Khwaja Sarmad
The writer is a political activist and former employee of IMF
Privatization is again on the march with two energy companies OGDCL and PPL next to be sacrificed on its corrupt altar. A brief review here of the rational for privatization and comparative performance of PTCL (a privatized state company) reveals serious problems that the government must address before proceeding with further privatization.
Several myths underpin the rational for privatization as given on the Privatization Commission's website: it is necessary because "worldwide experience has demonstrated private companies to be more efficient than public ones," .. it results in "improving technology, improving competitiveness and thus leaving more funds with the company. This, in turn is likely to result in increased employment opportunities."
Such mantras about the superiority of private companies over state-run companies dominate the policy circles. Government officials argue that state-run companies are 'inherently' loss making and a burden on the budget. Business is not the business of the state—they say, and therefore, instead of making a serious effort to improve performance, they should be sold, even though PTCL is sold to Etisalat, which is a UAE state company with both regulatory and control powers!! The Privatization Commission's web page also says that privatization is a "matter of principled ideology rather than a matter of expediency." It should add that its laissez faire ideology is found only in textbooks and in IMF reports! As HSBC's chief economist says: "Western governments have used the methods of state capitalism for hundreds of years in their bid to shape the world around them… The idea that market forces alone led to the West's success is nonsense."
The Privatization Commission's claims are fictitious and a fundamental misrepresentation of reality. In theory, even the Economist (November 13, 2010) admits: the ownership of a business in a capitalist economy is irrelevant! In fact, state capitalism is surging—a fifth of global stock market value now sits in such firms, more than twice the level ten years ago. Thirty nine state-supported French companies are in Fortune's list of top 500 global companies (Economist Oct 30, 2010). Two of the world's four biggest banks are state-owned. Three quarters of the world's oil reserves are owned by state companies and two of the ten biggest oil companies are state-owned because securing access to natural resources is considered a fundamental pillar of national security. This alone should suffice as a strong argument against privatizing OGDCL and PPL.
Industrial policy or the use of government money to support national industry is frowned on by the Privatization Commission, conveniently ignoring that: industrial policy was used even during the time of Walpole to subsidize British exports, and more blatantly in the Opium Wars against China. It was used recently in the US, the bastion of free enterprise, to rescue "banks that are too big to fail," General Motors and Chrysler. France used it to create "national champions" in strategic sectors including transportation and energy. Industrial policy created the miracle economies of Japan, and East Asian countries and brought about China's industrial transformation. China, like other surging economies, also uses an undervalued exchange rate to support its export empire (while our state bank looks on pompously in a laissez faire approach as remittances inflate our exchange rate and the bank's governor wonders why our exports don't surge! The world's bounciest economies have its most undervalued currencies, says the Economist).
In terms of competitiveness, it is increasingly clear that a specter haunts private enterprise—the specter of China's state companies, which become astonishingly competitive under state tutelage. For example, China became a "green giant" in five years now manufacturing more solar cells than any other country, and drawing away customers from companies that had invented the technology in the first place.
The comparative performance of PTCL during and before its privatization further refutes the claim that privatization is beneficial to the country: The data from the company's website shows that its share price is down from Rs70 in 2005—the final year under state control—to less than Rs20 today, a scandalous 300 percent decline in the company's valuation. Since the government still owns 62 percent of the company this means a loss of Rs 90 billion in the market value of its shares, which is not just gross mismanagement but criminal! The taxes paid by the company are down from Rs 5.2 billion to Rs. 1.8 billion resulting in a potential loss in tax revenue of about Rs 28 billion. Profit is down from Rs 26.6 billion to Rs 9 billion, while dividends were generous, even exceeding the total profit after tax in the five years of private control. So much for privatization "leaving more funds for the company"!
Employment is down from 65,000 to 26,000. Unfair labor practices reflecting poor management culminated in industrial action by PTCL employees in July 2008 and September 2009 and again in fall this year. The latest strike continued for 45 days. The National Industrial Relations Commission and the Lahore High Court have ruled in favor of the PTCL employees. Yet, management adamantly refuses to fully implement the Government of Pakistan notification of July 14, 2010 to raise salaries by 50 percent of long-term employees. Instead, striking employees were falsely implicated in Anti-terrorism cases (now quashed by higher courts) and criminal cases (still pending). And, in defiance of the decision of the National Industrial Relations Commission over 600 employees remain suspended/dismissed, and without salaries for over four months.
