Group 5

Ahmed Fouad Asim Ali Fida Baqar Hussain Sohaib Ahmed Umair Majeed Waseem Malik

Definition of Topic Disinvestment and Monopoly- Perspective.. Structure of a Monopoly Market- Advantages

Why Disinvest?
Privatization of PTCL Proposed Privatization of Pakistan Railways Conclusion and Recommendation

The action of an organization or government selling or liquidating an asset or subsidiary (investopedia.com) generally referred to as Privatization

A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products. According to a strict academic definition, a monopoly is a market containing a single firm. In such instances where a single firm holds monopoly power, the company will typically be forced to divest its assets. Antimonopoly regulation protects free markets from being dominated by a single entity. Read more: http://www.investopedia.com/terms/m/monopoly.asp#ixzz1dbu5Pjtv

Mission Statement of the Privatization Commission of Pakistan Privatization is envisaged to foster competition, ensuring greater capital investment, competitiveness, and modernisation, resulting in enhancement of employment and provision of improved quality o fproducts and services to the consumers and reduction in the fiscal burden. Graphs to be inserted

The objectives of privatization outlined in the publication cited above are: Creation of market based economy Promoting the expansion and efficiency of private sector enterprises Encourage competition, specially by abolishing the monopolies and promote integration of the domestic economy into the world economy Support wider capital ownership and encourage employee owner relationship Establish and develop capital markets for mobilization of domestic savings Reverse the flight of capital abroad and repatriate capital already transferred Mobilization of private sector resources for future investments Promote economic flexibility Maintain or create employment Improve the quality of goods and services Maximise receipts from privatization to pay off public debt and reduce the public sector deficit Substantially reduce the size and scope of the public sector Substantially reduce the financial drain of public enterprises on the government Decrease the opportunities for misuse and corruption of public property by government officials and public sector managers

Major Objectives of Privatization as stated by the Government Improvements in the level of efficiency in the production processes; Reduction in the debt burden of the government and fiscal deficit; Broad-basing equity capital; and Releasing resources for the physical and social infrastructures Graphs to be inserted

privatization is the process of shifting assets from public possession to private ownership and/or relocating the organization of a service or activity from the government to the private sector(Jeffrey M. Schoenberg, 2006). Privatization is recommended in many cases like: agency problem prevailing in the public sector, significant market failures, and government interventions etc. (Yarrow, 1991).Privatization is intended for planned development, welfare of country and economic growth, which became quite visible in both developed and developing nations during the period between the 1950s and 1970s(Haque, 2000).Privatization aims at opening such Governmental enterprises to private participation that have been previously prohibited by law. Their objectives include removal of political and bureaucratic management from public sector, an end to investment restrictions in certain strategic agencies and doing away with such policies which restrict competition. Graphs to be inserted

Pakistan Railways is a department of the Government of Pakistan (GOP). The network has 7,791 route km, 559 stations and it has an annual revenue of around Rs.20 Billion (2007-2008). Pakistan Railways came into existence under a different name on 13 May 1861, when Kotri and Karachi two stations 169 km. a part were linked by rail. In 1947, it was named as Northwestern Railways, had 11,088 routes Km of which 3043 were transferred to India. Leaving 8,045 Km to Pakistan. In 1961, it was named as Pakistan Western Railway and in 1974 as Pakistan Railways.

Pakistan Railway has been going in loss for the past sometime. These days privatization of Pakistan railway is under discussion in the cabinet. In your opinion should it be privatized or not?
42% Favour The Privatization Of Pakistan Railway As Opposed To 35% Who Are Against It GALLUP PAKISTAN

Current state of Pakistan Railways: Inefficencies management No route, inventory and cost management

Excess staff
Corruption Low quality of service Increasing debt

Pros and cons of disinvestmentDisinvestment is good