Impact of Nationalization on Pakistan.Docx

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  • Topic: Pakistan, Banks of Pakistan, Economy of Pakistan
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Impact of Nationalization on Pakistan's Economic development " We would have had the likes of Birlas and Tatas but for nationalization." Nasim Saigol, Interview with Business Today, India. March 22-April 6,1992 " Had we gone at the rate of growth during the decade of 1960's, I reckon we would have definitely been an Asian tiger by now" Abdul Hameed. M. Dadabhoy, Interview with Daily Dawn September 9, 1995. Bhutto's nationalization broke some of the 22 families financially but several of them were also broken in body and spirit, with the result that they disposed off industaries that escaped nationalization or self-imposed a moratorium on new projects. Farooq A Shaikh of Colony group, one of the major affectees of nationalization remarked in an interview with author that top Pakistani industrialists not just lost industrial units to Bhutto's nationalization policy, they lost the urge to invest in Pakistan. " We concluded regretfully that it was a bad judgement on the part of our group to have remained exclusively confined to Pakistan. It was like putting all the eggs in one basket", he said while noting that several industrialists particularly those from Karachi had resorted to flight of capital, ahead of Bhutto's nationalization and were able to comfortably live out the Bhutto era in Europe or United States on business ventures set up there.

Karachi based business communities of Memons, Khojas and Bhoras had led the first wave of industrial development in Pakistan but it were they who suffered most in the seperation of East Pakistan and Bhutto's nationalization. These business communities had been seasoned by persecutions of different types in their abodes in India and elsewhere, particularly, Burma, and therefore, they responded in the only way that was expected in such a situation , i.e switch over investment and move abroad. It is not surprising that several leading industrial families of the 1970 era have not set up a single big industrial project in 25 years since nationalization.

Earlier in this chapter, we have listed some projects abandoned by the big business, half or three quarters complete because nationalization order excluded private sector from operating in certain industrial fields. These projects mainly related to manufacture of tractors, automobiles and fertilizers which were capital intensive and employment generating. The sponsors of these gigantic projects resigned themselves in the post-Bhutto era to become traders or at best spinner of yarn and processor of sugarcane.

The sweep of nationalization, its impact on the psyche of the big business and thus on Pakistan's industrial development can not be comprehended without taking a look at the taken-over industries, companies and their ownership.

In six traumatic years of Z A Bhutto, 31 key industrial units, 13 banks, over a dozen insurance companies, 10 shipping companies and two petroleum companies were nationalized, out of which at least 22 industrial units, 9 banks, 9 insurance companies, 3 shipping companies and 2 petroleum companies belonged to the 22 families. Nasim Saigol claimed in the interview with the author that Saigols lost 70% of their assets in Bhutto's nationalization.

Following is the list of industaries and companies nationalized by Bhutto and the groups owning them.

31 Key industries nationalized in 1972
Units taken over in Karachi
1 Steel Corporation of Pakistan Fancy
2 Hyeson's Steel Hyesons
3 Ali Automobiles Jaffer Bros
4 Kandawala Industries
5 ROK Industries
6 Haroon Industries Haroon
7 Wazir Ali Industries Packages
8 Gandhara Industries Bibojee
9 Indus Chemical and Industries
10 Valika Cement Valika
11 Karachi Gas Fancy
12 Valika Chemicals Valika
13 Karachi Electric Fancy-Jaffer Bros
14 National Refinery
15 Pakistan Fertilizer Corporation Jaffer Bros

Units taken over in Punjab and NWFP

16 BECO C.M.Latif
17 M.K.Foundary
18 Ittefaq Foundry...
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