Privatization should not create new Oligarchs

[FuturePAF]

While discussions are underway to attract investment into Pakistan, this should be done carefully as not to hand over major sectors of the economy from the SOEs to a few oligarchs, creating new monopolies that have no incentive to grow as fast as possible.

Govt 'approves policy' to attract $20-25bn foreign investment

Federal cabinet approves Pakistan Investment Policy 2023. Policy readied after consultations with financial institutions. "Foreign investors will be given special protection," sources say. ISLAMABAD: The Pakistan Democratic Movement (PDM)-led government has approved a major economic policy to...

defence.pk

Any deals made to privatize SOEs, should’ve done in a way that still allows for real competition and doesn’t give the new owners of the SOEs unfair advantage or promises fixed profits as promised to the IPPs.

In India, Indigo has 60% of the Indian market while Air India has only 10%. Now that Air India is back in the hands of the Tatas, they can invest and build up the airlines and compete on a level playing field.

Privatization and selling to what became oligarchs due to their monopolies has prevented the Russian and Ukrainian economies from growing while Poland didn’t do this and their growth has been steady for the last 30 years, recording 6.8% growth in 2021; a significant amount in a relatively developed Europe.

Graph of the week: Poland's success story - European Commission

The Polish economy has had an impressive economic growth over the last two decades. The living standards (in terms of GDP per capita) more than doubled in the last 20 years and the accession into the European Union in 2004 speeded the 'catching-up' process.

ec.europa.eu

Creating space for small and medium enterprises to be able to compete with large domestic and multinationals is how the German Mittlestand developed and how Poland developed. They have also lifted up more regions of countries than just what a large company would do in a few cities. Also investment by people from smaller towns in businesses in their own regions allows money to circulate there.

This would also be the best way to attract sustainable long term investment; factor in the diaspora that would invest on a steady and growing basis for decades to come and only take out small amounts when they retire, like a 401K, but even better. The diaspora could gain the skills from abroad to run these companies themselves and manage it well because it would be their own money and their standing in their localities.

A very informative video on how Poland is outgrowing the UK and taking about the reform it did to get to where it is now.

 

[_NOBODY_]

While discussions are underway to attract investment into Pakistan, this should be done carefully as not to hand over major sectors of the economy from the SOEs to a few oligarchs.

Govt 'approves policy' to attract $20-25bn foreign investment

Federal cabinet approves Pakistan Investment Policy 2023. Policy readied after consultations with financial institutions. "Foreign investors will be given special protection," sources say. ISLAMABAD: The Pakistan Democratic Movement (PDM)-led government has approved a major economic policy to...

defence.pk

Any deals made to privatize SOEs, should’ve done in a way that still allows for real competition and doesn’t give the new owners of the SOEs unfair advantage or promises fixed profits as promised to the IPPs.

In India, Indigo has 60% of the Indian market while Air India has only 10%. Now that Air India is back in the hands of the Tatas, they can invest and build up the airlines and compete on a level playing field.

Privatization and selling to what became oligarchs due to their monopolies has prevented the Russian and Ukrainian economies from growing while Poland didn’t do this and their growth has been steady for the last 30 years, recording 6.8% growth in 2021; a significant amount in a relatively developed Europe.

Graph of the week: Poland's success story - European Commission

The Polish economy has had an impressive economic growth over the last two decades. The living standards (in terms of GDP per capita) more than doubled in the last 20 years and the accession into the European Union in 2004 speeded the 'catching-up' process.

ec.europa.eu

Creating space for small and medium enterprises to be able to compete with large domestic and multinationals is how the German Mittlestand developed and how Poland developed. They have also lifted up more regions of countries than just what a large company would do in a few cities. Also investment by people from smaller towns in businesses in their own regions allows money to circulate there.

This would also be the best way to attract sustainable long term investment; factor in the diaspora that would invest on a steady and growing basis for decades to come and only take out small amounts when they retire, like a 401K, but even better. The diaspora could gain the skills from abroad to run these companies themselves and manage it well because it would be their own money and their standing in their localities.

A very informative video on how Poland is outgrowing the UK and taking about the reform it did to get to where it is now.

To prevent this you need a very powerful government like the CCP and strong regulations. I love the way China puts its billionaires in their place whereas in the democratic world, it is the opposite.

 

[nahtanbob]

While discussions are underway to attract investment into Pakistan, this should be done carefully as not to hand over major sectors of the economy from the SOEs to a few oligarchs.

