PRIVATIZATION. Dr. Suad Husnan Faculty of Economics Gadjah Mada University October 24, 2002. PRIVATIZATION. Pros and Cons Privatization program in Indonesia Benefits Criteria Methods. PROPONENTS OF PRIVATIZATION PROGRAM. It is based on assumptions (and facts) that :
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Dr. Suad Husnan
Faculty of Economics
Gadjah Mada University
October 24, 2002
Pros and Cons
Privatization program in Indonesia
It is based on assumptions (and facts) that :
(2) private sector tends to be more efficient, innovative and more consumers oriented.
1. To increase efficiency, performance, and value of the SOEs.
2. To encourage or to create good governance (to avoid intervention from “stakeholders”, to improve transparencies, etc)
3. To contribute to state budget.
1. That the SOE operates on very competitive sector or industry, or
2. It Operates in a sector with rapid change in technology, or
3. The government owns minority share.
Initial Public Offering (IPO).
(1) When the government owns and operates the business by herself, she takes the risk (provides additional capital when the business suffer from losses and pays debt).
(2) When the government let private sector do the business, it is the private sector that take the risk.
Any option selected, the sovereign of the government remains to :
(1) Receive taxes.
(2) Formulate sectoral policies.
(3) Regulate the right and responsibilities of the investor.