Privatisation emerges as the modern and the most vital tool in helping the developing nations move out of the slow growth mode. It has widely proved and established itself as a component of sustained economic growth and prosperity. In the past two decades, the development that China has made through a remarkable GDP growth rate of over 9 per cent and the current promise that the Indian economy is showing has further established the credibility of privatisation as a means of fostering economy. Again, privatisation has played a similar key role in enabling Pakistan to transform her entire economic landscape in a relatively short span of time.

At the time, the government, under the leadership of General Pervez Musharraf, had taken over almost every major public entity that had been sustaining an excessive shortfall, requiring the government to allocate reserves towards enabling these units to continue their operations. Consequently, the subsidies deficit that reached an alarmingly high level of Rs100 billion ultimately added to the country's overall debt burden and the economic outlook comparable with, or even more than, any of the poor indebted nations like Congo, Malawi and Rwanda.

Although, there is no denial of the fact that no government has a business to do business, but to ensure a provision of elements, legislation is mandatory for creating an environment where the economy could flourish. Thus, it was actually owing to the adoption of various timely and prudent policies, particularly the investment and privatisation reforms, that Pakistan has come a long way not only in reducing the level of subsidies deficit, which today stands at Rs25 billion and is further likely to drop, but also in improving the overall economic picture by strengthening all the major economic indicators.

Governments around the world have pursued privatisation as a technique to achieve various objectives; to attract foreign and local currency in order to enhance the fiscal spread and pay off debt -- both public and private; to reduce the government reserves donated to public entities as subsidies and reduce fiscal deficit; and to draw foreign direct investment and abate the level of unemployment. Subjecting the above reasons to a careful analysis, it is easy to comprehend the significance of this very essential economic tool in keeping up the economic growth momentum of a country. It is undeniable that the current stream of foreign currency inflows in Pakistan from around the world and the Middle East in particular has given a tremendous boost to the overall economic activities in the country.

The scope of privatisation given impetus by US capitalism has won many supporters globally. Many experts today are of the view that privatisation can serve as a major cure for any nation with a crippled infrastructure and declining growth trajectory.

Global economic history depicts the way privatisation has served to boost the economies of various nations. Again, the privatisation attempts in Pakistan have not only been widely welcomed, but also proved successful in various spheres and aspects.

Fundamentally, the stand of the government of Pakistan on the issue of privatisation of various public utilities has often been distinct and clear which has ultimately resulted in an expected response from the investors and creation of various opportunities that have resulted in the smooth implementation of privatisation policies. Privatisation of PTCL, for instance, stands as one of the success stories of the smooth transfer of charge and helping public units to turn into effective market players. It is true that the privatisation of PTCL has been effectively carried out but the privatisation of railways has been completely ruled out given the inherent difficulties in the system. However, the government shows its unflinching resolve to continue with its determination to privatise other national assets. The Privatisation Commission is subjecting various nationalised entities to a careful study for this purpose.

Despite several similar attempts and the signing of MOUs during the regimes of Nawaz Sharif and Benazir Bhutto, both privatisation and investment policies could not materialise the desired results on account of several reasons. Corruption, lack of confidence in the system and above all, lack of consistency in policies were among the major factors actively responsible for leading the whole effort towards failure.

The trend of privatisation, however, took on a serious stance under the present government in the period following 9/11. This was brought about due to the change in the investment patterns of the Middle Eastern investors. It has already been seen that the Privatisation Commission has received its highest bidders from the same region because after 9/11, these investors had to divest their investments from the US financial market and invest it elsewhere -- Pakistan proved to be a suitable option. Bidding of privatisation of KESC, purchasing of PTCL by Etisalat of UAE and $176 million investment made in UBL reflected the trend clearly.

However, alongside the success of privatisation in helping the nation to accelerate the economic activities in the country, there are a number of hurdles that have cropped up to serve as some serious impediments in the privatisation efforts of the government. It is probable that if the situation continues, the government is likely to miss its targets for the current fiscal year in which the government aims to achieve a foreign investment target of $4 billion. It is estimated that the privatisation of PTCL alone would contribute to a major reward of $2.59 billion. However, such lofty targets can only be achieved through rational planning and efficient handling of the situation.

There is also a lot of speculation regarding the transparency of the entire issue. The government of Pakistan has so far received Rs275 billion from its ongoing privatisation process. There has been an ensuing debate over the earnings. There are three issues which need to be resolved to give a boost to privatisation and further safeguard the interests of all stakeholders -- the buyers, the government of Pakistan and the public.

These issues are: (i) absence of any regulatory framework for private sector commercial entities which encourages monopoles and cartels, (ii) to carefully outline national policy about what is to be privatised, and (iii) to make privatisation compatible with national objectives of creating more jobs, achieving higher economic growth and serving the people.

All in all, it can be said that privatisation in a developing country can prove to be of significant importance if handled efficiently. Unlike the challenge the country had been facing during the 90s, which is regarded as the lost decade for Pakistan, the current era reveals an altogether different picture and demands a need to ensure transparency and uphold consistency and continuity of all the government reforms including investment and privatisation policies. Today many bidders and investors exhibit trust in the present government.

Undeniably, every journey begins with a first step. At least we have started moving in the right direction. That in itself is good news, provided it can be sustained.

The writer is chairman of the Senate's Standing Committee on Finance, Revenue, Economic Affairs and Statistics.