With the resumption of long-stalled privatisation process, there are chances that loss-making State-Owned Enterprises (SOEs) will be seeing revival over time. "Transparency" is the buzz word these days, invoked every time one mentions privatisation.
The focus on having a robust transparency mechanism is well-placed, but there is also a need to focus on strengthening the regulatory framework in the context of privatisation.
SOEs operate in a number of sectors and impact the citizens in various ways. After the private sector takes the reins of some of the SOEs on that long privatisation list, the role of regulators will assume greater importance. Regulators will have to be especially cautious with the mixed-ownership SOEs (majority-owned by government but managed by private sector), which often flout rules of the game and get away with it.
The government has signalled that it will improve regulatory frameworks in conjunction with the privatisation process. However, there is no word on how and when that exercise will take place.
Informed observers suggest that regulatory laws are in place, but their lack of implementation is hurting the market and consumers. They cite politically motivated hiring and firing of the heads of the regulatory bodies as the main problem that gives rise to other problems in areas such as regulatory capacity, oversight mechanism, enforcement and litigation.
The perception of regulatory bodies is generally bad. As per BR Researchs Economic Perception Survey--conducted in Aug-Sep last year with 50 respondents from top local and multinational firms--only SBP, SECP and CCP were rated positively for independence and competence. Other regulatory bodies like Nepra, Ogra and NTC were rated poorly on those two perimeters.
It would be naïve to expect the government to be self-motivated to change this status quo. Pressure has to come from the civil society. Those parliamentarians who are opposing privatisation have a great opportunity here: they can peg their support with a roadmap for improvements in regulatory frameworks.
Parliament as a whole can pass laws mandating government to seek its "confirmation" for appointment of chairpersons of the regulatory bodies, with the objective of having only the qualified, competent and conflict-of-interest-free people to serve. Granted that the current political economy will not allow that to happen--but then, who else will bell the cat, if not the elected people?
Pakistans checkered history of economic reforms demands that things be done right this time. One suggests that the government use the privatisation process as a tool for the larger goal of "market development" where market players are competitively efficient and where regulators are vigilant. For that, a strong sector-based regulatory framework is needed.