Unlike in the past when increasing participation of the public sector in almost all types of economic activities was considered the panacea for all ills, a wave of privatisation is seen, at times rather furiously, all over the world from all four directions, Pakistan being no exception.
Although the process of bringing some business and industries from the public sector in to the private sector started during the second government of the People's Party. But the thrust was half-hearted and hesitant.
In its own wisdom, the IJI Government came all out with greater vigour, and without reservation, to take this process beyond all expectations, estimations and forecasts to its furthest end. Even certain age-old government functions and ancillary responsibilities were transferred to semi-autonomous and private bodies/organisations.
The scope of this article being limited to agriculture and allied activities, the observations and discussions on the subject as such could not be in much detail.
The importance of the private sector playing its part unhampered, and with the provision of necessary incentives in areas of agri-business and agri-industry in Pakistan has been recognised by the policy-makers.
That is why even in the days of government control on the sale/purchase of a number of commodities, including the main foodgrains (wheat, rice and sugar etc) the trading of a large number of agricultural and livestock products was freely allowed and was entirely in the hands of the private enterprises.
These included coarse grains, spices and condiments, fruits and vegetables, gur, gram and pulses, meat, milk and eggs.
Later on, commodities like sugar, wheat, rice oilseeds and cotton were also added to this list. Their internal marketing has been deregulated and foreign trade participation has also been permitted with encouraging results.
Participation of the private sector in the export of cotton and rice as well as in the import of sugar and wheat is a bold step taken by the present government. As the experts see, there is still much scope for broad-basing the existing agri-business in general as well as there is great potential for bringing in new investment by the private sector in many lucrative agri-industrial projects.
With all its shortcomings, Pakistan agriculture has progressed to a stage where further development may take place with the rationalisation of agri-business, both upstream and downstream.
Upstream operations include the supply of modern inputs and field-oriented services while at the downstream stage these are handling, marketing, processing, grading, packaging, storing, transporting of produce as well as establishing agri-industries.
What is heartening is that the present government having realised this fact, is adopting a supportive policy. Yet the private sector agri-business establishments in the country leave much to be desired. Barring fertilisers, textiles and sugar the agri-business (including the agri-industry) is rather small and fragmented.
CONSTRAINTS: Broadly speaking the constraints in the expansion of the private sector agri-business may be: (a) policy, (b) procedure, (c) finance, (d) infrastructure, (e) legal, (f) conceptual (g) technical, (h) political and (i) entrepreneurial. In order to bring home their implications a brief explanation is necessary.
A. POLICY CONSTRAINTS: These include various policies adversely affecting or hampering the agri-business and the agri-industrial establishment. There is a need to devise various policies judiciously and objectively, not just to place checks and controls on the agri-business projects but to assist them.
Particularly, policies on investment, industry, pricing, foreign trade, export-import and intellectual property (patents and trademarks) should be well-conceived, attractive and compatible with the international climate.
(B) PROCEDURAL CONSTRAINTS: The process and procedure of seeking government sanction should be simple, straightforward and quick. Necessary guidance in this regard may be provided through personal contracts rather than by corresponding to avoid delays.
(C) FINANCE: Under this category are difficulties in obtaining credit from the banks, bureaucratic red-tapism, high mark-up rates and under-assessment of collaterals. They are the key obstacles. Levy of taxes, income, excise and sales taxes, octroi, surcharges etc should be realistic and equitable. Inadequacy of the capital markets is among the main financial constraints.
(D) INFRASTRUCTURE: Lack of facilities (like water, gas, electricity, roads and communications) is considered a great impediment in the setting up of businesses and industry by the private sector, particularly in the rural areas. The required facilities may be provided on top priority basis to encourage shy investors.
(E) LEGAL: Rules, regulations and other legal measures required to set discipline in the agri-business operations should be supportive, rather than prohibitive.
(F) CONCEPTUAL: Sometimes private agri-business, despite having all sorts of facilities fails to succeed due to conceptual defects in the very project. It is, therefore, desirable if expert advice in formulating projects may be provided to the private sector at a nominal cost by the government.
(G) TECHNICAL: Technical know-how in carrying out a particular line of business or establishing a particular type of industry successfully is a must.
(H) POLITICAL: It is obvious that if there is no political fence, not only agri-business but all sorts of economic activities would suffer.
(I) ENTREPRENEURIAL: Some businessmen and industrialists themselves lack the qualities and specialisation in entrepreneurship. In other cases corporate business operations themselves are not carried out judiciously and in a business-like manner.
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