Talks of public-private partnership are in vogue in the government circles. And it should be. In the absence of both adequate funds and the capacity to focus on economic growth, it is in the country's interest to make an efficient use of the private sector.
The question, however, is that where should this synergy be channelled. One area where this may be best utilised is infrastructural development. There is already a dearth of funds for PSDP. And considering the dearth of funds available with the government, chances are that PSDP allocation will be squeezed further in the current fiscal year and will remain under pressure in subsequent years as well.
The trouble is that such cutbacks typically come in infrastructural component of the programme. Be it power, roads, ports, airports, water, railways, or even urban facilities, the country's infrastructure needs are enormous, requiring massive and urgent investment in the sector. Pakistan infrastructure in term of quality and quantity averaged at 3.6 compared to South Asian average of 4.2.
While some of the existing infrastructure in the country is world class, most of it is below average. Unless it can be significantly improved, infrastructure will continue to be a bottleneck to growth, a threat to competitiveness and an obstacle to poverty reduction.
With the government fiscally challenged to deal with these issues alone, much is left to the private sector Although, private sector investment in infrastructure projects has been growing gradually it is still dismal - averaging just 1.4 percent of GDP, compared with the need to invest around 7.5 percent of GDP per annum over the next decade, to sustain a growth of 7 to 8 percent, according to ADB estimates. In comparison private investment has accounted for more than 20 percent of total investment in infrastructure in developing countries over the last decade, according to other reports.
The only thing the government needs to do before going full speed with the public-private partnership is to strengthen the policy and regulatory framework, to avoid the deadly combination of favouritism, corruption and incompetence amongst other issues.