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[Editorial] Privatization Means Private Ownership

Posted March. 08, 2008 04:26,   


Strategic Planning and Finance Minister Kang Man-soo said Wednesday, “Raising efficiency is more important than changing the ownership of public enterprises.” According to him, the government is mulling over the Singapore model, which gave away all management rights to civilian CEOs selected through open recruitment. What he means is that the government will continue to own public companies, although managerial rights might be given to the private sector. This cannot be a desirable privatization plan.

As long as the government owns these enterprises and intervenes in personnel management including the nomination of CEO, it would be practically impossible to expect that the CEO would go his or her own way without the government’s intervention. Even though a civilian becomes a CEO, he or she will be shackled by bureaucracy under the current structure. Despite the government’s claim that it is possible to raise efficiency under the same ownership, complete privatization is the best way to achieve high efficiency.

Decreasing the number of public servants and privatization of public enterprises are the core pledges of President Lee Myung-bak’s ‘small government’ policy. Britain’s Thatcherism also could succeed thanks to privatization. The British prime minister said that a company is the only key to reform. She implemented a three-step privatization process of key industries including electricity, communication, road and shipbuilding, which were nationalized after World War II. In 1979 when she took office, nobody dared to speak about privatization, not to mention her supporters. The British economy, however, revived dramatically through these efforts.

Some voice concerns that privatization might hurt public services. But the best way to serve public interest is to provide high quality services with the minimum cost. In fact, the interest of the public will be realized better by the utilization of entrepreneurship of taking responsibilities for success and failure, creativity and management techniques.

I sincerely hope that the minister’s remarks do not portend the retreat of privatization efforts due to the government’s old habit of intervention. As soon as the Cabinet members are appointed, the government should push ahead with its plan to reform the public sector through complete privatization. History shows that privatization would fail if it does not succeed at the early stage of a new government.