Japan's debate on privatization
By James Rose The Straits Times / Asia News Network
2005.12.28
There is a lot to be bothered about in relation to the faked
building-safety reports scandal rocking Japan at the moment. First
there are the immediate problems - fixing the potentially unsafe
buildings, ensuring the safety of residents, cleaning up Japan's
construction sector. But there are bigger issues at play as well,
and their implications stretch across Asia and beyond.
As some commentators have noted, standards in Japan's building
inspections began falling when the industry was deregulated in
1999. One of the unintended consequences of that deregulation was
that safety inspectors began to develop a cosy relationship with
their clients.
Some inspectors became unwilling to find fault in the course of
their examinations of buildings lest they lose future business from
their developer clients.
Allowing private interests such scope may have made an already
problematic business culture in Japan's building sector
worse.
The safety of residents became just another factor to consider
against bottom-line profit concerns.
Former British prime minister Margaret Thatcher, arguably the
political pioneer of privatization, was always pretty clear about
why she believed in it. In her memoirs, she wrote: "For me it was
one of the central means of reversing the corrosive and corrupting
effects of socialism." As such, her moves to sell Britain's
utilities, including splitting British Telecom from the Post Office
and opening up the telco sector to another server, were, at their
core, ideological.
Does Asia need this ideological war to be brought to its
shores?
Privatization debates are raging across the region. In Pakistan,
there is uproar over proposals to sell off the country's nationally
owned telecommunications and electricity concerns.
In Thailand, the proposed listing of 25 percent of electricity
provider Egat has been blocked twice by public protests and
subsequent court rulings, despite the fact that it was a
cornerstone of Prime Minister Thaksin Shinawatra's 2005 election
platform.
Australia is still in the grip of a heated debate over the sale of
the majority government-owned telco, Telstra, though parliament has
already passed legislation approving the sale.
South Korea, Vietnam, China - there's virtually no Asian country
where privatization is not a major issue.
India's struggle with the issue is probably the most explosive. Its
influential communist parties, especially at the state level, are
seeking to block a range of high-profile national asset sell-offs,
including airports, universities, banks, electricity and water
utilities.
The issue has mobilized civic groups, given them momentum and
profile and brought cities to a halt as protests and rallies clog
the thoroughfares.
It is important to remember that privatization has historically
brought about a radical alteration of organisational culture in the
affected companies. Bureaucratic caution - some may say laziness or
insouciance - tends to give way to a hard-nosed business approach,
where the bottom line is revered.
In Australia, for instance, deregulation of the government-run
wheat export authority, AWB, may have contributed to that
authority's becoming embroiled in the United Nations' oil-for-food
kickback scandal. It was named as a major player in funding Iraq's
Saddam Hussein through the oil-for-food program.
Japan's current construction scandal potentially raises similar
social concerns. But is Japan debating the question?
Prime Minister Koizumi won re-election this year by replacing the
term "privatization" with "reform." All agree Japan is in need of
serious reform in important areas of its business and
administrative culture. The term "reform" suggests getting things
done and fixing up a broken system. It was a smart move on
Koizumi's part.
"Privatization," however, is a far more loaded and less easily
digestible term.
Japan doesn't need to sell off the assets it has built up over
decades of hard work and sacrifice, especially to international
interests, on the basis of poor debate and the application of
skewed ideological imports. Despite Koizumi's stunning re-election,
Japan still needs a debate on privatization and its so-called
"reform" agenda.
Given its role in the region, and current trends, this is a debate
it should have, and it should be in the interests of all who have a
stake in Asia.
http://www.koreaherald.co.kr/SITE/data/html_dir/2005/12/28/200512280003.asp