illusionist
05-19-2014, 03:29 PM
http://pkpolitics.com/files/2014/05/PIA-620x382.jpg
It is widely assumed that upcoming privatization will be sale of state-owned assets to earn money in one shot.
The general plan of government is sell 26% of state assets, similar to other privatizations of PTCL/Ufone where Etisalat owns 26%. This would mean that when an institute will make a profit of Rs. 100, the private party will make Rs. 26 and Rs. 74 will go to the government.
However with this sale of 26% shares, the government will be handing over the management control to the private party, which will bring professional CEOs and management experts to run the affairs of these institutions. This will result in rise in profits and also better service to public.
The private management will work hard to recover their investment and to make profits, which will ultimately bring more revenue to government.
One of the concerns of anti-privatization lobby is that rates of services will go up to achieve better profits. For example, PIA may increase their fares to get better profits, however in presence of multiple local and international airlines as competitors, it will not be easily possible.
Another main concern for anti-privatization lobby is that new management would execute layoffs to bring the staff level to international standards for more efficiency. This is a genuine concern for previous PPP regime that made massive over-hiring in all state institutions and also installed incompetent heads to run the affairs of these institutes, like for example installing Tauqeer Sadiq as head of OGRA who is involved in Rs. 100 Billion scam (http://www.thenews.com.pk/Todays-News-13-24266-Tauqeer-Sadiq-says-he-has-Rs101m-in-UAE-bank).
Zubair Umar, who has extensive experience in private sector and was the Chief Financial Officer of IBM Middle East, heads the Privatization Commission of Pakistan (http://www.privatisation.gov.pk/). Zubair is the elder brother PTI MNA Asad Umar from Islamabad. One of the main goals of Privatization Commission is to reduce the annual bailouts of up to Rs. 500 billion to state owned enterprises form precious tax payers money and reverse it so that they contribute in Pakistan’s economy.
Finally, here is a detailed case study that shows the benefits of privatization.
A study of privatization of British Airways (http://www.baserler.com/onur/isletme/Privatization%20of%20British%20Airways-Before%20and%20After.htm) showed that the revenues, profits, market share, number of employees and their salaries actually increased gradually after privatization.
The report summarizes on the following conclusion:
Privatization of British Airways was successful. It helped the company to be a world airline. The success story of the privatized British Airways can be an example for those airlines that are waiting to be privatized.
The next thing that can be concluded from this paper is the answer of “How can be a SOE (State Owned Enterprise) which is failing day by day turned into a cash producer (by the tax)?”. The answer is simple, “privatize it!”. But, Privatization is a broad issue, not all examples can be valid to other countries. However, the case of British Airways can be used for most of the airlines operated by the governments in the world.British Airways is a strong example that suggests why government must not operate an airline, which it has other things to focus on.
It is widely assumed that upcoming privatization will be sale of state-owned assets to earn money in one shot.
The general plan of government is sell 26% of state assets, similar to other privatizations of PTCL/Ufone where Etisalat owns 26%. This would mean that when an institute will make a profit of Rs. 100, the private party will make Rs. 26 and Rs. 74 will go to the government.
However with this sale of 26% shares, the government will be handing over the management control to the private party, which will bring professional CEOs and management experts to run the affairs of these institutions. This will result in rise in profits and also better service to public.
The private management will work hard to recover their investment and to make profits, which will ultimately bring more revenue to government.
One of the concerns of anti-privatization lobby is that rates of services will go up to achieve better profits. For example, PIA may increase their fares to get better profits, however in presence of multiple local and international airlines as competitors, it will not be easily possible.
Another main concern for anti-privatization lobby is that new management would execute layoffs to bring the staff level to international standards for more efficiency. This is a genuine concern for previous PPP regime that made massive over-hiring in all state institutions and also installed incompetent heads to run the affairs of these institutes, like for example installing Tauqeer Sadiq as head of OGRA who is involved in Rs. 100 Billion scam (http://www.thenews.com.pk/Todays-News-13-24266-Tauqeer-Sadiq-says-he-has-Rs101m-in-UAE-bank).
Zubair Umar, who has extensive experience in private sector and was the Chief Financial Officer of IBM Middle East, heads the Privatization Commission of Pakistan (http://www.privatisation.gov.pk/). Zubair is the elder brother PTI MNA Asad Umar from Islamabad. One of the main goals of Privatization Commission is to reduce the annual bailouts of up to Rs. 500 billion to state owned enterprises form precious tax payers money and reverse it so that they contribute in Pakistan’s economy.
Finally, here is a detailed case study that shows the benefits of privatization.
A study of privatization of British Airways (http://www.baserler.com/onur/isletme/Privatization%20of%20British%20Airways-Before%20and%20After.htm) showed that the revenues, profits, market share, number of employees and their salaries actually increased gradually after privatization.
The report summarizes on the following conclusion:
Privatization of British Airways was successful. It helped the company to be a world airline. The success story of the privatized British Airways can be an example for those airlines that are waiting to be privatized.
The next thing that can be concluded from this paper is the answer of “How can be a SOE (State Owned Enterprise) which is failing day by day turned into a cash producer (by the tax)?”. The answer is simple, “privatize it!”. But, Privatization is a broad issue, not all examples can be valid to other countries. However, the case of British Airways can be used for most of the airlines operated by the governments in the world.British Airways is a strong example that suggests why government must not operate an airline, which it has other things to focus on.