The former National Investment Trust chairman has claimed that the government is losing up to Rs 700 billion every year in state-owned entities. Former chairman Tariq Iqbal Khan's comments came as sharing his ideas with a selected group of newsmen.
He said, "Nationalisation of banks in the 1970s played havoc with the financial sector. Nonperforming loans soared as loans were sanctioned not on merit but on political grounds. The banking industry was further reformed; the regulation became further stricter and vibrant. The consumer benefited as in the case of long term deposits the banks offered better rate and services in competitive environment. "Again, the example of the Allied Bank Limited is very significant as the bank heading towards a complete failure and bankruptcy was privatised and now it has risen to number 4 after the Muslim Commercial, Habib and United banks. The example of the National Bank is also there being the only one operating under the direct control of the federal government and the services of the bank are deplorable."
He went on to say, "The government has a primary role of governance and regulation. The government officers are not trained to manage and operate businesses. The government works in a manner that there is a shared responsibility which is demonstrated in decision making through cabinet, assemblies, standing committees in assemblies, hence no single person makes a decision and the decision making is carried out through collective wisdom. In businesses, the boards are responsible for policy framework while the executives are responsible to carry out the day-to-day operations in the light of policy framework. "Because of the above difference of working, nationalisation has not succeeded in any country and any jurisdiction. No country is now following classical model of socialism or capitalism where the base is that all industrial production is carried out through nationalised industries. Pakistanis have firsthand experience of the havoc caused to the national economy by the state-owned entities. Only a handful of those that derive huge benefits from these enterprises oppose the move."