Privatization Assures Benefits to All Parties Involved
Even in advanced countries, privatization did not come easy or quickly. However, when it did, they proved to be beneficial to all parties involved in numerous cases.
According to Dr. Lee Joo-sun, senior research of the Korea Economic Research Institute privatization is a necessity and profitable when done correctly with government, company and union driving the program.
``Privatization is basically a process through which the inefficient aspects of state-run companies, which represent government, monopoly and regulation, are eliminated and streamlined,'' he said.
Unfortunately, both management and unions of state-run companies have opposed restructuring in the past, and now to a certain extent, but they are beginning to see the incentives that come with it.
``Through privatization, these companies can severe their ties to the government and politicians and this in itself is a advantage. Political rent extraction and regulation become more difficult,'' Dr. Lee said.
He said privatization leaves shareholders as owners of the companies and the management to run them and answer for their decisions and this is a much more efficient model that one of the past.
``We are at a point where privatization can happen quickly if the government is committed. Conditions now are better than before and so there is little excuse,'' Lee said.
Not that privatization is not being done. Lee, who sits on the committee for restructuring the power industry, said privatization, if you can call it that, is moving full speed ahead.
``Again, here we have a situation where things have been allowed down by the National Assembly which has yet to pass the law on restructuring Korea Electric Power Corp. (KEPCO),'' he noted.
While legislators are trying to slow the process down, much of the work at KEPCO is complete and it is already a very different company from what it had been in the past.
``Under the privatization program, KEPCO's power generating business is to be divided up into six units and the basic work has already been done. What I have found is that even though the units have yet to be formally separated, they have very different understanding about who they are and what their objectives are,'' he noted. …