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50. Privatization and Deregulation in ASEAN
- ISEAS–Yusof Ishak Institute
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234 Ng Chee Yuen and Norbert Wagner By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville 50. PRIVATIZATION AND DEREGULATION IN ASEAN NG CHEE YUEN and NORBERT WAGNER Reprinted in abridged form from Ng Chee Yuen and Norbert Wagner, “Privatization and Deregulation in ASEAN”, ASEAN Economic Bulletin 5, no. 3 (March 1989): 209–223, by permission of the authors and the Institute of Southeast Asian Studies. Privatization and deregulation have attracted increasing attention in Southeast Asia, especially among ASEAN countries in recent years. In 1985, the Asian Development Bank (ADB) held a conference in Manila, Philippines, on “Privatization Policies, Methods and Procedures ”. Meanwhile all ASEAN countries have, in varying degrees, studied the necessities and possibilities of privatization and deregulation.1 Some countries are already carrying out several privatization and deregulation attempts, while others are lagging behind. Even countries like Vietnam are considering if not privatization, then deregulation of parts of their economies. In developed countries like France and Japan where government intervention, regulation, and manipulation have been dominant measures in economic policy-making in the past, privatization and deregulation are considered key instruments to restructure the economies and promote economic growth. Even in China and the Soviet Union where the most dominant and pervasive role has always been assigned to the state, leaders have seriously reviewed the continued appropriateness of such policies and have been striving for a larger role for the private sector and the market mechanism. The recent emphasis on privatization and deregulation can also be seen in an ethical context as a manifestation of the spreading of democracy and individual freedom throughout the world. To a large extent, one is the corollary of the other since privatization and deregulation leave additional areas for individual decisionmaking , whereas democracy and individual freedom inevitably demand a predominant role being given to market forces. THE MEANING OF PRIVATIZATION Privatization as it is used here and throughout this volume is defined in a rather broad sense and includes deregulation as well. Thus, it comprises 050 AR Ch 50 22/9/03, 12:49 PM 234 Privatization and Deregulation in ASEAN 235 By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville — the transfer of ownership from the public to the private sector, — the transfer of production previously produced by the public sector to the private sector, — the financial privatization where the government charges market prices instead of fees for goods and services supplied, — the deregulation of the economy, i.e., liberalization and relaxation or removal of government regulations interfering with market forces. However, the focus of privatization clearly is the investment of public enterprises in favour of private investors and, consequently the transfer of ownership and decisionmaking from the public to the private sector. This reduces the role of the state and enlarges the scope of the market forces. PERCEPTIONS OF PRIVATIZATION AND DEREGULATION IN ASEAN Privatization and deregulation are complex concepts which may embrace many different policies and measures. In ASEAN countries, where not only the socio-economic objectives, but also the extent of the involvement of public enterprises in economic activities differ considerably, there are varying views on the degree to which privatization and deregulation are desirable or feasible. These varying perceptions are to a large extent influenced by the respective socio-economic objectives and policies towards public enterprises of countries in the region. These views range from an emphasis on a continued role for public enterprises but with improved efficiency to the belief that total privatization is the panacea to cure the ills of the economy being constricted by many inefficient public enterprises. Whatever the pros and cons of privatization and deregulation in the ASEAN region, the interest in the process has grown considerably. The governments of the ASEAN countries are increasingly committed to privatization and to reduced interference in the economy. PUBLIC ENTERPRISES IN ASEAN COUNTRIES Public enterprises have increasingly played an important role in most national economies of Southeast Asia. This phenomenon coincided with rapid industrialization in the region and to a great extent was aided by growing government revenue resulting from high commodity prices and economic growth. The tendency of increasing government involvement in the national economy has, to a large extent, been supported and driven by: — the underdevelopment of capital markets and their inability to mobilize the necessary financial resources; — the reluctance or inability of the private sector to invest in those sectors or industries with unusually high commercial and non-commercial risks and...