Business And Markets

MRC Has Reservations About Privatization Scheme

The government’s plan to offer assets within an ETF provides investment opportunity to a large number of people with small savings
MRC Has Reservations About Privatization Scheme
MRC Has Reservations About Privatization Scheme

The Majlis Research Center says a new government plan to divest its assets in assorted companies via exchange-traded funds is not “privatization in the true sense”. 
As per Note 2 of the budget bill for the next fiscal year (March 2020-21) the government can divest its stake in state-run companies via ETFs.  The bill obliges executive bodies to name the subsidiaries in which the government share is below 50%.
“Given the nature of ETFs, it seems state-controlled enterprises on the divesture list will still be managed by the government, at least in the short term,” the influential Majlis think tank said in a study delving into the pros and cons of the budgetary provisions related to state-owned and affiliated companies. 
An exchange-traded fund is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. 


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