Thursday, January 16, 2020

Privatization 15, GOCCs, GLCs, SOEs

My friends in KL, IDEAS, posted today about privatization. Here are our short tweets:

IDEAS backs Cabinet decision not to sell PLUS. “A transparent divestment process should be in place before the government engages in privatisation”, said Ali Salman, CEO of IDEAS.

Do you agree with IDEAS on government having a GLC reform plan first before engaging in divestment?

Hi Ali, govt should get out of business as much as possible. Use privatization proceeds to retire portion of pub debt, reduce debt/GDP ratio, save on interest payment. Also help depoliticize toll roads pricing and mgt. Thanks.

We are for privatization but not without a transparent framework. Government should be out of business but the private sector should not allowed to benefit from tax payers money except where public goods are involved.

But doesn't privatization save taxpayers in the form of ending annual subsidies to the state Corp? Plus billions of revenues from privatization. Also a signal to other state Corps, they should be next.

Yes, it does. We are for privatization, but it must follow independent valuation process. It should also follow some policy criteria. Ultimately, privatization should create better markets, more consumer choice, and lesser government spending.

Thanks. More than valuation process, govt should just deregulate sectors then privatize as many state Corps as possible. Bidding of state Corps will set a better valuation too.

Malaysian case of ownership is quite complex. The shareholders are government linked companies who claim that they were not on board in this divestment talk which was started by the Prime Minister. Our main point is that it speaks of arbitrary decision making from the top.

Yes, I am not familiar with government-owned and controlled corporations (GOCCs) in Malaysia. Their term there is government-linked corporations (GLCs); in other countries they are called state-owned enterprises (SOEs).

Here in the Philippines, I still believe in the old proposal by Peter Wallace in 2005 -- just sell them all, at bargain firesale prices for some. We need less politics -- these GOCCs are often the dumping ground of some key political supporters of the administration in power who cannot be given regular posts like Cabinet Secretary, UnderSecretary, Presidential Adviser, etc. 

Below, see the revenue program of the PH government. Lots of taxes and fees, and fines. Mainly to sustain the wide bureaucracies, national and local, and populist, welfarist subsidies and freebies with no timetable, meaning forever unless explicitly terminated, which seldom or never happened. Only P2 B a year in privatization proceeds.

Source: DBM, BESF 2020.

See also:
Privatization 12: PH government corporations sold, retained as of 2007, February 07, 2016 
Privatization 13, Firesale of GOCCs, notes in 2005, December 30, 2016 

Privatization 14, Notes in 2005, December 3, 2019

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