ISLAMABAD: The Pakistan government said on Saturday it was struggling to resolve all pending issues to expedite the privatization of loss-making state-owned entities (SOEs), as their cumulative losses have soared into trillions of rupees, challenging the country’s ability to sustain them amid a financial crunch.
Pakistan has identified 25 public sector enterprises for privatization, including the flagship carrier Pakistan International Airlines (PIA), banks, hotels and power generation and distribution companies. However, the country’s progress in privatization has been stalled for decades due to political inertia and various challenges, including legal, licensing and ownership issues.
In a recent push for privatization, aiming to avert a macroeconomic crisis, Pakistan agreed in June 2023 to reform its loss-making SOEs as part of a deal with the International Monetary Fund (IMF) for a $3 billion bailout package.
The government resolved to privatize PIA shortly after finalizing the IMF agreement.
“The political will of a government matters in privatization of the public sector enterprises, and this time the government is keenly focusing on the privatization as the accumulative losses are in trillions of rupees now,” Dr. Ahsan Ishaq, a spokesperson for Ministry of Privatization, told Arab News.
Official data reveal there are 88 commercially operated state-owned enterprises (SOEs) in Pakistan, with their collective losses reaching Rs730.258 billion ($2.61 billion) in the fiscal year 2022.
The top ten loss-making entities, including PIA with Rs97.5 billion, the National Highways Authority at Rs168.5 billion and the Peshawar Electric Supply Company Limited with Rs102.2 billion, accounted for a cumulative loss of Rs650.197 billion ($2.33 billion).
In contrast, the remaining enterprises reported combined losses of Rs80 billion ($286 million) in the same fiscal year.
Dr. Ishaq disclosed that PIA’s cumulative losses alone have surpassed Rs800 billion ($2.86 billion), with the total asset valuation of the airline standing at approximately Rs160 billion ($572 million).
“As part of the privatization, currently the work is underway on bifurcation of the PIA into two entities and once this is completed, the expression of interest will be issued,” he said, adding the Privatization Commission was currently focusing on only three entities including the PIA, First Women Bank and House Building Finance Company (HBFC).
“There are multiple legal, licensing and ownership issues of the entities on the privatization list that keep hampering the smooth transaction,” he said, adding that political and economic instability in the country were also impeding the privatization process.
“We may not get the best offers [for the entities] from potential buyers, but we can’t afford to linger on with the multibillion-dollar losses of these enterprises,” he said.
He said the privatization of the PIA, HBFC and First Women Bank was at the advanced stage, and “the successful transaction of these entities may help boost confidence of the government and investors for other enterprises as well.”
“The UAE [United Arab Emirates] government has shown interest for a G2G [Government-to-Government] transaction of the First Women Bank, and hopefully this will materialize in the coming months,” he said.
Economists said it was heartening that almost all stakeholders were on the same page after decades of foot dragging over the privatization of loss-making entities, though they warned there was still a long way to go.
“It is yet to be seen as to what concessions the government would offer to buyers especially in regulations of the energy companies to make them attractive for privatization,” Ali Khizar, a senior economist, said in a conversation with Arab News.
He said successive governments had been striving to privatize the loss-making enterprises since 1992, but the process was stalled either by the local courts or opposition parties.
“The government should work on the economic and political stability to fetch good offers from buyers,” he suggested, pointing out that next IMF program could also be crucial in terms of privatization of Pakistan’s public sector enterprises.
“If we get a push from the IMF in the next program, the process of privatization could be expedited to reduce the losses,” he said.
Federal Minister for Finance and Revenues Muhammad Aurangzeb said on Tuesday Pakistan would seek a “large and long program” from the IMF under the Extended Fund Facility to overcome the macroeconomic challenges.
Ahsan Mehanti, managing-director and CEO of Arif Habib Commodities, said the need of the hour was effective decision-making to either improve management of the ailing SOEs or offload them to get rid of the enormous losses.
