9 - Can Efficiency Co-exist with Equity? A Case Study of Public Transport in Thailand

Summary

Public enterprises (PEs) are one of the major factors in the world economy. Their share of the national product in industrialized and developing countries is estimated at half that of multinational enterprises (Ramamurti 1985). In most developing countries, PEs share in the gross domestic product (GDP) ranges between 7 and 15 per cent (Hafsi et al. 1987). Public enterprises are set up and used as one of the instruments by government to achieve multiple socio-economic and political goals (Priebjrivat 1986). For example, PEs may, among other things, be expected to promote industrialization, to advance technology, to create jobs, to defend national interests, to reduce regional disparities, and to save declining industries (Vernon 1984). The 1980s, however, have witnessed a market reversal of the roles played by the public and private sectors in the industrialized economy. Instead of government control and centralized planning, there has been a renewed emphasis on markets and competition. Privatization then came into fashion. “Markctization”, as used here, refers to making the market more efficient through various forms such as changes in ownership, policy, governance, and management of the PE sector. Thus, it does not mean privatization in the narrow sense, although it does involve inviting greater participation by the private sector in providing competition or performing functions including investment and management which were previously the government's domain. Here, if the autonomy of management is extended or if methods of business and profit orientation are introduced into the operation of specific PE, it is regarded as marketization (Konig 1989).

Likewise in Asia, a remarkable economic growth has been experienced recently especially in ASEAN member countries. The private sector is becoming more efficient and its role as the engine of growth is notably increasing. The public sector meanwhile begins to reconsider its role in the economy. Together with the deficit problems, the governments of ASEAN countries are now considering the restructuring of various economic sectors (Ng and Wagner 1989). Yet, some empirical evidence both in Europe and in some Asian countries have led to the question whether privatization is the only means to improve public sector efficiency and profitability (Bishop and Kay 1989; and Ng 1989).