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The full
privatization of the Philippine National Bank (PNB)
should inspire the government to sell more state-owned
corporations in banking and in other sectors that are
either losing or are not being efficiently run by their
caretakers.
It is
true that the road to privatization is a bumpy one with
full of detours and man-made obstructions.
There
are many, too, in government who just wouldn’t want it
to happen.
Who
would want it succeed when many government corporations,
sequestered or not, have become milking cows for
relatives who could not find work in the private sector?
A little
push for privatization and a resolve to weed out the
corrupt and the inefficient in government may do the
trick.
In
addition, privatization, despite the demolition jobs
being orchestrated by people who are afraid to lose
their government jobs, is a sure way to earn more money
for the government the legitimate way.
President Arroyo showed it could be done when she
allowed the privatization of PNB.
She said
privatization is now reaping success as affirmed by the
rehabilitation and full privatization of PNB.
However,
some in the financial, energy and service sectors are
still waiting for the privatization of corporations and
agencies.
“From
EDC [the Energy Development Corp.] to PNB, we are among
the best in Asia,” the President said in a recent
statement.
Also
cited were the privatization of water distribution
through the Manila Water Co. and Maynilad Water Services
from the Manila Waterworks and Sewerage System (MWSS).
There
are about 500 state-owned or -controlled assets, many of
them as a result of bailouts by private companies that
had gone sour.
According to the World Bank (WB), it is hard to find a
country without a privatization program, or a sector of
activity not susceptible to private management, if not
ownership.
Examples
were
Malaysia
when it sold its National Lottery, and Buenos Aires when it sold its zoo.
Governments facing financial crisis often try to improve
performance by bringing in new and dynamic managers, and
paying them incentive salaries, observed the WB.
They
grant managers autonomy to set prices and hire and
fire—and agree to overdue tariff increases and payment
of past-due bills. These measures often have a positive
effect. But as the crisis dissipates, so does political
resolve, it noted.
Political interference, a common and deadly disease,
tends to reemerge, and the painfully achieved reforms
tend to backslide.
Some
thought to be well on the road to recovery have either
stopped improving performance or suffered deterioration,
according to the WB.
However,
said the WB, privatization—properly structured—yields
substantial and enduring benefits.
A WB
study found that 41 firms privatized by public offerings
in 15 countries—Jamaica, Chile, Singapore and Mexico,
among them—increased returns on sales, assets and
equity, raised internal efficiency, improved their
capital structure, and increased capital expenditures.
They
also expanded their workforces by small margins.
Privatization is often accompanied by layoffs, but this
is not always so—jobs increased after privatization in
divested firms in the Philippines, Tunisia, Mexico and
Chile.
Privatization is easier to launch and more likely to
produce positive results when the company operates in a
competitive market, and when the country has a
market-friendly policy environment and a good capacity
to regulate.
The WB
noted, however, that the poorer the country, the longer
the odds against privatization producing its anticipated
benefits, and the more difficult the process of
preparing the terrain for sale.
Nonetheless, successes can be found in low-income
countries, too. The conclusion is straightforward:
privatization, when done right, works well, said the WB.
E-mail: raulbvalino@yahoo.com.ph. |
