Business Recorder Editorials 21st September 2026

SOEs: Govt must reduce footprint

EDITORIAL: Reportedly, the financial health of State-Owned Enterprises (SOEs) is deteriorating fast, as net fiscal inflows from SOEs dropped to one-tenth in the first half of the last fiscal year. That is not a pretty picture, especially when the finance minister is very vocal about cutting losses in SOEs.

There are a few reasons for this, such as historically low oil prices keeping profits depressed across the oil and gas supply chain. Now that prices have improved, a rising circular debt threatens to eat away at these gains. Achieving efficiency from SOEs remains difficult; they continue to drain precarious fiscal resources, a burden that ultimately falls on taxpayers through measures like the hefty petroleum levy.

The best remedy is to reduce the government’s footprint in commercial ventures. Given the history of all administrations over the last three decades, it is clear that the government should not be in the business of running businesses.

Consequently, the ultimate solution lies in expediting privatization. The government’s first success after almost two decades of lull was the privatization of PIA. Critics may argue that PIA Holding Company’s losses continue to accumulate, which may be true.

However, had PIA’s operations remained under government control, the rise in oil prices would have likely resulted in even uglier operational losses. Now that management is in private hands, the government is exonerated from these liabilities. To cut its losses further, the government should expedite its privatization program. Fortunately, following the success of PIA’s privatization and recent changes to the judicial system, investor confidence—particularly among foreign investors—in purchasing public assets is returning.

They are finally getting a level playing field, and no court would repeat what happened during the attempts to privatize Pakistan Steel Mills in the early 2000s. There are also other past examples of mishandling foreign interest, such as the Reko Diq and rental power plant cases. However, the legal advice foreign investors receive today strongly supports participating in privatization. The risk of court or state intervention after a transaction has reduced significantly. This shift is evident from the participation of several foreign companies in the privatization of FESCO—the first power distribution company on the block. It takes time and precedent to build confidence; while there was no foreign participation in the case of PIA, FESCO is turning into a success story that incentivizes others to join in.

It is of utmost importance to expedite the privatization of power distribution companies, as IESCO and GEPCO are the next two in line after FESCO. The Privatization Commission should adhere to the established timelines and avoid delays, as was the case with PIA. The sooner privatization happens, the sooner losses from State-Owned Enterprises (SOEs) will reduce. Once these companies are turned around, they may start paying taxes to the government and creating jobs in the private sector. Furthermore, new sectors might open up for private enterprise, and increased efficiencies in these areas would have spillover effects across the economy.

Thus, the key lies in accelerating deregulation and privatization within the energy sector. Industrial expansion will follow once DISCOs are privatized and the market is opened to private players, mirroring the growth seen in the early 2000s following the deregulation of the telecom sector and the privatization of PTCL. Today, telecom companies are major contributors to taxes and employment generation. A similar transformation occurred in banking, which has become the largest tax-paying sector in the country. The next revolution could very well be in the energy sector; all the government needs to do is reduce its footprint.

AI needs rules

EDITORIAL: The decision by OpenAI, Anthropic and Google to jointly develop an AI standards body is a telling acknowledgment of the risks accompanying a technology advancing at breakneck speed. That three of the companies driving this extraordinary race now see a need for common safety standards suggests that concerns once viewed as distant can no longer be easily dismissed.

AI’s potential is vast, but so are the consequences of allowing its capabilities to outpace humans’ ability to manage them.

The initiative comes amidst mounting warnings about AI risks. Former Anthropic researcher Jacob Coxon, who also worked at OpenAI, recently resigned after expressing fears that AI companies were “gambling with our lives”. Former Google DeepMind researcher Bilal Chughtai has warned that AI could potentially kill humanity, while Anthropic chief Dario Amodei has called for a slowdown in development. Whether such dire predictions come to fruition or not, they cannot simply be ignored when they are being raised by people who have worked deep inside the industry.

Nor are the dangers confined to the apocalyptic possibility of AI becoming uncontrollable, destroying critical systems or being used to trigger nuclear catastrophes. The more immediate disruption is going to be economic and social. AI threatens to displace workers across an expanding range of occupations, alter the value of skills and concentrate wealth and technological power in a handful of companies.

Copyright and intellectual property disputes are already raising fundamental questions about whether AI systems can be trained on creators’ work without consent or compensation.

The enormous resource requirements of data centres are another emerging concern. Their rapidly expanding electricity consumption is placing pressure on power grids, while their need for cooling also requires huge amounts of water. Their concentration in particular regions can further strain local infrastructure and raise questions about who ultimately bears the environmental and economic costs of AI’s expansion.

This makes the question of regulation unavoidable. However, an AI standards body convened principally by the companies developing the technology carries an inherent conflict.

Industry expertise is indispensable to developing workable safety standards, but there is a risk that the interests of AI companies could take precedence over the broader public interest when those same companies have a hand in writing the rules. As chief of Cohere, a Canadian AI company, has argued, the issue is not whether AI needs guardrails, but who writes them and whose interests they protect.

Governments therefore cannot abandon their regulatory responsibility here. Independent testing, transparency requirements, liability rules and safeguards against particularly dangerous applications must have public authority behind them.

Regulation must also keep pace with a technology that does not respect national borders. US Senator Bernie Sanders has called for the US and China to sign a treaty, pausing the development of advanced AI systems. Whether such a proposal ultimately materialises is another matter, but the need for international cooperation is becoming increasingly urgent. No single country can establish effective global safeguards for a technology being developed and deployed worldwide.

President Donald Trump’s dismissal of AI warnings as “hoaxes” is therefore a highly misguided response. One doesn’t have to subscribe to predictions of imminent human extinction to recognise that technological progress does not inevitably produce benign outcomes.

AI could deliver extraordinary gains in medicine, scientific research, education and productivity. Precisely because its benefits could be so transformative, the dangers associated with it must be brought under control.

The objective should not be to stop innovation, but to ensure that those driving the AI race do not become the sole arbiters of its rules. It is imperative then to ensure that its risks do not outrun humans’ ability to manage them.