8 - Marketization of Public Utilities in ASEAN: Focus on the Public Transport Sector

Summary

Overview

The development ideology prevalent during the 1970s called on the state to play a more active role in the development process. The influence of this ideology is more apparent in developing countries such as those in the Association of Southeast Asian Nations (ASEAN) than in developed countries as their governments have established various state enterprises to correct perceived market failures, rationalizing that the market mechanism is unable to provide both collective and merit goods. Moreover, the private sector's inability to invest in sectors or industries with unusually high commercial and non-commercial risks became natural conduits for government assistance and direct economic participation. In the Philippines, the government took the responsibility for providing most public utilities, including public transport services. Transport per se formed part of a new ideological package called the “eleven basic needs of man.” Conceived by Mrs Ferdinand Marcos, the ideology rationalized the existence of the Ministry of Human Settlements in the early 1970s, and made it imperative for government to provide facilities, or access to it. to satisfy people's “basic needs”. Thus, government built and managed infrastructure requirements (for example housing and recreation facilities) and provided direct services (for example the operation of the Food Terminal, Inc. and the Metro Manila Transport Corporation [MMTCj) whenever applicable. In Malaysia and Singapore, similar inclinations were apparent in government efforts to institutionalize and improve the delivery mechanism for public utilities and the different modes comprising the transport system.

Specifically, the initiative and more importantly, the push to “marketize” stateowned enterprises (SOEs) in the Philippines, particularly utilities, have been selective. Among the public utilities which the government either fully owns, or maintains a majority ownership of, only a few are expected to be in the hands of the private sector in the next few years. More notable among these are the Manila Gas Corporation, a subsidiary of the National Development Company, and the Metro Manila Transport Corporation. In the water utilities sector, there is no similar tendency to privatize, or at least create a contestable environment to promote greater efficiency in such firms as the Metropolitan Waterworks and Sewerage System and the Local Water Utilities Administration.