State-owned Enterprises in Pakistan: The Need for Corporate Governance and Private Investment

This Most of the State-owned Enterprises (SOEs) in Pakistan are a huge burden on the public exchequer without delivering results. These SOEs also distort competition and crowd-out private sector through their inefficient operations and excessive commercial lending guaranteed by the government. The opportunity cost of public money in the case of few SOEs is alarmingly high. They SOEs have also posed risks to fiscal sustainability of the economy while leaving limited space for social sector spending and other core functions of the state. Current practices of managing and governing SOEs are not yielding intended results. The multiplicity of accountability checks in case of SOEs including ministerial controls, parliamentary oversights, investigation agencies, judicial scrutiny, media investigations, regulatory agencies and other transparency checks also enhances operational inefficiencies and creates confusion about public sector company’s strategies and policies. It is utmost important for the SOEs in Pakistan to move towards a better system of governance in order to improve the current state of affairs.
Many efforts to revive or privatize SOEs have failed repeatedly. There is need to be cognizant of the factors and challenges behind those failures and develop effective strategies to resolve those challenges namely outdated legislative frameworks for SOEs, ineffectiveness and poor quality of  BoDs,  multiple  layers  of accountability,  flawed  public perceptions, lack of transparency in public sector, weak regulatory structures, politics of clientelism, ineffective contract enforcement mechanism and poor compliance of corporate governance.