Group 5- Impact of Disinvestment of Monopoly Markets

8/3/2019 Group 5- Impact of Disinvestment of Monopoly Markets

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Group 5


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Ahmed Fouad Asim Ali Fida

Baqar Hussain Sohaib Ahmed Umair Majeed Waseem Malik


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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


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The action of an organization orgovernment selling or liquidating an asset orsubsidiary (investopedia.com)generally referred

to as Privatization


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A situation in which a single company or group owns all or nearly all of the market for a giventype of product or service. By definition, monopoly is characterized by an absence ofcompetition, which often results in high prices and inferior products.

According to a strict academic definition, a monopoly is a market containing a single firm. Insuch 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 asingle entity.

Read more: http://www.investopedia.com/terms/m/monopoly.asp#ixzz1dbu5Pjtv
http://www.investopedia.com/terms/m/market.asphttp://www.investopedia.com/terms/d/divestment.asphttp://www.investopedia.com/terms/a/asset.asphttp://www.investopedia.com/terms/m/monopoly.asphttp://www.investopedia.com/terms/m/monopoly.asphttp://www.investopedia.com/terms/a/asset.asphttp://www.investopedia.com/terms/d/divestment.asphttp://www.investopedia.com/terms/m/market.asp


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Privatization is envisaged to foster competition, ensuring greater capital investment,competitiveness, and modernisation, resulting in enhancement of employment and provisionof improved quality o fproducts and services to the consumers and reduction in the fiscalburden.

Graphs to be inserted

Mission Statement of the Privatization Commission of Pakistan


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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


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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



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privatization is the process of shifting assets from public possession to privateownership 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.



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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 daysprivatization of Pakistan railway is under discussion in the cabinet.In your opinion should it be privatized ornot?

42% Favour The Privatization Of Pakistan Railway AsOpposed To 35% Who Are Against ItGALLUP PAKISTAN


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Current state of Pakistan Railways:

Inefficencies management

No route, inventory and cost management

Excess staff

Corruption

Low quality of service

Increasing debt


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Pros and cons of disinvestment-

Disinvestment is good


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Group 5- Impact of Disinvestment of Monopoly Markets

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