Yesterday’s piece on state-owned enterprises (SOEs) ended on the note that the fixing of SOEs doesn’t appear on the horizon. That the Privatization Commission Pakistan hasn’t been activated as yet, and that government discussions over the future of SOEs have toned down, and that sector-specific reform discussions haven’t even started by and large – not even towards the market development of power sector – reaffirms the view that the future of SOEs remains bleak today.
What’s even more intriguing is that the government seems to lack clarity on what it really wants to do with the SOEs. Asad Umar, the former finance minister, was all too impressed by Malaysia’s Khazana model. Hafeez Shaikh, the current finance minister, says it’s no business of the government to do business. Both are working for the current political regime in various capacities. Which way will the camel sit?
In comes the latest finance ministry’s report on the SOEs. Titled ‘Federal footprint: SOE annual report’ for 2017, the report says that “in the short to medium term, the government will remain keen to apply” the idea of public sector corporate governance.
“Corporate governance remains on the priority of the government for SOEs. The SOEs should be held to higher standards of accountability than private companies as they are owned by the taxpayer. Unlike private firms, where the main goal is wealth maximization, the goals of SOEs are typically more of a mixture of social, political, and commercial objectives,” the report said.
Two points need to be made here. Why should an SOE have a stated goal to meet political objectives? Second, can the government list down the measures it has taken to ensure that SOEs have high standards of accountability as it claims it should have. The answer is no. A year into the government, and no concrete steps have been taken to ensure timely preparation and public dissemination of audited accounts of these SOEs.
The Q-block’s SOE report also states that the “SOE framework going forth” will include the establishment of a holding company that sets out a strategic direction of SOEs and performance targets and run with professional management. The key question to be asked is whether Pakistan’s state has the capacity to hire such a body of professionals to run these SOEs. Here is a state that is yet to prove its mettle in the core functions of the state: security, taxation, health, education. Here is a state that until a few months ago could not even put together its top finance team. And yet they want to have a holding company and run these SOEs. Funny, isn’t it?
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