Documenting the years of neglect
The golden years for industry in Pakistan were the Ayub Khan years when maximum development took place. Unfortunately it also created a small ruthless coterie of robber barons who were so greedy and unscrupulous that both the white and blue collar labour class had reached a stage of desperation in their attempts at getting their just dues. Swinging to the other end of the pendulum’s limits, Zulfikar Ali Bhutto exploited this deep-rooted frustration into a tangible vote bank that along with the division of the country into two independent wholes, propelled him into power in the western wing and he in turn nationalised everything in sight. While it is true that he gave labour a voice and also spread the public largesse among the favourites and the faithful in that order, by rampant nationalisation instead of a measured modus operandi he destroyed the years of economic promise and turned industrialist entrepreneurs into commercial entities. When production declines or becomes stagnant, so does the economy. In place of industrial and commercial managers, he put in selected bureaucrats and technocrats, the numbers heavily weighted in favour of the bureaucracy, the selection based more on loyalty than ability. This created a new class of “commercial” bureaucrats who had motivation for profit for themselves rather than for the State.
The darkest decade for the economy were the Zia years 1977-1988, though after 1985 “democratic” PM Junejo had got the policy of privatisation and denationalisation on the anvil at least. During 1977-1985, under the aegis of Mr. Ghulam Ishaq Khan, Mr. Mahbubul Haq and Lt.Gen Saeed Qadir, bureaucracy became omnipotent in Pakistan’s industry and commerce. The politicians exercised a measure of some accountability between 1972 and 1977, beyond 1977 there was wholesale loot and plunder of the assets of the State. While the aforementioned economic leaders may not have been part of the plunder and/or even had intent to do so, at least two of them Ghulam Ishaq Khan and Lt. Gen Saeed Qadir lacked detailed knowledge about the dynamics of a free economy and ignored the fact of Margaret Thatcher acting as the free world’s symbol of the dismantling of the over-centralized economy. This basic shortcoming of lack of foresight and the inability to render revolutionary changes concentrated everything in the hands of the inefficient, incompetent and corrupt officials lower down the ladder with no national interest at heart but only that which was vested in the financial and material comfort of their personal selves.
Dr. Mahbubul Haq was another matter, he was a brilliant economist and with his induction into the economic hierarchy one expected that he would take far-reaching measures for reform. While his rhetoric and reputation gave us hope, he had wider political ambitions and had no intentions of bucking the system. He thus became a part of the routine, the good doctor becoming the perennial chameleon, changing policies every decade according to the law of the land. So much was expected of him but he subordinated the national interest to whatever suited him at that time. One must make it clear that while never corrupt in the financial sense he corrupted his mind and soul trying to become something he was definitely not, a politician. To that end he broke principles to satisfy his own personal advancement plans. To give one example, the Trading Corporation of Pakistan (TCP) was turned between 1983 to 1985 around from its import orientation into an export house by its dynamic Chairman, Muhammad Yousaf, as per the need of the hour. In 1985, instead of replacing Mr. Yousaf as Chairman by another such individual, he brought in the late Mr. Habeeb Hussain, who was only two years or so away from retirement. With respects to the soul of the late departed Civil Services officer, Mr Hussain had scant knowledge of commerce and was singularly against risk at the fag end of his career. In short order, he turned TCP back into an import house, undoing the hard work of export orientation of the previous three years. Mr. Habeeb Hussain was a senior bureaucrat whose major claim to fame was that he was the brother of a senior Pakistani in the World Bank, Mr. Shahid Hussain. Obviously some quid pro quo was involved in giving Mr. Habeeb Hussain a last posting in his home station, otherwise why should such a critical post in Pakistan’s export orientation for the public sector be given to a person who was obviously (1) not suited for the post and (2) being that close from retirement did not have any motivation to do well? It was not Mr. Habeeb Hussain’s fault at all, if he was to be accommodated there were a number of other jobs which he could have done more successfully in Karachi. Mr. Mahbubul Haq broke a principle of management in putting somebody ineligible into a crucial slot and exposed a fault of the system that permits such anomalies without checks and balances.
