Minta ampun orang satu ini! goblok dipelihara. Menggunakan referensi tetapi gak 
ngert artinya!

 

Sudah baca belum arti privatization yang lain? Yang artinya delisting??!!! 
Sudah cari belum referensi nya? Ada atau tidak ada?

 

Kalau BUMN terbuka mau jual saham lagi ke bursa disebut apa?

Swastanisasi/privatisasi? Pemiliknya sudah swasta!

 

Nesare

 

 

From: GELORA45@yahoogroups.com [mailto:GELORA45@yahoogroups.com] 
Sent: Monday, October 10, 2016 5:07 PM
To: GELORA45@yahoogroups.com
Subject: [GELORA45] Privatization

 

  

 

http://www.econlib.org/library/Enc/Privatization.html

  <http://www.econlib.org/res/img/masthead_cee_small.gif> 


Privatization


by Robert W. Poole Jr.

 <http://www.econlib.org/library/Enc/Privatization.html#abouttheauthor> 
http://www.econlib.org/library/Enc/Privatization.html#abouttheauthor

 

“Privatization” is an umbrella term covering several distinct types of 
transactions. Broadly speaking, it means the shift of some or all of the 
responsibility for a function from government to the private sector. The term 
has most commonly been applied to the divestiture, by sale or long-term lease, 
of a state-owned enterprise to private investors. But another major form of 
privatization is the granting of a long-term franchise or concession under 
which the private sector finances, builds, and operates a major infrastructure 
project. A third type of privatization involves government selecting a private 
entity to deliver a public service that had previously been produced in-house 
by public employees. This form of privatization is increasingly called 
outsourcing. (Other forms of privatization, not discussed here, include service 
shedding, vouchers, and joint ventures.)

Regardless of the mode of privatization, the common motivation for engaging in 
all three types is to substitute more efficient business operations for what 
are seen as less efficient, bureaucratic, and often politicized operations in 
the public sector. Some have described the key difference as the substitution 
of  <http://www.econlib.org/library/Enc/Competition.html> competition for  
<http://www.econlib.org/library/Enc/Monopoly.html> monopoly, though some forms 
of privatization may involve only one provider in a given geographic area for a 
specific period of time. But because government almost always operates as a 
monopoly provider, the decision to privatize usually means demonopolization, 
even if not always robust, free-market competition.

The decision to privatize usually involves money. Governments sell state-owned 
enterprises to obtain proceeds either for short-term budget balancing or to pay 
down debt. They turn to the private sector to finance and develop a major 
bridge or seaport when their own resources are stretched too thin. And they 
outsource services in the hope of  
<http://www.econlib.org/library/Enc/Saving.html> saving money in their 
operating budgets, either to balance those budgets or to spend more on other 
services (and occasionally to permit tax reductions).


Classical Privatization (Asset Divestiture)


As recently as the 1970s, many major industries in OECD countries were owned by 
the state, in keeping with the Fabian Society’s dictum that the “commanding 
heights” of the economy should be in government hands. 
<http://www.econlib.org/library/Enc/Privatization.html#lfHendersonCEE2-134_footnote_nt383>
 1 As is still true today of state-owned enterprises (SOEs) in China and many 
other developing countries, these businesses were generally run at a loss, 
subsidized by all the taxpayers. In other words, the value of their outputs was 
less than the value of their inputs, making them into value-subtracting (rather 
than value-adding) enterprises. The reasons for this situation were many, but 
generally they included explicit or implicit policy decisions that—in addition 
to producing whatever goods or services (cars, steel, air travel, etc.) they 
were set up to produce—the SOE was also intended to provide jobs, provide its 
output at “affordable” prices, and accomplish other ends.

The first organized effort to divest SOEs took place in Chile under the 
influence of the “Chicago boys” during the 1970s’ Pinochet era of economic 
reform. But the largest and best-known effort was that of Margaret Thatcher’s 
government in the United Kingdom during the 1980s. Thatcher succeeded in making 
privatization politically popular while selling off the commanding heights of 
the British economy: British Airways, British Airports Authority, British 
Petroleum, British Telecom, and several million units of public  
<http://www.econlib.org/library/Enc/Housing.html> housing, to name only a few 
examples. Thatcher’s political strategy emphasized widespread public share 
offerings rather than  <http://www.econlib.org/library/Enc/Auctions.html> 
auctions to other private firms. Over the decade, this approach tripled the 
number of individual shareholders in Britain, giving the policy a popular base 
of support.

