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Privatisation in Pakistan is an important economic reform policy tool, for generating growth and to expunge structural inefficiencies, by removing false barriers and opening up the economy to competition. The Privatisation program is part of the economic and structural reforms agenda of the Government of Pakistan that along with deregulation and good governance, seeks to enhance the growth and productivity of Pakistan’s economy, by harnessing the private sector as its engine of growth. It takes an integrated approach, towards enhancing the private sector’s role and goes beyond the transfer of public assets to the private sector, by identifying the linkages and role of regulation, good governance, market competition in fostering conditions that provide incentives for the private sector to invest in providing goods and services efficiently. Pakistan had initiated a significant program of deregulation and decontrol in 1960s, when such policies were neither fashionable nor common in much of the developing world. After the announcement of an “Industrial Investment Policy”, industrial sector was partially deregulated. After the announcement of Economic Reforms Order 1972, the Government took over from public sector 32 industrial units under ten basic categories i.e. iron and steel, basic metals, heavy engineering, heavy electrical machinery, assembly and manufacture of motor vehicles, tractor assembly and manufacture, heavy and basic chemicals, petrochemical, cement and public utilities including oil, gas and electricity. In September, 1973 another 26 industrial units were nationalized, producing vegetable oil, life insurance, shipping and petroleum making companies, followed by cotton and rice export trade. In 1974, banks were nationalized. The nationalization later extended to 3000, flour mills, rice husking and cotton grinning industries. However, most of the small rice and cotton units were denationalized and the government only retained large rice mills. Only textile and sugar sector remained untouched. Sooner or later, the state-owned enterprises (SOEs) exhibited the following characteristics:
“The transfer of Managed Established Order 1978” induced denationalization policy except for sugar and a tractor plant, and the same were transferred to private sector. Two further attempts of denationalization in 1985 and 1989 had little success. Nevertheless, government succeed in divesting 10% shares of PIA via Initial Public Offering in 1988. The government was and is committed to bring itself out of the business of running businesses and this creating space for private sector to play a vital role in development process in realizing the dream of a prosperous Pakistan. The Government initiated the privatisation program afresh and offered 108 (SOEs) out of 128 and in less than 18 months, 66 (SOEs) were privatised. Thus, in 1991, Pakistan formally institutionalized the privatisation activity by establishing “Privatisation Commission (PC)”. Many organizational changes took place from time to time, so that by end of 1993, there was one Commission to deal with the privatisation of industrial units, banks and financial institutions, another for privatisation of the power sector and separate Committees to look after the privatisation of telecommunications, transport and shipping companies. All these activities were subsequently amalgamated into one Privatisation Commission by the end of 1993. Later, on 28th September 2000, the Privatisation Commission Ordinance 2000 was promulgated, concurrently; the Privatisation Commission was converted into an autonomous/ semi-autonomous corporate body. This strengthened its legal authority for implementing the Government’s Privatisation Policy. The Ordinance was further strengthened after the 17th amendment in the Constitution of Pakistan, 1973, whereby, it was ratified as a permanent law. The Ordinance empowers the Commission to conduct following functions:-
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