Regrettably, the government's directors in the PTCL Board, including the secretaries of telecommunications (Chairman of the Board) and finance, and the Ministries of Information and Privatization are not doing anything to safeguard the state's and people's (workers') interests, which they are mandated to do by the Shareholders' Agreement.
The privatization of PTCL is a disaster. The company's management must be returned to state control. The privatization program which is based on myths needs a thorough review to avoid further pillage of our "family jewels."
[Attachment(s) from farooq tariq included below]Dear all,
please find encloised a report on the round table conference against privatisation, held in Islamabad National Press Club,
Farooq Tariqspokesperson
Labour Party Pakistan
25 A Davis Road Lahore, Pakistan
Tel: 92 42 6315162 Fax: 92 42 6271149 Mobile: 92 300 8411945
www.laborpakistan.org
From: rednisar33@hotmail.com
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Subject: Round Table Conference against Privatization of national Assets
Date: Sun, 2 Jan 2011 13:47:07 +0000
Dear All,
Please fined out the press release and pictures of round table anti privatization conference.
Round Table Conference against Privatization of national Assets
Islamabad, 2nd January 2011 - Scores of trade unionists, political
workers, teachers, students and ordinary citizens vowed at a special
roundtable conference Sunday to resist the privatization of state
enterprises and agreed on the need to formulate an alternative
economic policy paradigm to that being forced upon Pakistan by the
international financial institutions (IFIs). The conference was
organized by the Anti-Privatization Alliance at the National Press
Club Islamabad and featured the participation of a broad cross-section
of representative workers and students organizations. The conference
resolved to resort to a general strike call in coming months if the
government continued to toe the line of the IFIs and push further
privatizations.
In his introductory remarks, Aasim Sajjad of the Worker's Party
Pakistan (WPP) said that for the past two decades successive
governments have adopted neo-liberal policies at the behest of
international donors and have succeeded in pushing Pakistan's working
people into a state of economic and social misery. He focused
specifically on the policy of privatization and noted that around the
world 'experts' have asserted that the state should withdraw from the
economic sphere and leave allocation of resources to the market.
However, this philosophy ignores the fact that the private sector does
not cater to the needs of working people and the result has been
increased joblessness, deteriorating access to basic amenities such as
health and education, and general economic decline for Third World
Countries such as Pakistan.
Khawaja Sarmad of the Awami Jamhoori Forum provided detailed figures
of privatization in Pakistan since the early 1990s. He noted that more
than 160 public enterprises had been sold into private hands and the
majority had subsequently shut down or were operating even more
inefficiently than earlier. He talked at length about the debacle of
PTCL's privatization, noting that 40,000 workers of the enterprise had
been shunted out from their jobs while the share price had plummeted
from Rs. 70 to Rs. 19. He said that the scandalous performance of PTCL
after privatization proves that the claims of neo-liberal ideologues
about the greatness of the market are totally false.
Nisar Shah Advocate General secretary of the Labour Party Pakistan
spoke extensively on the upcoming privatizations of Pakistan Post
and IESCO and also warned that OGDC is once again on the chopping
block after a move to privatize it was successfully repealed in late 2008.
He also slammed the government's plan to privatize at least 26 educational
institutions in Punjab and said that the government policy on education is
resulting exponential increases in fees and a growing
class divide in society.
Among others who spoke were Rana Hassan, Malik Maqbool and Azad Qadri
of PTCL, Aqleem Khan of OGDC, Malik Fateh of WAPDA, Moazzam Khan of
Pakistan Post, Zahoor Awan of the Pakistan Worker's Federation, Nazir
Javed of PWD, Raja Altaf of the Railway Workers Union, Dr. Saghir Alam
of the Punjab Teacher's Union,jameel Enginer of communist party of Pakistanand Alia Amir ali of the National Students Federation.
The conference unanimously passed resolutions demanding
the rescinding of PTCL's privatization, reinstatement of fired employees
in ZTBL, the immediate suspension of all plans to privatize further state
enterprises, and new labour legislation that protects the rights of workers
to assemble, organize and strike. The conference also resolved to participate
fully in the rally call against privatization that has been issued by the Pakistan
Worker's Federation for January 4.
Nisar Shah
General Secretary
Labour Party Pakistan
Cell: 0092-3002147960
labour_party@yahoo.com
www.laborpakistan.org
www.jeddojuhd.com
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