“This government’s privatization resolve is a silver lining, but timely and effective decisions are required to proceed with the process,” he told Arab News. “This is the best time to invite bids and get the loss-making enterprises offloaded as we can’t continue like this anymore.”
Pakistan struggles to privatize state-owned entities as losses mount to trillions of rupees
https://arab.news/busm3
Pakistan struggles to privatize state-owned entities as losses mount to trillions of rupees
- The government says it may not get the best offers, but it can’t afford to incur billions of dollars in losses
- Experts say government’s timely decisions to offload the loss-making entities can stabilize the economy
Ancient spring festival concludes with rituals and dance in Pakistan’s picturesque Chitral
- Chilam Joshi celebrated in May by the Kalash, a group of about 4,000 people and possibly Pakistan’s smallest minority
- Festival coincides with coming of spring and is marked by dance, animal sacrifice and highly prescribed roles for men and women
PESHAWAR: The Khyber Pakhtunkhwa (KP) Tourism Authority said on Friday a spring festival celebrated by the minority Kalash people living in the country’s northern Chitral District had concluded with the practice of community rituals and song and dance.
The Kalash are a group of about 4,000 people, possibly Pakistan’s smallest minority, who live in the mountains of the Hindu Kush, where they practice an ancient polytheistic faith. Each year in May, they come together for Chilam Joshi, a festival that coincides with the coming of spring and is marked by dance, animal sacrifice and highly prescribed roles for men and women. The community’s religion incorporates animiztic traditions of worshiping nature as well as a pantheon of gods and its people live mainly on the three Kalash valleys of Bumburet, Birir and Rumbur.
“A large number of domestic and foreign tourists had arrived for the religious festival celebrated on the arrival of spring,” Mohammad Saad, the spokesperson of the tourism authority said in a statement. “Khyber Pakhtunkhwa Tourism Authority’s tourist facilities in Dir Upper and Chitral Lower remained open during the festival.”
He said the Kalash tribe celebrated the festival with song and dance as well as the rituals of distributing milk, performing traditional dances for newborns and praying for the safety of livestock and crops.
On the first day, boys and girls go to the higher pastures to pluck wildflowers and walnut leaves to the beat of drums, while the second day, when milk is distributed, goat stables are decorated with wildflowers and walnut leaves, and songs and ceremonies take place in every village.
On the third day, villagers get together and distribute dried mulberries and walnuts in ceremonies for new born babies. On the fourth day, during the Ghona ceremony, villagers of the Kalash community gather at one main venue and different rituals and ceremonies are performed.
Throughout the festival, women usually dress up in vibrantly colored traditional clothes, wear gold and silver jewelry and elaborate headgear, while men wear traditional shalwar kameez with a woolen waistcoat.
Experts urge Pakistan government to probe capital flight after ‘Dubai Unlocked’ revelations
- Dubai Unlocked investigative project has revealed Pakistanis own residential properties worth $11 billion in Dubai
- Real estate experts, tax lawyers say poor governance, rapid currency depreciation driving Pakistanis to invest in Dubai
ISLAMABAD/KARACHI: Tax lawyers and real estate experts said on Wednesday Pakistani authorities should initiate a probe to determine factors behind the flight of capital and possible tax evasion following a new leak of records that revealed the offshore real estate wealth of the country’s political, military and business elite.
Dubai Unlocked, an investigative project involving more than 70 media outlets around the globe, has revealed the ownership of properties in the Emirate of prominent global figures, including alleged money launderers and drug lords, political figures accused of corruption and their associates, and businessmen sanctioned for financing terrorism, among others.
The data spans 2020 and 2022, and only includes residential properties.
“This is a serious issue of capital flight, therefore the Federal Board of Revenue should launch a thorough probe following the data leak,” Dr. Ikram ul Haq, an economist and tax layer, told Arab News.
He said the probe should determine whether Pakistanis had bought the assets through legitimate funds or not, adding that Pakistanis who bought properties in Dubai were legally bound to declare their rental incomes and any profit proceeds from real estate in annual tax returns.
