Altaf Saleem, Chairman, Shakarganj Foundation, served as Federal Minister for Privatisation and Chairman, Privatisation Commission during 1999-2002. Saleem has had a strong affiliation with education, and was the founder Chairman of National Vocational and Technical Education Commission, and founder Governor of National Management Foundation, which runs the Lahore University of Management Sciences.
He was appointed Chairman of Earthquake Reconstruction and Rehabilitation Authority (ERRA) after the October 2005 earthquake, and the President awarded him with the 'Sitara-e-Essar' - highest civil award for service to humanity - for his services for the earthquake-affected people.
CONSISTENCY: THE MOST-LOVED WORD OF INDUSTRIALISTS You might say resolving the power crises, curtailing government borrowing and selling off the ailing public sector entities will resolve half of Pakistan's economic problems. Well, you have probably got it wrong.
"Power is definitely the major issue. However, if you hypothesise that if power issues are resolved everything will be good for the industry, my answer would be no, because there are issues of economic viability even after power sector problems are resolved," says Altaf Saleem a businessman-turned-policymaker who is taking time off these days to chart his future course of action.
Saleem, whose first public sector job was as the minister of privatisation in 1999, points finger at the frequent changes in the industrial policy. "As every successive government announces its plan for a new industrial policy", the old policy gets shelved without any heed whatsoever. "We need to take a stock of all the previous policies and assess what has worked for us and what has not," asserts Saleem. Perhaps, a page can be taken from the telecom experience.
The single-most important factor in the telecom sector was the deregulation policy that Goldman Sachs created for Pakistan, says Saleem. "There was a lot of opposition to the idea at the time. PTCL was deadly against breaking its monopoly. But a world class policy was introduced, and approved by the government."
"We auctioned the first two telecom licenses for $290 million each; previously the licenses had been granted for free. When the time came for the renewal of the old licenses, we made them match the licensing fee. Some players found sponsors, others were bought out and one folded. So you see, a good policy is attractive to investors," says Saleem. "In other areas, the policy is not clear; in fact the policy is often not there at all".
In a rare, but candid acknowledgement by any businessman, Saleem argues for a strong system to regulate the industry. "Without robust systems that regulate the industry, those involved in malpractices will always outperform those with integrity. Yet so far, there is very little development on this front," he says.
"Even during 2000-2004, when fiscal borrowing was curtailed, interest rates were low, and inflation was in check, there was confidence in the domestic currency, yet there wasn't any worthwhile industrial development," Saleem laments, while highlighting that the only industries that expanded were ones that are heavily subsidised.
But for Saleem, the policy mishmash is probably the worst sin. "The prerequisites of industrialisation include geographical advantage, a stable economy, presence of raw material and, most importantly, skilled human capital. And all issues must be dealt with simultaneously. Patch-fixes will not fix our problems," says Saleem.
Similarly, "when the power crisis first started, people invested in furnace oil-based captive power plants because the government was subsidising it. At that time there was no policy. But when the subsidy was removed, that investment became redundant. So the government has to be consistent in its policy," he said.
In other citations of haywire policymaking, Saleem criticises the subsidies on diesel that boosted trucking business at the cost of railways. "The focus was taken away from railways, whose prime purpose is transportation of freight," says Saleem. "In India, they have revived the railways by optimising freight transportation, because for them travellers are a by product, and not the other way around," he added,
Sadly, "in Pakistan people are still not changing their transportation preferences despite that the subsidy on diesel is no more," -- and this speaks volumes of the long lasting impact of policies, and the dangerous implications of wrong policies.
POWER AND PSEs Saleem is a staunch critic of unbridled power subsidies. Why is the government subsidising power to people through state-owned companies, he inquires rhetorically. "There should be a bar on the government, perhaps constitutional, that prohibits the government from doing so," Saleem urges while asking the government to subsidise through the fiscal budget, if it must.
But unlike such conventional wisdom, Saleem argues for a 'project-to-project' evaluation of the case to sell-off the public sector entities. "Some of the companies are not very good privatisation targets at the moments," says Saleem. "However, there are others, which cannot continue much longer without privatisation".
Can you give an example of each? Well, "Pakistan Steel Mills is surely one of those companies that need to be privatised. It requires expansion to be feasible. And everyone knows that the private sector employs capital a lot more efficiently". When you look at PIA, on the other hand, it would be very difficult to find an investor, Saleem points out. "People will not sell it for a token amount, looking for an upside stake in the company; we need to break down the losses and see how they can be addressed".
While Saleem is an advocate of empowered independent boards as well as professional management, he does seem to share the consensus view that public private partnerships are the solution to turning around sick organisations.
"At best, public private partnerships can work in the social sector. Hospitals, schools etc are good candidates," says Saleem. "But when you talk of commercial enterprises, it is not the best solution; unless a professionally drafted process is created and also followed, public private partnerships become handouts to influential lobbies around the government," he cautions.
So, how long should be the long-term policies? "You have to make a policy with 20-30 year horizon and keep revising every 3 to 4 years. Policies for taxation and investment need to be long term. Skill training has to be on going and in tune with the demands of the industry, skills change over the course of time.
SKILL BUILDING Saleem, who also headed National Vocational & Technical Education Commission -- a government run vocational training institute for three years - is an ardent champion of skill building, but his experience in NAVTEC has left him almost as bitter on that note as well.
Let me narrate you a story, he begins with a long breath. "I visited one of the vocational centres in Sukkur and went to the classroom. I asked one of the girls learning how to weave sweaters, if she would be able to find a living once she completed the certificate. She replied that the weather in Sukkur is too hot for sweaters. It turned out that the girls came there just to pass the time and sit under the fan.
The point is that "we need relevance in the training we provide". They are in not in sync with the time at all government institutes. There needs to be a link between industry and the professionals teaching our students.
Similarly, "our agricultural department has ostriches and rabbits, when we have problems in chicken and livestock. "In another instance, I sought counsel with Nestle International to establish a joint venture for training purposes of the farmers, only to find that many basic concepts, like feed and water for animals, were reducing the efficiency".
Amidst all this hopey-changey talks, at the end of the day, Saleem is a rational man who understands how policies work and how the possibility of errors is embedded in any policymaking process. "The government, the public and the media should have tolerance for genuine mistakes. An environment has to be created where the major stakeholders in society are on the same page and continue to check each other, not fight battles between themselves".
Interview by Ali Khizar Aslam