The finance ministry’s latest report on the federal footprint on economy courtesy the state-owned enterprises (SOE) has been released. This is one is for FY17, the fourth in the series that began with the release of annual SOE report for FY14. But don’t expect a surprise or anything like it, because the story is little changed over yester years.

The combined losses of top ten loss making SOEs alone equaled 10 percent of federal tax collection in FY17; little changed over the year before. Age-cohort of the employees at these mostly sick enterprises remain in the old and rusty category, whereas the combined return on investments as well as the return on assets remain terribly poor. This story was also the same the last time around and will likely be the same when the Q-block releases the report for FY19 since precious little has happened to the SOEs to-date. (See BR Research’s SOEs: elephants on the table Nov 27, 2018)

https://www.brecorder.com/2018/11/27/455004/soes-elephants-on-the-table/

The efforts of Finance Ministry’s Economic Reform Unit (ERU) – the wing responsible for producing these reports – are commendable. One can only imagine the dreadful task of dealing with the egos of so many ministries that run these umpteen SOEs. However, most intriguing is the part that did not make it to the report. For instance, the report does not have any estimate of gratuity or pension accruing on these SOEs; or perhaps it is not accruing at all and one day that bubble will also burst all over the fiscal face.

The report also doesn’t inform its readers as to how many SOEs have complied with the PSE corporate governance rules. Nor does it explain some strange accounting numbers present in the report, where for instance, Pakistan Railways has a revenue of Rs40 billion but ‘ZERO’ cost of sales. Then again, let’s not shoot the messenger; the ERU is only the data collecting agency so far as this report is concerned. Fixing the SOEs requires whole of government approach, which so far doesn’t appear on the horizon.