“Pakistanis can transfer $500,000 abroad for investments with prior approval of the central bank,” Dr. Haq explained. “It is now up to the FBR [Federal Board of Revenue] to see if the funds are legally remitted to Dubai for the investments and the assets are properly declared by their owners.”
The FBR and Pakistan’s Federal Investigation Agency could not be reached for comment despite several calls and text messages.
Pakistanis listed in the leaks include President Asif Ali Zardari’s three children, former prime minister Nawaz Sharif’s son Hussain Nawaz Sharif, Interior Minister Mohsin Naqvi’s wife, Sindh provincial minister Sharjeel Memon and family members, Senator Faisal Vawda, Pakistan Tehreek-e-Insaf lawmaker Sher Afzal Marwat, and half a dozen lawmakers from the Sindh and Balochistan assemblies.
The Pakistani list also features the late Gen (retired) Pervez Musharraf, former prime minister Shaukat Aziz, former army chief Qamar Javed Bajwa’s son, and more than a dozen retired army generals as well as a police chief, an ambassador and a scientist, all of whom owned properties either directly or through their spouses and children.
Pakistani politicians and others were last named in the 2016 Panama Papers, leaked documents that showed how the rich exploit secretive offshore tax regimes.
Abdul Basit, an Islamabad-based tax consultant, also said the FBR could seek information on whether the properties revealed in the leaks were declared in tax returns or not.
“If an owner of an offshore property fails to prove the asset in Dubai is bought through legitimate money, the tax authority can impose a fine on the beneficiary,” Basit told Arab News.
Meanwhile, real estate experts said lacklustre governance, rapid currency depreciation and poor taxation policies related to the sector in Pakistan were the main factors driving people to invest in Dubai’s residential properties.
“Dubai remains a top destination for real estate investment in 2024 thanks to its dynamic economy, favorable government policies, and robust infrastructure,” Faizan Munshey, an expert on Dubai’s real estate investments, told Arab News.
“Key factors include Dubai’s tax-free environment, booming economy, safe and stable environment, and thriving tourism industry.”
Munshey added that Dubai also offered a strong rental market, impressive return on investments, and projects from world-class developers that made it an attractive choice for both local and international investors.
Asif Sumsum, chairman of the Association of Builders and Developers of Pakistan (ABAD), said Pakistan’s real estate sector had “huge potential” and could provide employment to thousands and contribute to the national exchequer.
Sumsum urged the government to revisit its policies related to the sector.
“Pakistani rulers and the incumbent government must think why Pakistanis are buying real estates in other countries, why people feel insecure in Pakistan and they opt for a second home abroad,” he said.
Muhammad Ahsan Malik, a real estate analyst, pinpointed four important factors that had discouraged investments in Pakistan’s real estate sector.
“Currency devaluation, high interest rate, poor government policies, and bad taxation of the real estate sector are among the key elements that discourage investments in Pakistan’s real estate,” Malik told Arab News.
POLITICIANS OFFER EXPLANATIONS
Pakistani politicians reacted to the Dubai Unlocked revelations, saying they had bought the properties as per law and declared them to authorities.
Explaining his position on the issue, Pakistan’s interior minister Mohsin Naqvi said the Dubai property bought in his wife’s name in 2017 was fully declared and listed in tax returns.
“It was also declared in returns submitted to the Election Commission as caretaker CM [chief minister] of Punjab,” he said in an X post. “The property was sold a year ago, and a new property was purchased recently with the proceeds.”
Pakistan Tehreek-e-Insaf (PTI) lawmaker and ex-PM Imran Khan aide, Sher Afzal Marwat, admitted he owned an apartment in Dubai, but had declared it with authorities in Pakistan, including the Federal Board of Revenue and the Election Commission of Pakistan.
“It can be confirmed with both the FBR and as well as ECP,” he said.
President Zardari’s Pakistan Peoples Party also said the properties of its leaders in Dubai had been duly declared in tax returns.
The property records at the heart of the Dubai Unlocked project come from multiple data leaks, mostly from the Dubai Land Department, as well as publicly owned utility companies. Taken together, the data provides a detailed overview of hundreds of thousands of properties in Dubai and information about their ownership or usage.