By the end of the 1980s, the sale of SOEs had gone global, inspired in part by 
the British example. Governments in France, Germany,  
<http://www.econlib.org/library/Enc/Japan.html> Japan, Australia, Argentina, 
and Chile all sold numerous SOEs, and global privatization proceeds ran in the 
tens of billions of dollars each year. Generally speaking, companies that moved 
into the private sector were restructured (often with considerable loss of 
jobs) and turned into value-adding enterprises. In the case of public utilities 
(airports, electricity, water, etc.), privatization generally led to the 
creation of some form of regulatory oversight if the company remained a 
monopoly provider. The privatization wave expanded further in the 1990s, 
encompassing the countries emerging from  
<http://www.econlib.org/library/Enc/Communism.html> communism and many more 
developing countries. Here, the privatization record was mixed, with many cases 
of less-than-transparent sale processes (to firms well connected with 
government officials) and a botched shares-for-debt scheme in Russia that 
created an instant crop of politically connected billionaires. Still, by the 
end of the decade, privatization proceeds were well above $100 billion per 
year, and the cumulative total for the two decades exceeded $1 trillion.

Few people today dispute the value of transforming value-subtracting SOEs into 
value-adding companies accountable to their shareholders. China, India, and 
numerous other developing countries continue to prepare and sell SOEs, though 
this can be a painful process in a country like China, where SOEs have 
historically provided extensive social welfare services, and neither the 
government nor the civil society has devised a safety-net alternative. In OECD 
countries, there are very few industrial SOEs left, although many airports, 
railways, motorways, and electric and water utility systems are still in state 
hands (but increasingly being privatized).


Infrastructure Partnerships


The idea of granting a private firm or consortium the right to develop and 
operate a major infrastructure project is not new. Most British and American 
(pre–auto era) toll roads of the eighteenth and nineteenth centuries operated 
on this model. So did the electric streetcar systems and the original New York 
subway. So, still today, do most U.S. investor-owned utilities, typically 
operating on fifty- or ninety-nine-year franchises. But apart from those 
utilities, the idea seemed to die out in most of the world for most of the 
twentieth century.

The governments of France and Italy revived the idea in the 1960s to develop 
national networks of tolled motorways, and Portugal’s and Spain’s governments 
later imitated them. These transport examples inspired the historic Channel 
Tunnel, a rail link between England and France built in the 1990s. Neither 
government was prepared to put up the estimated four billion dollars needed for 
the project, so an investor group eventually succeeded in winning a 
fifty-five-year concession agreement to do the project privately. The project 
cost nearly twice as much to build and is generating much less revenue than 
forecast. But apart from renegotiating the franchise term to ninety-nine years, 
the company has received no taxpayer bailout; only its investors have been on 
the hook for the overruns.

That example illustrates one of the principal virtues of the infrastructure 
franchise model. While governments typically focus on the advantage of being 
able to get such major projects built without adding to the government’s debt, 
a more important benefit is risk transfer. Hapless taxpayers should not be 
burdened with such risks as construction cost overruns and less-than-expected 
traffic; those are risks the private sector can take on. But in a properly 
structured “public-private partnership” agreement, risks that the government is 
better suited to bear (policy changes, “acts of God,” etc.) should remain with 
the public sector; otherwise, there is likely to be no private-sector partner 
willing to tackle the project.

This model—often called build-operate-transfer (or BOT)—went global during the 
1990s, with the enthusiastic backing of the World Bank and other global 
development agencies. It was adopted without such prodding in most OECD 
countries: for example, Australia developed modern toll expressway systems in 
Sydney and Melbourne; Britain added major bridges and its first tolled 
motorway; and more than a dozen U.S. states passed transportation partnership 
laws to facilitate BOT toll-road projects. Development bank reports helped 
spread the model across South America and southern Asia, with airport, seaport, 
toll road, electric power, and water/wastewater projects in scores of 
countries. A major year-end survey in 2003 by Public Works Financing lists 
1,369 such projects in 87 countries costing $587 billion that have been 
financed since 1985. Adding those in the design or proposal stage produces the 
larger totals of 2,701 projects in 124 countries costing $1.15 trillion.

As with the sale of SOEs, infrastructure partnerships can be done well or 
poorly. Developers often seek guarantees of traffic or revenue, which undercut 
commercial discipline and void the desired risk transfer away from taxpayers. 
On the other hand, political risk can be high in many countries. Governments 
may impose after-the-fact controls on pricing or may not allow prices to be 
adjusted to take into account a major devaluation (as in Argentina, where 
privatized utilities were caught with large debts in dollars but revenues in 
greatly devalued local currency), or a change of government can lead to the 
abrupt termination of a previously awarded concession. But despite such 
problems, the BOT model appears to have become a standard modus operandi in 
many countries in the early twenty-first century.


