1. A quick approach to privatization and
deregulation…
Privatization and
Deregulation
Fin 111 –AY02
2. Objectives:
To be able to differentiate Privatization and Deregulation
To know the importance of Privatization and
Deregulation
To know the latest work in Privatization and Deregulation
To know the definition of Privatization and Deregulation
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To know the significance of Privatization an Deregulation
To know the effects of Privatization and Deregulation
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To know the scopes of Privatization and Deregulation
3. Fin 111 – AY02
•Privatization
• The conveyance of ownership from government
to private
• The transition from an active public company to a
non-active private company
• The repurchasing of all of a
company's outstanding stock by employees or
a private investor.
Definitions
4. • Power companies
• Banks
• Water companies
• Telecommunications
Affected:
power companies, banks, water
companies, telecommunications
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5. • Build –Own-Operate-Transfer or Build-
Operate- Transfer (BOOT or BOO)
• Rehabilitate-operate-transfer (ROT)
• Build-transfer-operate (BTO)
• Joint Venture
Schemes of
Privatization:
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6. • First Wave:
– (1986-1987)
– Non performing assets of government
– Government banks
– President Ferdinand Marcos
– Everything is a loss
– Economic crisis
In the Philippines…
Waves of Transferees
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7. • Second Wave
– Started in 1990
– Power sector was involved
– Used BOT law
In the Philippines…
Waves of Transferees
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8. • Third Wave
– The current wave
– Housing ,health, postal services and pension
plans.
– GCG (Governance Commission for GOCCs)
– GOCC (government-owned and –controlled
corporation)
– PPP Program
In the Philippines…
Waves of Transferees
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9. • Authored by Sen. Franklin Drilon
• Signed June 6, 2011
• Assessing and Overseeing GOCCs and
Government Financial Institutions
• Watch money
• Shortlist of GOCCs and GFIs
What is GCG?
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10. • LRTA- LRT line
• LandBank and DBP – MRT
• Studied by the GCG
MRT, LRT Privatization
A P15 Million bid…
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11. • Asset Privatization Trust (APT)
• Executive Order No. 215
– Pres. Cory Aquino in 1987
• Republic Act No. 6957
In the Philippines…
Landmarks of Privatization
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12. • Power Sector
• Transport Sector
• Water and Waste Sector
• Information Technology
In the Philippines…
Working Progress
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13. • Being Efficient and Effective
• Profit Maximization
• Less budget concern
• Global trend
Why promote
Privatization?
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14. Fin 111 – AY02
•Deregulation
• Reduction or Elimination of control by the
government
• No government interference
• Enacted to create competition
• Usually targets Utility industry
• Different from Liberalization
Definitions
15. • Utility Industries
– Power companies
– Water companies
– Light companies
– Oil companies
Affected:
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16. • Republic Act No. 8180
• Downstream Oil Industry Deregulation Act
of 1996
• Pres. Fidel V. Ramos
• 1997
In the Philippines…
Oil Deregulation
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17. • Republic Act. No. 8479
• Downstream Oil Industry Deregulation Act
of 1998
• Complete no government interference
• DTI as monitor
In the Philippines…
Oil Deregulation
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18. • December 26, 2011
• Open Access
• Big Consumers
• Energy Regulatory Commission
In the Philippines
Electricity Deregulation
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19. • Oil Deregulation
• Economic crisis
• Opposition of mass
In the Philippines…
Issues
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As a result of such an initiative, the company stops being publicly traded. Sometimes, the company might haveto take on significant debt to finance the change in ownership structure. Companies might want to go private in order to restructure their businesses (when they feel that the process might affect their stock prices poorly in the short run). They might also want to go private to avoid the expense andregulations associated with remaining listed on a stock exchange.
BOOT or BOO systems: where there would not be a transfer of ownership;• rehabilitate-operate-transfer (ROT): if there is an existing facility or infrastructure;• build-transfer-operate (BTO): if there is a restriction on ownership of the facility – for instance if it is still owned by the state but the private sector operates and maintains the facility; and• joint venture: If the government wants to participate as an equity holder or investor in a financially viable project that would give a good return.
ECONOMIC CRISIS- double-digit inflation, a deficit in the balance of payments, gross international reserves below $1 billion
PPP- Private –Public Privatization Program of the Aquino AdministrationGCG regulates the GOCCs
LRTA- Light rail Transit
• Assets Privatization Trust (APT): Basically pertaining to the first wave, APT concerns the disposition of nonperforming assets.• Executive Order No. 215: This was the first legal framework for power and was passed by President Corazon Aquino in 1987, resulting in the implementation of about 20 power projects.• Republic Act No. 6957: Congress passed this Act in July 1990. However, only two projects were implemented under this law: the Light Rail Transit (LRT) Line 3, an overhead railroad along a key route, EDSA; and a public market in Mandaluyong City, in the north of Manila.
Power sectorCompleted operational projects and those in the pipeline in the power sector amount to about $11 billion.Transport sectorAbout 52 projects in transport total about $6.9 billion. The Government is negotiating two rail projects and two toll roads. Unlike the case of EDSA LRT Line 3, the Government will take the market risk on subsequent transport projects.Water and waste sectorsThis is a remarkable sector of infrastructure development. Two concessions for the Metropolitan Water Sewerage contract were awarded in 1997 to two consortia headed by two local companies. The Government is at the negotiation stage for a $400 million bulk water supply in Cebu, central Philippines.Information technologyThe Government is trying to computerize the country’s passport system, civil registry, car registrations, and land titling, as well as other smaller projects. These are but some of the achievements of a legal framework written into the Constitution, which specifies the private sector as the engine of growth for national development.
No government interference even in pricing, exportation and importation MORE LIKE THE FREE MARKET- ruled by laws of Supply and demand Liberalization has little regulations and protects consumers
