THIS refers to the letter ‘State-ownership is not the culprit’ (Feb 8) which described the reasons why the state-owned enterprises (SOEs) in recent decades could not show efficiency and profitability as has generally been the hallmark of private enterprise.

It is agreed that there is nothing wrong in state ownership as the profitability of SOEs is hampered generally due to political expediency at the cost of skill and talent. Experience has shown that SOEs can be efficient and profitable if the management team is independent, proficient and has been able to somehow tackle political pressures. A large number of industries as well as many SOEs have shown profits in the past.

Over the years, a number of SOEs were established. As of now, there are reportedly around 212 SOEs incorporated by the federal government, including subsidiaries, trusts and funds. Due to a number of administrative, management and policy issues, the financial position of various SOEs reportedly deteriorated over time, resulting in significant fiscal burden for the government in addition to poor service delivery to the end-users.

It has been reportedly said that during the discussion and finalisation of the current International Monetary Fund (IMF) Extended Fund Facility (EFF), the government has agreed to complete a comprehensive review of the SOEs’ continued ownership and control by the government through a well-defined ownership rationale. This, if completed and properly implemented, is expected to be beneficial for the SOEs in Pakistan.

The contribution made by the Pakistan Industrial Development Corporation (PIDC) to the cause of industrialisation of the country, however, remains beyond doubt. It was established in 1952, a time when there was hardly any industry worth its name, and even the agricultural base was not strong enough to cater to the funding requirements of the country.

The primary task of the PIDC was to set up industries in areas from which the private sector was shying away due to large capital outlay and long gestation periods. The objective was to set up industries in such geographical areas that were backward in order to create employment opportunities and to remove regional disparities.

Proving true to the trust and promise the government reposed in it, the PIDC embarked on the gigantic task. No doubt, it played a pioneering role in developing industries in the fields of fertiliser, shipbuilding, heavy industries, jute, textile, cement, chemicals, sugar, etc. It established 94 industrial units from 1952 to 1988.

Muhammad Bashir Chaudhry
Karachi

Published in Dawn, March 5th, 2022