Outsourcing


The rationale for outsourcing is that there is a difference in principle 
between providing for a public service and producing that service. Government 
may be responsible for maintaining highways, collecting garbage, or operating 
recreation centers, but just like any private company it is faced with a “make 
or buy” decision about that service. Economic theory suggests several reasons 
why outsourcing might be more cost-effective than in-house provision. First, 
the unit of government with responsibility for the service may not be of the 
optimum scale to provide the service efficiently. Second, it may lack the 
required expertise or technology, for various reasons. Third, and probably most 
important, a perpetual in-house monopoly will have weaker incentives to 
innovate in order to find more cost-effective ways to operate. Competition to 
be the service deliverer should produce stronger incentives.

Although outsourcing is still debated politically, the empirical question has 
long since been answered in its favor. In the 1970s, the National Science 
Foundation funded the first empirical study, examining the cost and performance 
of municipal garbage collection under various institutional alternatives. The 
researchers found that competitive contracting was clearly less costly. Further 
research during the 1980s and 1990s—by academics, think tanks, and the federal 
government’s General Accounting Office—reinforced those findings across 
hundreds of different types of services at federal, state, and local levels of 
government in the United States. The findings on municipal garbage collection 
were replicated in a large-scale study in Canada.

During the 1980s, outsourcing became common in municipal and state governments, 
primarily in the Sunbelt. In California, more than seventy cities joined the 
California Contract Cities Association. Aiming from the outset to obtain most 
of their public services via contractual arrangements, these cities contracted 
either with private firms or with larger nearby governments. In the 1990s, 
outsourcing was embraced by reform mayors, both Republican and Democrat, in 
larger and older cities, such as Chicago, Cleveland, Indianapolis, New York, 
and Philadelphia.

At the federal level, the Office of Management and Budget issued 
government-wide policies on competitive contracting (OMB Circular A-76) during 
the 1960s. Aside from an effort to promote this approach aggressively during 
the final year of the Reagan administration (1988), outsourcing at the federal 
level waxed and waned until the Bush administration in 2001. Under the 
President’s Management Agenda, “competitive sourcing” has become a White House 
priority, with government-wide targets for outsourcing a large fraction of the 
850,000 federal positions that the agencies themselves have classified as 
commercial in nature.

Public employee unions have engaged in large-scale efforts to thwart 
outsourcing by governments. They publicize individual examples of 
privatizations that have gone wrong—and there definitely are such cases. Firms 
seeking government contracts make campaign contributions, and sometimes 
contracts are awarded via less-than-transparent processes. In other cases, once 
a firm has won a contract via a low bid, it may seek to renegotiate the 
contract at a higher price. And there is always the danger that once a firm 
becomes the incumbent provider, it will persuade public officials that, instead 
of going back out to bid when the contract expires, they should simply 
negotiate a contract extension. All such practices undermine the 
competition-works-better-than-monopoly rationale for outsourcing and may reduce 
or eliminate the intended savings for taxpayers. Moreover, unless the 
government becomes skilled at writing solid and measurable performance 
standards into the contract, it may not be able to ensure that it is getting 
the full measure of services it expects at the promised lower cost.

These problems are real, but they are arguments for doing outsourcing well 
rather than not doing it at all. Overall, the continued spread of outsourcing 
and its increasingly bipartisan acceptance (e.g., by New Democrats such as 
David Osborne) suggest that the advantages are genuine, despite the occasional 
failure to do it well.


Conclusion


Privatization encompasses a variety of techniques for shifting functions that 
have traditionally been wholly in the public sector into the private sector to 
various degrees. In the case of state-owned enterprises, there is widespread 
consensus that steel mills, auto factories, and airlines belong in the private 
sector, and the first decade of the twenty-first century should see most of the 
remaining SOEs in these areas sold off or liquidated. The track record of 
large-scale private infrastructure projects is more mixed, with many of these 
projects (especially in poorer countries) financed with a mixture of state and 
private capital, which leads to blurred incentives and challenging policy 
questions. The next decade or two should see continued efforts to fine-tune the 
allocation of tasks and risks between public and private sectors in these 
projects.

Because public service delivery is the one area in which  
<http://www.econlib.org/library/Enc/LaborUnions.html> labor unions have been 
gaining ground in OECD countries during the past few decades, we can expect 
continued battles over outsourcing such services. Recent U.S. controversies 
over airport screening and air traffic control suggest that these battles will 
be high profile, emotional, and costly. But to the degree that competition 
becomes institutionalized in public-service delivery, the performance and 
cost-effectiveness of those services seem likely to improve, regardless of 
which party wins a particular competition.

Classical privatization (the sale of SOEs) became such a phenomenon in the late 
1980s that several global newsletters and magazines were devoted exclusively to 
the subject, complete with league tables and aggregate statistics. By the 
twenty-first century, however, such privatization had become so commonplace 
that there was no longer a market for these publications. By contrast, 
infrastructure franchising still supports a specialized newsletter (Public 
Works Financing), and outsourcing also has a newsletter (Privatization Watch).

 



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