Business Privatization Accelerates in Developing World
Julian M. Weiss, Monitor, The Christian Science Monitor
PRIVATIZATION is accelerating rapidly from Bangladesh to Borneo. Billions of dollars worth of projects are under review. "Companies are making offers for new types of businesses once completely off-limits to the private sector," says Sean Randolph, director of the Pacific Basin Economic Council in San Francisco. "Privatization is now a foundation for national economic policy" in Asia.
State-owned monopolies exist even among the more affluent nations of East Asia. Many are inefficient and perpetually drain treasuries.
Strides were made in privatization during the 1980s, but the movement is now in a new phase. "The last few years were a learning curve," says Roger Leeds, corporate finance officer at the International Finance Corporation (IFC), an arm of the World Bank that is taking a key role in promoting privatization. "We have a much better idea of how to separate reality from fantasy, to find out (whether) deals are even feasible."
A whole range of proposals will be reviewed in the months ahead by foreign and domestic investors alike. For example, Malaysia is privatizing its shipping industry. Some rail lines are to be offered, while the publicly-owned telecommunications monopoly, with $1 billion in assets, has a five-year divestiture plan in progress.
In Singapore electronics, armaments, and aerospace are under review. Those industries are part of a state-run conglomerate that realized sales of over $285 million last year.
Indonesia - where public corporations hold $68 billion in assets - is finalizing programs in gasoline, mining, telecommunications, the plantation sector, and construction. Early successes were seen in financial institutions and in textiles. An estimated 80 percent of national output is still dominated by government firms. Garuda, the national airline, is being divested.
Pakistan is generally satisfied with the recent privatization of its airline, and water and power agencies are candidates for sales to private owners. The Philippines is considering sales of several large public enterprises in commodities, heavy industry, and the national air carrier - enterprises whose assets are $2. …