1. ENHANCING GOOD GOVERNMENT
THROUGH PUBLIC ENTERPRISE
(PRIVATIZATION)
By: LEILANI MARIANA G. CASTELO

2. Issues in Privatization
• What is privatization?
• What are the modes of privatization?
• What are the reasons for privatization?
• What are the problems of privatization

3. What is privatization?
• The transfer of the delivery of public
services to the initiative and control of the
private sector
• Transfer of management of an enterprise
from the public to private sector.

4. What is privatization?
• Whenever a public sector sells out government-owned
corporation to the private sector, it then becomes a
public enterprise management or a management of
innovations.
• Public Enterprise Management is “a form of human
activity operated and managed by the state government
or any public authority. It is an undertaking where the
investment is owned and controlled by any government
organization whether national or local.”

5. The Private Sector
• Part of the economy not controlled by the state but that
segment of the economy which is managed and operated
by varying individuals or business organizations
• It is a profit – oriented organizations that sells competitive
goods and services for the consumers/beneficiaries.
• They are potent conduits of the government in managing
the overall economy of the state.

6. • Its role in a free enterprise economy has always been
highly organized.
• It is a management organization known for efficiency
(least cost with great returns) and effectiveness (attainment
of the desired outputs).
• One acceptable and viable way in dealing with the private
sector is through privatization of public goods, utilities,
and services.

7. Reasons for Privatization
• Rising costs of doing business
• Field or area of expertise to operate a service
• A privately contracted company may deliver a service
more efficiently
• The private sector has better human resource management
approach
“the desire to do with less made the public sector an eye for
the viability of the private entities as alternative service
provider”

8. Modes of Privatization
1) Contracting Out Services


while the government is still responsible for the service it
has someone else (contractor) who provides the actual
service
Invitation to Bid - open competition among contractors to
post the lowest or highest bid
Request for Proposal – inviting groups to present a
proposal to the government that provides how they would
perform the service at the least cost (for the govt) but
with maximum efficiency (for the group)

9. Modes of Privatization
2) Public-Private Collaboration
a cooperative agreement between a government and a
private organization may be formed in which both parties
assume some degree of mutual responsibility in operating
a program or a service like the Build-operate-Transfer
(BOT) scheme where one party builds an infrastructure
like roads or markets, and the other entity operates.

10. Modes of Privatization
3) Franchising
the right of the government sector to grant a program or
service on an exclusive basis to private individuals or
groups in the locality
non-exclusive franchise could also be extended to some
contractors to supply services like sanitation services for
a district or city

11. Modes of Privatization
4) Load or Asset Shedding
when a government sells out a facility or equipment or
simply discontinues the provision of a public service
private entities may step in to cover a particular service
delivery

12. Modes of Privatization
5) Volunteerism
a local government may hand down the provision of a
service to volunteers to operate a particular public
service such as public safety services and recreational
services
“the use of volunteers is highest in the operation of
culture and arts programs and museum operations”

13. Regulatory Functions
•When services are contracted out, they do not set aside or
diminished the government’s supervisory functions, the
more they should stay on guard and the more the
government should set performance standards and
monitoring evaluation only to guarantee that the contracted
services are made available, and people behind the service
provision are held accountable.
•The reduction of State’s control and involvement in some
key sectors of the economy makes a government a
regulatory one in theory and in practice.

14. Regulatory Agency
refer to organizations that are charged (normally by
statute) with regulating not just newly privatized sectors
but also any aspect of social life where a public interest is
held to be at stake such as natural monopoly like electrical
supply, water provision, broadcasting and so forth.
when a public service has been assigned to business
contractors, the function of regulation on the part of the
government becomes increasingly necessary.
Governmental regulations may set operation standards,
limit business action, restrict property rights, and affect
incomes. Such regulations are imposed to protect and
promote the public interest.

15. Roles of Public Administration
in an organizational and administrative setup, managerial control helps us
organize better public administration. Hence, we should organize public
administration in a manner that would maximize some desirable traits
1) Honest, accurate translation of political leaders’
decisions into more specifically designed policies.
2) Flexibility in dealing with special cases at the point of
delivery.
3) But this flexibility should not be used arbitrarily.
4) Feedback of expert advices, active imagination, and
assertive inquiry on the part of the administrators.
5) Efficiency.

16. Aim of Privatization
The aim of privatization is :
To achieve higher micro-economic
efficiency and foster economic growth, as
well as reduce public sector borrowing
requirements through the elimination of
unnecessary subsidies.

17. Privatization Issues in the Philippines
• Job separation
- The “reengineering the bureaucracy” program of the Ramos resulted to
massive reorganization which in turn resulted to mass lay-off of
government employees
• Pricing or utility rates of a service provided by a business
sector
- Monopoly pricing may be liberally condoned because there exists no
competition of said service like electric and water supply hence minimizing
the benefits of privatization

18. Privatization Issues in the Philippines
• Presence of political pressure
- “tend to retain for the public sector functions where privatization would
make sense and to privatize tasks that would be better left to government”
- privatization leads to corruption because of its susceptibility to political
influence
It is important then that the government conduct a thorough analysis of the
services to be contracted out to the private. A committee should be formed to
analyze and determine the level of efficiency and effectiveness of the service
when privatized.

19. THANK YOU