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Government Sponsored Corporations 1988-89.

Government Sponsored Corporations 1988-89

The Government Sponsored Corporations is one of the important publications of the Economic Adviser's Wing Federal Ministry of Finance. The first edition of this useful publication was issued in 1965 as an authentic document on the working of the corporate sector in which the Central Government has equity interest or management control. So the publication is 25 years old. In this connection, it may be mentioned that the Expert Advisory Cell of the Ministry of Production issues annually a voluminous report on the performance of the agencies under that Ministry. These units are covered in the publication under review also. However, the analysis of the Ministry of Production is more detailed and those units are mostly manufacturing.

The publication under review is more significant than the preceding issues as Water and Power Development Authority (WAPDA) has been covered for the first time in this publication. WAPDA is now one of the most autonomous commercial organisations in the public sector. Further, it is now operating as really an autonomous commercial body tending toward self-sustaining organisation, reducing its dependence on Government resources although it does not pay taxes.

Another significant development of this publication or performance of the Federal Public Sector is changes brought about in the performance of the Pakistan Industrial Development Corporation converting it from a loss sustaining body into a profit making organisation. But this conversion is at the cost of public sector assistance or indirect budgetary support. According to the authors of the Report:

"and apparently remarkable improvement in Pakistan Industrial Development Corporation's (PIDC) performance, from a loss of Rs. 247.19 million in the previous period (1987-88) to a profit of Rs. 638.83 million in the period under review. PIDC's `Profits' are somewhat illusory as three PIDC units were the recipients of Federal Government largesse: through the assumption of liabilities, grants-in-aid, and subsidies and writing off of accrued interest and loans, the Federal Government has effectively reduced the outstanding liabilities of these units by a total of Rs. 834.54 million. This amount has been included as income under prior period adjustments, converting what would have been an operating loss into a large profit."

If the WAPDA and Pakistan Industrial Development Corporation are excluded, the growth rate of pretax and post-tax profit is not impressive. While the pretax profit actually declined in real terms, the post-tax profit increased by 3.5 per cent. If the element of inflation is not taken into account, pretax profit increased by 6.03 per cent from Rs. 11.06 billion in 1987-88 to Rs. 11.72 billion in 1988-89, and post-tax profit rose by 12.69 per cent from Rs. 6.86 billion to Rs. 7.73 billion during the same period.

Sectoral Results

The Government Sponsored Corporation have been classified into 14 categories or economic sectors. In assets of the Government Sponsored Corporations, there was a big jump of about Rs. 80.627 billion or 11.2 per cent, from over Rs. 719.815 billion in 1987-8 to Rs. 800.442 billion in 1988-89. There were appreciable declines in the assets of four economic sectors, viz. "other Corporations", Commerce, Mining and Construction. The assets of "other Corporations" declined by 72 per cent, of Commerce by 14.6 percent, of Mining by 3.7 per cent and Construction by 24.6 per cent. Following table shows the sector-wise assets of the Government Sponsored Corporations in 1987-88 and 1988-89.

Here it may be pointed out that all the Corporations or units working under the Federal Government have not been included here due to one reason or the other and some of the excluded units are very important. Total number of excluded Corporations/units is stated to be 33 which means that more than one third of the units/Corporations are not covered. And when the names of such agencies are known, one feels, that this publication is incomplete. There are four agencies which were left out as some of the querries about them could not be sorted out. These units are (i) Port Qasim Authority, (ii) Telephone Industries of Pakistan, (iii) Universal Oil and Vegetable Ghee Mills Ltd., and (iv) Pakdyes and Chemicals Ltd.

Proformas were not received in respect of 11 Corporations which included (i) Pakistan Automobile Corporation Ltd. (However data were received from individual units of PACO and was included under PACO), (ii) Pakistan Mineral Development Corporation, (iii) Resource Development Corporation, (iv) National Book Foundation, (v) Printing Corporation of Pakistan, (vi) Pakistan Tourism Corporation, (vii) Overseas Employment Corporation, (viii) Shalimar Recording Company, (ix) Roti Corporation of Pakistan Ltd., (x) FATA Development Corporation, and (xi) Pakistan Environment Planning and Architectural Consultants.

