The above is the title of a book which has attracted much attention of the intelligentsia of Pakistan. I got a copy of it only last week. But, I have been wanting to get it for quite some time for two main reasons: (1) press reviews of it have been mentioning the sensational, though factual, disclosures in it, and (2) the intellectual integrity and the caliber of the author, Shahid-ur-Rehman, who has been a prominent economic journalist of Pakistan for almost three decades. The demand for the book, in a country where reading books does not form part of the culture of even the well-educated persons, may be gauged from the fact that, within the first four months of its publication, it went into four editions.

I came in contact with Shahid while serving as the Manager of National Press Trust that owned seventeen newspapers and periodicals including the daily Morning News. Shahid was the Islamabad Bureau Chief of this paper. During our meetings and discussions on various national issues, I had always admired the depth of his knowledge particularly on economic issues.

Why did he call the book “Who Owns Pakistan”? Reproduced below is what he has to say himself:

“How else it should be called when

• a sugar mill set up with tax payers money at an estimated cost of Rs.300 million is sold for a token price of one Rupee,
• the government majority shares in Pakistan’s biggest chain of hotels are dished out free to a crony, by giving him a loan to facilitate the purchase and then writing the loan off,
• a business shark manages to secure 38 loans totaling Rs 3.5 billion through fake collaterals, escapes when found out and is living happily abroad,
• an unknown entity is granted a loan of Rs. 1.18 billion without any collateral on a telephone call from Islamabad and the banker who sanctioned the loan ends up as a federal minister instead of ending up in prison,
• all five loans worth Rs.500 million of an enterprising businessman heading FPCCI Committee for Revival of Sick Industrial Units, are written off,
• 12 foreign currency loans of an industrial tycoon, amounting to Rs. 672 million are converted into a rupee loan and rescheduled so that repayment starts in 2002 instead of 1990. When the matter is raised in the Supreme Court, the tycoon who has expanded his business abroad is granted another loan to repay the rescheduled loan,
• 80 industrial units including 32 biggest units set up by public and private sector in the last 50 years are sold for a paltry amount of Rs.10 billion. New owners are defaulting in the payment of Rs. 4 billion to the Privatization Commission and liabilities of the privatized units worth tens of billions of Rupees in local and foreign currencies are being paid by the Government of Pakistan, i.e. the tax payers,
• 1,500 individuals and firms make use of 80 per cent of the total bank credits; Rs. 130 billion are stuck up in bad loans and Rs. 8.2 billion have been written off: while the public demands recovery of stuck up loans, the government has come out with schemes to reschedule the loans and grant new loans to the same defaulters,
• the common man bears the burden of 100 different taxes prevalent in the country but the super-rich are provided escape routes of exemptions and tax holidays, 180 of them in the payment of income tax alone.

“If you still question the title of the book, please consider these: The House of Habib has about 90 units in its fold, Mian Muhammad Mansha is director on boards of 45 companies, Ittefaq (of Sharif family) controls at least 29 units, Sadruddin Hashwani has 25 companies, Monnoos have 18 textile and sugar mills…Wadera Ghulam Mohammad Mehr owns 100,000 acres, Ghulam Mustafa Jatoi follows him with 80,000 acres.

“It is these people, their ilk, their kith and kin who own Pakistan.

The system works for them. My investigations have revealed that the top 44 business groups own assets worth Rs. 500 billion…Yet they pay marginal income tax. In several cases no tax at all.”

Shahid-ur-Rehman divides the economic saga of Pakistan over the past half a century into three phases. The above represents the current state of affairs.

The First Phase (1947-71) witnessed an exemplary expansion of the economy. Pakistan was regarded by some foreign economists as an emerging Asian Tiger. This remarkable industrial development was led by the Karachi-based business groups, mainly of Memons (org. Momins -pure Muslims) These persons with vast assets and experiences gained in India, Burma, Singapore and elsewhere streamed to Karachi with a zeal for the new state. They were encouraged to do so by leading Memons of the day –Haroons, Adamjees, Rangoonwalas, Dawoods, Jaffers and others. The emphasis on capital formation and private enterprise, during this phase, led to even the transfer of the industries set up in the public sector by the PIDC to private ownership. The economy came to be dominated by 22 families based mainly in the Western wing causing a disenchantment in East Pakistan and its secession.

The Second Phase (1971-77), the Bhutto era, saw tumultuous economic changes in the name of social justice. Their repercussions continue to haunt the country even today. Nationalization of 31 key industrial units, 13 banks, over a dozen insurance, ten shipping and two petroleum companies was carried out, many of these belonging to the 22 families. The industrialists and entrepreneurs found the fruits of their labor snatched from them over-night. But, the shattering of their spirit was much more harmful to the nation. Not a single industrial project has been set up by any of these families over the past 28 years. From producers they have turned into distributors, spinners of yarn and processors of sugarcane, at best.

A minor business community, the Chiniotis, filled up the vacuum and shifted industrial activity to Punjab. Karachi kept growing physically, while employment opportunities kept shrinking with the shift of industries to the north. This spawned frustration and violence that, in its turn, has pressured further the Chiniotis of Punjab to take their businesses up north to safer areas. Allocation of land in duty-free areas, provision of infrastructure facilities at public expense and latent official support, worked as the pull factors in this trend.

Nationalization turned bureaucrats and politicians into businessmen and businessmen into politicians.

Bhutto’s 1973 constitution provided no constitutional security of job to the civil servants. Their postings, transfers, promotions and even summary dismissals lay, for the first time in the country’s history, totally at the pleasure of the prime minister. The en masse dismissal of senior officials by Bhutto on assumption of office –mainly on the recommendations of his party leaders- had effectively politicized senior bureaucrats. Insecurity germinated corruption, its incidence having been till then insignificant.

How nationalization has retarded Pakistan’s economic growth, points out Shahid, can be illustrated by the simple fact that in 1947 Pakistan had inherited three aging vessels but their number increased to 75 when Bhutto nationalized shipping and placed all these vessels under the National Shipping Corporation. But, in 1992 when Nawaz Sharif allowed the licensing of private shipping, the number of ships with NSC had gone down from 75 to 25 only.

The Third Phase (1977-to date) includes 11 years of Gen. Zia’s rule which in the words of Shahid was “a status quo period for the economy”. Socialistic policies of Bhutto having been rejected, the market forces were allowed to play increasingly important role. The economy posed no serious problem though its pace of growth was slow.

The two stints each of Nawaz Sharif and Benazir have caused the greatest harm to the country’s economy mainly because of their limitless greed and corruption. The national debt –both foreign and domestic-kept mounting at an unprecedented rate. Both advocated the privatization of public enterprises as the panacea for getting rid of the debt burden. Shahid comments: “Privatization in Pakistan is the classical example of corrupt politician and ever-corrupt bureaucrats working in concert to turn a lemon into an orange.” A large number of units were passed on to cronies at throwaway prices. Some examples of this have been quoted from Shahid’s book at the beginning of this column. No wonder the national debt kept mounting and the national assets kept shrinking.

Shahid has dealt in detail with the modus operandi resorted to by the two luminaries for making money. Some of these have come into the open in their trading of corruption charges against each other. “Both Benazir and Nawaz Sharif”, says Shahid, “championed transparency in privatization and at least 90 industrial units and several financial institutions have been privatized. Starting with Muslim Commercial Bank, the first unit to be privatized till Kot Adhu Power privatized by Benazir Bhutto at the fag end of her government, there are very few units whose privatization is scandal-free.”