Pakistan’s private sector and level playing fields

9 Dec 2017

Imran Khan has always held the stance that if the reins of the government are put into the hands of a businessman,the businessman will most likely work for his own personal gains rather than those of the public. This creates an inevitable conflict of interest, thus making it inappropriate for a businessman to run the government. Ironically, there is now an astounding and absolute silence surrounding the reality of government institutions carrying out private businesses.

To ensure equal opportunities to all Pakistanis in business and trade, the Competition Commission of Pakistan has been created. While in theory this commission sounds like an excellent idea, serious and unchecked problems and conflicts of interest exist. For example, the Pakistan army owns 33 petrol pumps, 62 shopping centers, and 54 schools in military areas. Following in the same footsteps, the Punjab Police have started constructing petrol pumps in several cities such as in Muzafargarh. The petrol pump in Multan City is near completion. If we look closely and objectively, his trend is worrisome and definitely comes under the realm of the Competition Commission. This problem of governmental institutions carrying out private businesses is often overlooked by the the government as well as the media.

Government institutions involved  in private businesses is detrimental to the private business sector of Pakistan in several ways. The difficulty of setting up a private business in Pakistan is well known to all business owners, large or small. A colossal amount of money and time is wasted in getting approvals from the relevant government authorities. Because the prospective owners of private businesses do not have a large workforce, they must work day and night to obtain the approvals needed. On the other hand, if a government institution decides to set up a certain business, they are likely to have a competitive advantage. They have well-paid manpower working on the government’s payroll to get the job done. Furthermore, their project approval files are not as heavily scrutinized by the relevant governmental agencies and authorities because, unlike the private business owners, they themselves are a part of the bureaucracy. On one hand, there is a private entrepreneur frantically running around, wasting time and energy to get the government’s approval to set up a business. The other hand holds a team of people working within the framework it created, with an unnatural advantage on account of their status and influence within the government itself.

Private businesses already face an uphill struggle, tackling issues such as load shedding, theft and so on; as they try to stay afloat. Forcing them to compete against their country’s own government-run institutions as well seems entirely unfair 

After successfully setting up a business, the next step is to run it. To this end, a private businessman will hire employees and pay their salaries from his own pocket. A business run by a government institution has government employees working on the government payroll. The source of that government payroll is the taxes paid by private businesses. This means that the taxes that the private businesses must pay to the government in order to function legally are used to pay the salaries of the employees of the businesses that are directly competing with them. There is a clear conflict of interest here.

Moreover, it has recently been made compulsory for private retail businesses to have official security and the top-on-the-line surveillance systems on premise. A private business owner must pay a large fee to a security company to fulfill this regulation. A business run by a government institution will not have to go through this hassle due to their connections and contracts with governmental security companies. This is an additional expenditure on part of the private business owners that the government-owned businesses will be allowed to evade.

Private businesses already have an uphill battle tackling issues such as load shedding, burglary, and so on, while trying to stay afloat. Forcing them to compete against their country’s own government-run institutions as well seems entirely unfair. Why is the Competition Commission not doing anything about this?

One might argue that the government departments need welfare funds and thus justify the government’s involvement in the private sector. This argument only creates more questions. Why has the government failed to provide appropriate welfare for its own departments? Does the Constitution allow such practices to exist? Are there laws prohibiting these practices? Allowing the government to insert itself in the private domain legally will, fundamentally change the country’s economic system from a competitive system to a command system. This change will see government institutions directly controlling major parts of the economy and getting involved in all business sectors freely. This is the only logical outcome and will see government-backed businesses monopolizing the private market. History bears witness to the fact that state ownership in the business sector has an adverse impact on a country’s economy. That is why the global trend is towards privatization. In India, for example, even their national flag carrier Air India is to be privatized.

One of the main duties of the government in a democratic system is to provide an equal and level playing field for all citizens. This involves restraining government institutions’ involvement in private sector competition. A strong and prosperous private sector is the backbone of a country’s  economy. It is about time that the Competition Commission of Pakistan and the legislature recognize and rectify these anomalies. Only then can they ensure truly fair competition. Only then will the private sector in the country survive and thrive.

Published in Daily Times, December 9th 2017.

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