Similarly, proformas were not received from 18 other units, including (i) Domestic Appliances Ltd., (ii) Hino Pak Motors Ltd., (iii) Suzuki Motor Cycle Pakistan Ltd., (iv) Pak-Iran Textile Mills Ltd., (v) Talpur Textile Mills, (vi) Hazara Forestry Project, (vii) Specialized Refractories Project, (viii) Pakistan Petroleum Provident Fund Trust Co. Ltd., (ix) Petroman Ltd., (x) Hydrocracker Project, (xi) Duty Free Shops (Pvt.) Ltd., (xii) P.I.A. Holdings (Pvt.) LTd., (xiii) P.I.A. Investment Ltd., (xiv) Minhal Incorporated Ltd., (xv) Pakistan Services Ltd., (xvi) Pakistan Institute of Tourism and Hotel Management, (xvii) Malam Jabba Resorts Ltd., and (xviii) Markerwal Collieries Ltd.

Some of the 33 units mentioned above and which have not been covered in the publication are very important. These include some industrial units which hold virtually a monopoly in their line and are important for the national economy. These are Telephone Industries of Pakistan, Pakdyes and Chemicals Ltd., Printing Corporation of Pakistan, Shalimar Recording Company, Domestic Appliances Ltd., Hino Pak Motors Ltd., Suzuki Motor Cycle Pak. Ltd., Pak-Iran Textile Mills Ltd., Talpur Textile Mills Ltd., Hazara Forestry Project, Specialized Refractories Ltd., Hydrocracker Project, and Makerwal Collieries. Some other units such as Port Qasim Authority are important in their own field. About other Corporations or units, people should know about their performance.

Savings and Investment

Now public sector covers a good part of the national economic and commercial activities and has absorbed a big chunk of the national capital. Savings and investment in the commercial establishments of the public sector should contribute to economic development of the country. Situation does not seem to be very encouraging. Investments exceeded the savings by over Rs. 8 billion. While the saving of 10 sectors exceeded their investment, in other four fields there were deficits. In fact, the power sector contributed significantly to convert surplus of savings to deficits. Following table shows a brief summary:

Value Added

The contribution of public sector to national income is now significant although a large number of Corporations and other units are not covered in this publication. Total value added contribution of 63 Corporations/units covered in this publication in 1988-89 was Rs. 52.70 billion or about 6.61 percent of GNP at market prices. The inclusion of WAPDA Power Wing has increased the value added contribution by more than one per cent and if all the Government Sponsored Corporations were covered, value added contribution should have doubled.

Employment

Government Sponsored Corporations with a variety of economic activities contribute to employment of a large number of workers. Despite the reason that some of the important sectors were not covered, 402,627 workers were employed in GSC's covered by this report. These were 2.76 percent of the total non-agricultural labour force of the country. Power sector with 153,890 employees, Manufacturing with 91,448 workers and scheduled banks with 86,585 employees were the biggest job providing sectors.

Revenues

Taxes and duties paid by the Corporations under review to Federal, Provincial and local coffers were Rs. 25.80 billion in 1988-89, 14.2 per cent more than Rs. 22.6 billion paid in 1987-88. Here, it may be pointed out that the Corporations paid 26.75 per cent of the total consolidated revenues of the Government, 26.22 per cent of indirect taxes and 26.51 per cent of direct taxes. To conclude it, the Government Sponsored Corporations is a very useful publication for students of economics, accountancy and commerce, public finance, research workers, businessmen and administrators. [Tabular Data Omitted]
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Author:Khan, Abdul Majid
Publication:Economic Review
Date:Aug 1, 1990
Words:1359
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