Govt 'approves policy' to attract $20-25bn foreign investment

Federal cabinet approves Pakistan Investment Policy 2023. Policy readied after consultations with financial institutions. "Foreign investors will be given special protection," sources say. ISLAMABAD: The Pakistan Democratic Movement (PDM)-led government has approved a major economic policy to...

defence.pk

In India, Indigo has 60% of the Indian market while Air India has only 10%. Now that Air India is back in the hands of the Tatas, they can invest and build up the airlines and compete on a level playing field.

Nothing prevents a new entrant for competing in the Indian aviation sector - other than access to capital to raise a large fleet. There are zero structural barriers

 

[Azadkashmir]

you need Stalinist style ruler who just with a flick of pen, send whole government to the gulag to rot.

 

[nahtanbob]

you need Stalinist style ruler who just with a flick of pen, send whole government to the gulag to rot.

a few million individuals who have nothing to do with the government

 

[FuturePAF]

Nothing prevents a new entrant for competing in the Indian aviation sector - other than access to capital to raise a large fleet. There are zero structural barriers

Hence why growth is sustainable in India, as long as wealth per capita and population grow.

 

[Azadkashmir]

a few million individuals who have nothing to do with the government

government has go to do bussiness with investors so they do have something to do with it.

 

[FuturePAF]

To prevent this you need a very powerful government like the CCP and strong regulations. I love the way China puts its billionaires in their place whereas in the democratic world, it is the opposite.

On core issues there should an acceptance of the national interests, otherwise no political party can bear to make tough decisions as they would be voted out, but a democratic system is better able to hear and respond to people’s complaints giving a pressure release mechanism to the massive changes an industrializing country will have to carry out as it develops.

 

[_NOBODY_]

On core issues there should an acceptance of the national interests, otherwise no political party can bear to make tough decisions as they would be voted out, but a democratic system is better able to hear and respond to people’s complaints giving a pressure release mechanism to the massive changes an industrializing country will have to carry out as it develops.

I would argue that there's more pressure on an autocratic regime to deliver than there is on a democratic one. This supposed "freedom" makes people tolerate their government's inefficiency; however, this isn't the case for autocratic governments. If an autocratic government fails to deliver economically then there will be a whole lot of instability in the country. The Arab Spring would have never happened had the governments delivered economically. KSA, Qatar and UAE saved themselves from the Arab Spring because they were doing well economically.

 

[FuturePAF]

I would argue that there's more pressure on an autocratic regime to deliver than there is on a democratic one. This supposed "freedom" makes people tolerate their government's inefficiency; however, this isn't the case for autocratic governments. If an autocratic government fails to deliver economically then there will be a whole lot of instability in the country. The Arab Spring would have never happened had the governments delivered economically. KSA, Qatar and UAE saved themselves from the Arab Spring because they were doing well economically.

But a democratic government can be brought down in an election. Autocrats won’t have a change of government or some other means of course correction if they fail, so no matter how they perform, the people have to put up with it. In fact, many of the most talented and wealth they have built up choose to flee.

A state with a baseline level of social liberties and protections for the masses in an autocratic system with competing elites has a chance at continuous growth. Something akin to Germany in the late 1800s and early 1900s.

I two world wars, what they had built up to 1914 allowed them to stay economically set up to be relevant to this day.

 

[maithil]

You don't need Stalin for Business to grow. You need rule of law and level playing field. Without these, you will only have Fauji Foundation and Malik Riaz.

 

[Indos]

Why this Western Liberal policy being pursue ? If SOE is mismanaged, then bring reform and put best leaders on them.

If we want to encourage private investment then the solution is to improve infrastructure, easing regulation, easing funding to MSME, protect local industry from imported goods, etc.

There is trade off in managing gov budget, as I always say many times here is to manage the budget based on current capability

Current gov policy to be less confrontative to India is a good thing, but it should be followed by reducing defence budget and use it to do something more effective and crucial for Pak long term economic goal.

Immediate plan can be improving electricity infrastructure in Pakistan tourist site near Himalaya. It can bring USD to Pakistan if the region potential is tapped and exploited.

 

[RealDeal]

I would argue that there's more pressure on an autocratic regime to deliver than there is on a democratic one. This supposed "freedom" makes people tolerate their government's inefficiency; however, this isn't the case for autocratic governments. If an autocratic government fails to deliver economically then there will be a whole lot of instability in the country. The Arab Spring would have never happened had the governments delivered economically. KSA, Qatar and UAE saved themselves from the Arab Spring because they were doing well economically.

Any dissent and instability in autocratic regimes is quickly crushed by soldiers, mobs, criminals and paramilitaries associated with the govt and any pressure loses steam. What can be a bigger economic failure than Cuba, Venezuela and NK, yet they continue to stand for over 60 years. Plenty of more such examples from Africa..