The data was obtained by the Center for Advanced Defense Studies (C4ADS), a non-profit organization based in Washington that researches international crime and conflict. It was then shared with Norwegian financial outlet E24 and the Organized Crime and Corruption Reporting Project (OCCRP), which coordinated an investigative project with dozens of media outlets from around the world.
Pakistan licenses Salaam Family Takaful as ‘first ever’ digital only Islamic life insurance provider
Pakistan licenses Salaam Family Takaful as ‘first ever’ digital only Islamic life insurance provider
- Pakistan has lately encouraged the development of Shariah-compliant financial institutions in the country
- In April, Islamabad licensed ZLK Islamic Financial Services Limited as first Shariah-compliant brokerage house
ISLAMABAD: Pakistan has licensed Salaam Family Takaful Limited (SFTL) as the country’s “first ever” digital Islamic life insurance provider, Pakistani state media reported Thursday.
Akif Saeed, chairman of the Securities and Exchange Commission of Pakistan (SECP), handed the license to Rizwan Hussain, chief executive officer (CEO) of the Salaam Family Takaful Limited.
The SFTL will provide Shariah-compliant, end-to-end digital offerings as per the stipulations and guidelines of the SECP, the APP news agency reported.
“With this license of our new company, we will be revealing a new brand very soon, which will not only resonate with our values of customer centricity and innovation but will also introduce the much-needed game changing Islamic Life Insurance and Savings offering, never seen before in Islamic Life Insurance segment across the globe,” the report quoted Hussain as saying.
“We have done extensive work in developing a comprehensive infrastructure to be the first ever digital only Life Takaful operator, and in’sha’Allah our products will provide an exquisite digital experience.”
The SFTL said the endorsement signified that its operations and offerings were “completely Shariah-compliant,” according to the report.
The organization would introduce products that would not be the usual life insurance or family takaful products, but they would be disruptive in terms of policyholder benefits and include unique features such as real-time information availability.
Pakistan has lately encouraged the development of Shariah-compliant financial institutions in the country.
In April, the SECP approved amendments to the Securities Brokers (Licensing and Operations) Regulations, 2016 and issued license to ZLK Islamic Financial Services (Private) Limited as the first Shariah-compliant brokerage house in Pakistan.
ICC announces warm-up fixtures for T20 World Cup, Pakistan to play none
- A total of 17 teams will play the warm-up games, including India
- The tournament will be hosted by the West Indies, the US in June
ISLAMABAD: The International Cricket Council (ICC) has announced warm-up fixtures between May 27 and June 1 for the upcoming Twnety20 World Cup in the West Indies and the United States (US), with Pakistan getting no chance to warm up for the mega event.
The venues hosting the 16 warm-up matches ahead of the T20 World Cup 2024 include Grand Prairie Cricket Stadium in Texas, Broward County Stadium in Florida, Queen’s Park Oval and Brian Lara Cricket Academy in Trinidad and Tobago, according to the ICC.
A total of 17 teams will play the warm-up games, including South Africa, who are playing an intra-squad in Florida on May 29.
“These warm-up fixtures will be 20 overs per side and will not have international T20 status, allowing teams to field all members of their 15-player squad,” the ICC said on Thursday.
“In a departure from the previous cycle, teams can now choose to play up to two warm-up matches, depending on their arrival time at the event.”
While Pakistan are not scheduled to play any warm-up game, India will get a chance to play one such game against Bangladesh on June 1.
The mega tournament will be hosted by the West Indies and the United States (US) from June 1 till June 29.
The June 9 T20 World Cup clash in New York between arch-rivals India and Pakistan is one of the most anticipated cricket matches this year. Millions are expected to tune in worldwide to watch one of sports’ fiercest rivalries take centerstage in New York.
