crisis, which led the Tories British political party, also known as the Conservative Party, to lose dominance in the parliament. During this time, in the Ridley Report, the Thatcher shadow cabinet started suggesting about the need to break up the public sector and to disjoint unions. Initially, privatisation was subordinate to other policy themes. Nonetheless, during Margaret Thatcher’s governance starting in 1979, a certain degree of privatisation was put in place, notably regarding British Aerospace and Cable & Wireless (1). Nonetheless, during this period of time, the government’s aim was to privatise profitable entities, in order to increase revenues and therefore minimize borrowing from the public-sector.

Laissez-faire is an economic environment in which transaction between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulation sufficient to protect property rights against theft and aggression. The phrase laissez-faire is French and literally means “let them do”. But it broadly implies “let it be”, or “leave it alone”. A laissez-faire state and completely free market has never existed, though the degree of government regulation varies considerably.

Economic factors: Due to income disparity in Pakistan and the adverse economic conditions, people are tending to save rather than to spend. Moreover, the increase in unemployment rate and inflation rate also supports these assumptions. However, on the other hand, the increase in the wealth of already wealthy people has increased the use of Dine in restaurants which is one of the stimuli for McDonald’s to open a branch in Pakistan. Furthermore, cost of labor has decreased over the years making labor cheap in Pakistan as compared to other countries has also influenced foreign investments. Examples of Economic factors are Growth rate, inflation rate, unemployment rate, interest rates, exchange rates, labor costs, labor supply etc.

There are two kinds of privatization, private provision of service with a “public” character and the process of returning to the private sector property’s or functions previously owned or performed by government. (Shafritz/Russell/Borick pg. 106-107). The private sector is guided by the motive of money and in the United States, where there is more of a free economy, the private sector is wider in comparison to countries like China. Some argue certain public goods and services should remain primarily in the hands of government. An example of this, is law enforcement, basic health care, and basic education. In comparison, some feel that government should steer rather than row.

It’s been more than 68 years of so called independence but yet we are not free. Although we were assigned with a new territory and a new title yet we haven’t stood up on our own. Pakistan is enormously confined within a foreign group of countries. And they manipulate us as they want and we are bound to follow them. A country prospers only when the basic requirements, food, clothes and shelter, are rendered to its citizens. But to do so, first we have to liberate our homeland from foreign affairs. There are a number of factors that are responsible for the downfall of Pakistan. Let’s have a look on 10 primary reasons behind the downfall of Pakistan:

It is common practice now for governments to contract with private companies for services which were traditionally under public administration. As a general concept, administrative law regulates public bureaucracy while private bureaucracies are subject to other private law areas such as torts or contract law.

Pakistan has included air services contract with 91 countries. As per the new national aviation policy of Pakistan, namely Lahore, Islamabad and Peshawar, effective January 01, 1990. The national air line, Pakistan international Airline (PIA) now operates services to 45 cities in 36 countries across four continents. Is also serves over 30 cities within the Pakistan.

On 14th August 1947 we received freedom and got a separate homeland named “Pakistan”. But on 16 December 1971 after the war we lost our one hand that is East Pakistan. The separation has many causes which are following :

The need for financial stringency in public organizations due to budgetary pressures and tax resistance coupled with the need to Managing /balancing budget deficits and provide quality services with a reduction in revenue has always been a major challenge for public organizations. The need to save money and at the same time provide quality services, had forced government agencies to privatize and contract out. Recently, there is greater involvement of the private and nonprofit sector in public service delivery. More and more government functions in service delivery are now carried out by private and nonprofit organization. This is one part attributed to the belief that private organizations can provide services more efficiently and effectively than government operated services. And the other is the fact that it is cost effective and takes a lesser time frame. These two process are indeed unarguably beneficial to the government and private sector as well as the beneficiaries, but they can be also very daunting accompanied with huge challenges especially when not executed in the rightful manner. The case of the crummy contractor by Rainey depicts such a complex situation , where the process of contracting out was poorly conducted. The case highlights the demand for privatization and contracting-out and most importantly some of the challenges of privatization and contracting in government organization. it goes on further to identify some crucial pointed to be

the nation had split up into 2 separate countries- Muslim majority Pakistan and Hindu majority

The difficulties of governments that run businesses are well-known. PSUs face little "market discipline". There is neither a fear of bankruptcy, nor are there incentives for efficiency and growth. The government is unable to obtain efficiency in utilising labour and capital; hence the GDP of the country is lowered to the extent that

Nearly every one of the government companies experience softness in management under the take hold of public services. These are not treated as efficient as private units because of this state of relationships found.

Nearly every one of the government companies experience softness in management under the take hold of public services. These are not treated as efficient as private units because of this state of relationships found.