Privatisation Concerns
Despite my strong reservations about handing over control of “national security” assets like PTCL and PSO to foreign ownership, privatization is a must for Pakistan’s economic revival, not only does it get much needed funds to retire our accumulated country debt but it also brings in much required expertise and better management as well as access to technology. Given the “fait accompli” about PTCL one must recognize that, viz (1) the price offered for 26% shares by the winning bidder was far more than anticipated, and therefore extremely welcome and (3) the purchaser was Etisalat, the telecommunications company of one of our closest nation-friends, the UAE, therefore qualming some of our nation-security concerns. Congratulations are in order for Privatization Minister Dr Abdul Hafeez Shaikh and his team for a job extremely well done, one will keep hoping and praying that we are as lucky with PSO.
Dr Hafeez Shaikh is an extraordinary person. One can hardly blame people who seem to develop an enhanced sense of “inferiority complex” around him. He is a national asset who is being under-utilized for petty personal reasons, that is the tragedy of this country, merit is not a qualification, it is a disqualifier. When the first computer came to GHQ more than 3 decades ago, a young major was selected to run the “contraption”. The officer programmed the computer so that whenever a list of officer candidates for prized foreign courses were asked for, his name was always on top of the list. This went on till one day his superiors asked the computer about the further utility of the “brightest” young major of the Army? The computer replied, “he is of no further use to the Army!” In Pakistan’s case, the data bank has been programmed for favourites only, mostly mediocre, and therefore it is not surprising we get dismal results in public sector enterprises. Those with talent and expertise are almost never tapped for their potential, and even if they are called upon, they are mostly slotted in jobs that they are either not equipped for, or more importantly, they may be over-qualified for, the latter being the case even with Dr Shaikh.
In a recently written article on PTCL’s privatization controversy Zafar Khan, Chairman PTCL responded to “the most often cited questions and concerns”. Addressing the first question “why privatize a profitable state enterprise?” Zafar Khan said, “My assessment is that PTCL will have to recast itself if it is to remain profitable and be a significant service provider. If it remains a commercial organization of the State, it will not be allowed to change at the speed required and it will find it exceedingly difficult to respond to competition and remain profitable. Cumbersome procedures, lack of trust, interference, pushing non commercial considerations etc all get in the way of quick and merit-based decision making”, unquote. Serving on the Board of a privatized financial services entity for 8 years, my response is that the change will certainly be of better management (and maybe some induction of funds). With proper oversight and pro-active control over the 100% Pakistani management, the entity I am honoured to be associated with has performed in an outstanding fashion. In this particular case the transfer of 26% shares to the new owners for strategic control was right, on the other hand one hopes that in PTCL the ownership i.e. 51% will always be kept in government hands despite the fact that one sleeps easier knowing that Etisalat is the new owner and not Singtel or China Mobile (HK). I have nothing against Singtel or China Mobile but at least Etisalat belongs to a most friendly country.
To the second question addressed, “why sell it to foreigners?” Zafar Khan says, “they would have been happy to sell PTCL to local investors but the large value of the transaction and possibly the absence of telecom expertise in local companies is what perhaps did not evoke a response to the well publicized invitation to bid”, unquote. My response is that shares could have been off-loaded in smaller lots over a period to facilitate both local and foreign entrepreneurs. Don’t foreign equity funds invest in our share market?
The third question the PTCL Chairman addressed was about “Foreigners repatriating profit and compromising national security”. He rightly states that no group in Pakistan could have bid US$ 2.4 billion in one go, what to talk of as an individual companies. Having made a successful bid it is the right of the foreigner purchasers to repatriate for the foreign ownership to repatriate profits. But one disagrees with him about compromising national security, Etisalat has many foreign national employees, how will we sift the loyalties of friend from foe? By the same token why not put loss-making units of Army Welfare Trust, Fauji Foundation, etc up for auction. What about NLC and FWO? They certainly pose less security concerns than PTCL or PSO!
The fourth and sixth questions are inter-linked “privatization will cause job lay-offs and add to the country’s unemployment” and “PTCL in private hands will not allow other private enterprises to get established!” One agrees with Zafar Khan who says, “A very large number (almost 70%) of PTCL employees are civil servants and their terms of employment are protected under law similar to all other government servants.” With new telecom companies coming up in the private sector, a lot of PTCL employees will find new jobs in the telecom sector, competition will provide better services at lower cost to the consumer.
To the fifth question, “Private enterprise will work for profit and not serve backward areas and other social causes”. Zafar Khan disagrees, “the telecom policy of the government has built in sufficient safeguards to ensure that telecom facilities reach the remotest areas of the country,” unquote. The truth is that the private sector, particularly in Pakistan, is profit-oriented (as they should be) but have displayed very little social-consciousness as many multi-nationals have. Whatever safeguards have built in by the government will not work, what has any government in Pakistan done about the backward areas except for media-oriented projects and plenty of lip-service?
An outstanding corporate executive, Zafar Ahmed Khan was in the Shaukat Mirza inner group that did a most successful employee (ESOP) takeover in ENGRO. Forgive me for being mystified about his not opting for the Employee Stock Ownership Plan (ESOP) route for PTCL? We could have had an employee take-over along with a white knight investor providing funds and management expertise, with a sizeable lot of shares offered to the public, the public sector retaining a major interest. While that is now a part of history, one hopes we will not pay heavily in the future for the actions of the present fathers of the country.
By the way who has the majority shareholding of Etisalat itself, is it a public sector or private sector enterprise?
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