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Privatization Advantages And Disadvantages

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Privatization: It is the practice of transferring of ownership of an agency, enterprise, business, public property or service from government sector to private sector. It has become one of the most practiced trends of developing and developed worlds. This process of privatization is either sale of government assets held by government or removal of limitations preventing business and private individuals from participating in that industry. It is done either to a business that operates for a profit or a nonprofit organization. It has also been used to describe the repurchasing the outstanding stocks of the company by the private individual or employees and because of this the company stops being publically traded. Another transaction that privatization …show more content…

Asset sale privatization: it is the selling of a part of the organization or the entire organization usually by auction to a strategic investor. 2. Voucher privatization: It is the distribution of shares of the organization at free or a very low price to all the citizens. 3. Share issue privatization: It is the selling of shares in the stock market. Advantages and disadvantages of privatization: Advantages: • Private companies are efficient they know how to make profits by cutting their expenses and turns approximately a failing business to a successful business • It gives an access of investment capital to new businesses which a government cant provide • Through taxing previous public sector it generates money for the government • When a government sector is privatized the government can pay off their debt faster. • It includes the destruction of the monopolistic status of government and become approachable to the needs of the citizens. • It delivers better profit incentives such as downsizing staff, motivating staff, training staff and provides competitive prices. • The public sector become depoliticized hence the government pressure of using resourses is …show more content…

The banking sector is one of the most important sectors of Pakistan. The progress of the country depends on the growth of the banking sector and further necessary for the real economy growth. The policies of privatizations and liberalization go in the favor of effective and efficient banking sector. The savings up trends of privatizations justifies the improved performance of banks. The objectives of this change were to facilitate people by a quality service through an institution which is free of any political pressure, increase efficiency of the institutions, generate more revenues, and, to encourage the private sector to get into the competition and flourish. Conclusion: Privatization varies from industry to industry. If we take an example of a telecom sector or a public interest sector (education, health care) we would see that telecom industry would have an incentive to maximize its profit however in a public interest sector the profit intention is less

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