Mr. Mahbubul Haq could be brought to task if such appointments were made in isolation, unfortunately this was the practice from 1972, from 1977 onwards when accountability went out of the window completely it became endemic to the system. Has anyone been brought to task for beggaring the hundred or so State enterprises? Commerce is based on incentive and reward, the risk is to the individual whether of gain or loss and he or she is sensitive to any overheads not critically required. When the individual has no stake in the enterprise that he is entrusted with, his normal modus operandi will be to add to the overheads by making himself comfortable, i.e. cars, airconditioners, entertainment, servants, travel, etc, by adding extra personnel to the staff, delaying decisions till it did not matter anymore, etc. Senator Lt Gen (Retd) Saeed Qadir was from the Army, he had a bureaucratic family background and thus became one of the many military bureaucrats who prospered between 1958 and 1985. As the Chairman of the Privatisation Commission, he is now the most ardent advocate of the private sector but during his years as Minister of Production and the virtual Czar of the State-owned industries his was a strong public sector philosophy and no one except Ghulam Ishaq Khan, who vehemently contributed to the same philosophy, to challenge his domain. This is indeed a strange quirk of fate that a man who was responsible for making the State industries sick to the point of extinction is now appointed to oversee their disinvestment. One does not blame Saeed Qadir, he did not have private sector background and thus had no knowledge how to break the economic logjam, at best he was an excellent manager of administration. While Senator Lt Gen (Retd) Saeed Qadir knew how best to manage the State enterprises, he did not have the ability to back the economic logjam because he could never instil the profit motivation that drives the private sector and thus the economy.
There were some excellent officers of the civil service who performed admirably in the public sector, most notably Mr Nusrat Hasan of the Cotton Export Corporation of Pakistan (CEC), Mr Riaz A. Naik of the Rice Export Corporation of Pakistan (RECP) and Mr Mohammad Yousuf of the Trading Corporation of Pakistan (TCP). Such people did exist and probably performed much better than comparable private entrepreneurs but this was because they were honest men who did not need to look over their shoulders. This was a small minority, few and far between. For the most part, the bureaucrats managed to contrive postings away from their particular discipline within the mainstream of Government into cushy public sector corporation jobs that would not only be lucrative and comfortable but would make their own economic futures bright. While the government machinery suffered from their absence from the administration domain, they mostly contributed to additional red ink in the hopeless balance sheets of the public sector enterprises.
Because of the sale of State-owned assets and shortage of senior management slots, today there is a glut of available CSS officers without commensurate appointments to locate them. Instead of keeping them cooling their heels, the Government of Pakistan (GoP) would do well to take advantage of whatever experience they have had in the public sector corporations and use that knowledge to good effect in District Management, an area that forms the crux of civil administration in a Third World country and is presently subject to being benignly ignored. Even if these people are senior to the post that they would be commensurately employed on at this stage of service, their expertise should be used to directly ameliorate the lot of the masses. One must remember that the individuals who qualified for CSS were adjudged to be better educated than their fellow men and that GoP has spent a huge amount on their further education and experience, it is time to take some of that capital back with interest (excuse me, “mark-up”!).
There is a definite place for the public sector in industry and commerce, it must still pursue those projects that make socio-economic sense only and which private entrepreneurs may not go for one reason or another. All the progressive countries have mixed economies to an extent, with inputs by both the public and the private sector. This is the subject of analysis and debate, much like the Round Table on the US Economy chaired in Little Rock, Arkansas by President-elect Bill Clinton. Unfortunately we never listen to the voice of reason and/or experience, most of our in-depth papers are prepared without substance but with plenty of rhetoric. An Additional Secretary of Commerce proudly stated some years ago that while he did manage to read some of the advice rendered by the media, he paid no attention to it. We must eschew this approach and become pragmatic if we have to create economic opportunities for our masses.
Lest we forget, the years of neglect must be well-documented to act as an Encyclopedia of the fallacies of having a huge public sector and of using public servants in a commercial capacity. At the same time, Nawaz Sharif must step up the pace of disinvestment ensuring that fair play and the public interest is kept paramount. Pakistan could well have been a model for South Korea instead of the other way around, at the moment we are left to rue our plight because of an economically sorry two decades.
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