CHAPTER 4 - Privatization of Water Services via Public-Private Partnership and Implications for Southeast Asia

Summary

Privatization and the involvement of the private sector have been definitely important components of many water utilities and public projects in recent years. But the concept of “social goods, services and distribution” has also become resurgent. Is there therefore an alternative formula to “bridge” the private sector and “social goods and services” in the globalized context today, beyond mere outright privatization? However, while attempting to answer this question, it must also be firmly kept in mind, the overarching importance of corporate governance, social distribution and financial viability in public undertakings.

GLOBAL TRENDS IMPACTING ON THE PRIVATIZATION DEBATE

There are several global trends, which have had a direct impact on the privatization debate. The twin trends of neo-liberalism and liberalization have made privatization à la mode. Within the context of neo-liberalism, liberalization and globalization, the key globalization elements of goods and services, capital, human resources, and ideas have increased their circulation around the world.

But, a more unstable financial system and unstable financial markets have also ensued, especially in the last decade with the emergence of the U.S. sub-prime crisis. High social costs have also emerged in developing economies, for example, after the Asian financial crisis in 1997–98. As such, a scenario of more political uncertainties, amidst slower economic growth, political upheavals, inter-state conflicts, religious tensions and ethnic violence has thus emerged, with terrorism now deemed the “dark side of globalization”. Sustainable socio-economic development and the environment have become a la mode today too.

“Unbridled capitalism” is under attack; there is thus an urgent need to re-look at the whole concept of privatization. With an upsurge in democracy and participatory politics, there is thus increased decentralization and more devolution of power downwards. The emergence of civil society and people's power has become a check on both public and corporate sectors' integrity and governance practices. The nexus of the Asian political economy is undoubtedly shifting in Asia, from a bipolar one comprising “big business-big government” to a tripolar nexus of “governmentprivate sector-civil society”.