Below is a schedule of warm-up matches:
May 27
Canada v Nepal, Grand Prairie Cricket Stadium, Grand Prairie, Texas 10h30
Oman v Papua New Guinea, Brian Lara Cricket Academy, Trinidad and Tobago 15h00
Namibia v Uganda, Brian Lara Cricket Academy, Trinidad and Tobago 19h00
May 28
Sri Lanka v Netherlands, Broward County Stadium, Broward County, Florida 10h30
Bangladesh v USA, Grand Prairie Cricket Stadium, Grand Prairie, Texas 10h30
Australia v Namibia, Queen’s Park Oval, Trinidad and Tobago 19h00
May 29
South Africa intra-squad, Broward County Stadium, Broward County, Florida 10h30
Afghanistan v Oman, Queen’s Park Oval, Trinidad and Tobago 13h00
May 30
Nepal v USA, Grand Prairie Cricket Stadium, Grand Prairie, Texas 10h30
Scotland v Uganda, Brian Lara Cricket Academy, Trinidad and Tobago 10h30
Netherlands v Canada, Grand Prairie Cricket Stadium, Grand Prairie, Texas 15h00
Namibia v Papua New Guinea, Brian Lara Cricket Academy, Trinidad and Tobago 15h00
West Indies v Australia, Queen’s Park Oval, Trinidad and Tobago 19h00
May 31
Ireland v Sri Lanka, Broward County Stadium, Broward County, Florida 10h30
Scotland v Afghanistan, Queen’s Park Oval, Trinidad and Tobago 10h30
June 1
Bangladesh v India, Venue TBC USA
IMF to wait for ‘findings’ of mission in Pakistan for further engagement with Islamabad — spokesperson
- An IMF team this week met top Pakistani officials in Islamabad to kickstart discussions on a fresh bailout
- The cash-strapped South Asian country is expected to seek around $7-8 billion bailout from the global lender
KARACHI: The International Monetary Fund (IMF) said on Thursday said it would wait for findings of its mission, currently holding talks in Islamabad, for further engagement with Pakistan, which seeks a fresh bailout from the global lender.
The South Asian country, which has been facing low foreign exchange reserves, currency devaluation and high inflation, last month completed a short-term $3 billion IMF program that helped stave off a sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term program.
While Islamabad has said it expects a staff-level agreement by July, both Pakistani and IMF officials have refrained from commenting on the size of the program. The South Asian country is expected to seek around $7-8 billion bailout from the global lender.
An IMF team, led by Mission Chief Nathan Porter, this week met Pakistan Finance Minister Muhammad Aurangzeb, central bank governor, chairman of the Federal Board of Revenue and other officials in Islamabad to kickstart discussions on the country’s further engagement with the lender.
“Right now, a mission team led by Nathan Porter, our Mission Chief, is meeting with the authorities this week to discuss the next phase of our engagement with Pakistan,” IMF spokesperson Julie Kozack said at a press briefing on Thursday, when asked about the status of talks with Pakistan.
“Given that there is a mission on the ground, we will wait for them to complete their work and we will communicate the findings of the mission in due course.”
Pakistan narrowly averted a default last summer and its $350 billion economy has slightly stabilized after the completion of the last IMF program, with inflation coming down to around 17 percent in April from a record high of 38 percent in May last year.
However, the South Asian country is still dealing with a high fiscal shortfall and while it has controlled its external account deficit through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2 percent this year, compared to negative growth last year.
Wall Street Bank Citi expects Pakistan to reach an agreement with the IMF of up to $8 billion program by end-July, and recommends going long on the country’s 2027 international bond.
“While longer-term challenges pertain, we see several positive catalysts supporting the Eurobonds,” Nikola Apostolov at Citi wrote in a note to clients.
“First, a larger and longer IMF EFF (Extended Fund Facility) program could be finalized by July – possibly a $7-8 billion 4-year program and secondly and a possible inflow of Saudi investments,” Apostolov said after a team from Citi visited Pakistan and met policymakers, including Finance Minister Muhammad Aurangzeb.
Citi said it expected Pakistan’s international 2027 bond to offer a sweet spot to investors with sufficient liquidity and large upside as risks of default dissipate further.
