A MONTHLY SUPPLEMENT OF RAKAN SARAWAK BULLETIN (People, events, activities and programmes which make for a total quality-managed Sarawak Civil Service) ISSN 1394-5726

Online Publisher:          Contents provided by:	Privatisation of State-Owned Enterprises : The Right Way To privatise or not to privatise" That is the question. There is no easy answer to the question. Every privatisation exercise touches on issues related to politics, economic and financial viability, welfare of the employees, and the overall welfare of the rakyat. The figures show that 8,500 stateowned enterprises (SOEs) in over 80 countries have been privatised since 1980, of which 2,000 borrowed from the World Bank. Among the developing countries, Asia accounted for 6% of SOEs privatised. Privatisation, when structured properly, yields substantial and enduring benefits. It can increase returns on sales, assets and equity, raise internal efficiency, improve capital structure, increase capital expenditures - all leading to higher productivity and faster growth, and thus boosting the economy as a whole. Another element important for the success of privatisation is the existence of a conducive market framework. Conducive factors to make privatisation easier to set up and produce positive results involve a competitive market, market-friendly policy environment, and good regulation capacity in the country. Privatisation when done right, works well. Here are six tips on doing it right : 1. Privatisation works best when it is part of a larger program of reforms promoting efficiency. Some reformers to increase efficiency include monopoly elimination to unleash potential competitive activities, and creation of regulations to protect consumer welfare. 2. Regulation is critical to the successful privatisation of monopolies. A well-developed, well-administered regulatory structure to increase the productive efficiency of the enterprise brings about benefits for everybody - consumers, labor, government, and buyers. 3. Countries can benefit from privatising management without privatising the ownership of assets. In sectors where it is difficult to attract private investors, management contracts, leases, and concessions can be used successfully to improve efficiency in technical areas or even billing and collection of receivable. 4. The sale of large enterprises requires considerable preparation. To privatise a large enterprise may entail settling of past liabilities and bringing in of dynamic private sector managers, that is, restructuring and good management. 5. Transparency is critical for economic and political success. Transparency can be achieved by adopting competitive bidding procedures, developing objective criteria for selecting bids, and creating a clear focal point with minimal bureaucracy to monitor overall program. 6. Governments must pay special attention to developing a social safety net. To ease the social costs of privatisation, develop employee ownership schemes, unemployment benefits, and retraining-redeployment programmes. ,
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