Report of the Experts Group Meeting

Introduction

The meeting was held for 3 days from 16th December to 18th December 2002. It took place at Dewan SHuT of the Civil Service Institute, Jalan Kampong Rimba, Gadong, Brunei Darussalam. The programme of the meeting is shown in Appendix ‘A’. The meeting was attended by more than 50 people inclusive of 26 foreign participants from NAM Member Countries. The list of the experts and participants of the meeting is shown in Appendix 'B'. The meeting was organised by the Institute of Civil Service, Brunei Darussalam in collaboration with NAM CSSTC, Jakarta. The Organising Committee Members are shown in Appendix ‘C’.

Day One, 16 December 2002

Opening Ceremony

The programme for the morning started at 8.45 a.m with a recitation of Surah Al Fatihah by Imam Masjid Kampong Limau Manis, Pengiran Hj. Metassim bin Pg. Hj. Kula. This was followed by a speech given by Mr. Rachadi Iskandar, NAM CSSTC Financial and Administrative Director. Mr. Rachadi Iskandar conveyed an appology from Mr. Omar Halim, the Executive Director of NAM CSSTC, for not being able to be with the participants that morning because of his service was needed in Indonesia. He went on to say that he was only going to read the text of the speech of Mr. Omar Halim. In the text of his speech, Mr. Omar thanked the Institut Perkhidmatan Awam (IPA) for collaborating with NAM-CSSTC in organising the Experts Group Meeting on NAM Reform: Privatization and Public-Private Partnership.

He went on to say that since independence most NAM member countries have considered the provision of public services as the sole responsibility of the government to service the needs of the population in their daily lives. However, he argued that public services in many countries were considered inefficient, of poor quality and lack of innovation to take advantage of more modern technologies. These factors and others such as the lack of good governance have triggered the exploration of a win-win situation solution such as privatisation and public-private partnership in the management of public utilities.

He hoped that the meeting provided the participants with clearer ideas of what could be done in their respective countries in order to make the public utilities serve their intended purpose efficiently for the benefit of all the people. The text of the speech ended in thanking the Government of Brunei Darussalam for funding the Experts Group Meeting. The full text of the speech is given on page 11 of this report.

The Permanent Secretary at the Prime Minister's Office of Brunei Darussalam, Dato paduka Awang Haji Abdul Wahab bin Juned, was the Guest of Honour for the opening  ceremony. In his opening remarks he welcomed the experts and the participants to Brunei Darussalam and hoped that they would find time to enjoy the country during their short stay in Brunei Darussalam.

The Guest of Honour went on to say that the public opinion on the role of state and private enterprises in economic development has changed in the last decades particularly the role of the private sector which, he said, is becoming  more and more evident today as the government alone can no longer act as the main source of provider for public goods.  'Privatisation and Public-Private Partnership (PPP) are the two key tools that have been widely used as and developed into innovative tool for public policy', he said, quoting the statistics of the World Bank that there are more than 6800 state-owned enterprises (SOEs) have been privatised around the world since 1980. 

He was of the opinion that Public-Private Partnership (PPP) could be an attractive option to be pursued as 'it facilitates investment where a public sector can barely afford' and it allows 'the private sector to operate without the need for lengthy regulations to be in place before hand'.  Nevertheless, he cautioned the participants that there were 'instances where PPP/Privatisation have caused governments to run into difficulties such as protracted legal, political and economic battles' and 'in some cases of Privatisation have created private sector monopolies instead of increased level of competition'. He emphasized that a synergy has to be created which will 'accommodates the government's and investors' concerns through sharing responsibility and accountability to the public as well as sharing risks'.

Dato Paduka  Awang Haji Abdul Wahab went on to highlight some crucial issues that need to be addressed to satisfy both the interests of the public and private investors. He also listed certain best practices which needed to be adhered to in order for privatisation and PPP to succeed. Finally, he hoped that the meeting would focus on those issues and provide avenue for sharing of experiences and 'know-hows' to facilitate economic growth in NAM member countries. The full text of his speech is shown on page 13 of this report.

Following the speech given by the Guest of Honour was a video presentation on the establishment of NAM CSSTC and its role in the NAM region. The video presentation was considered useful and informative.

The opening session was ended with a doa prayer read by Imam Masjid Kampong Limau Manis,  Pengiran Hj. Metassim bin Pg. Hj. Kula. The Guest of Honour and the participants were then invited to have a group photograph.

Paper Presentations Session by Experts

After a short break of 20 minutes the paper presentations session started at 10.30 a.m. A total of 5 main papers were deliberated and the session was completed at around 5.00 p.m.

The first paper was presented by Ms Hjh Zainab binti Hj Morshidi from Brunei Darussalam. Her paper was on Privatisation and Corporatisation: Brunei Darussalam's Experience. In her presentation she explained the context, rational and forms of privatisation before she deliberated on the experience of Brunei Darussalam on Privatization/Corporatisation process and the setting up of administrative and legal framework. Among the key issues she highlighted include the following:

1. Sensitivity of transforming state enterprise to private enterprise

2. Performance & Efficiency measurement for privatization option

3. Tasks and functions of Privatisation committees and processes

4. Success and failure of natural monopoly

5. Public employees privileges versus private employee privileges

6.  Question of privatization rationales

The way forward, she explained, was to have a comprehensive and systematic master plan to cover a broad spectrum of public services; identify projects for privatisation, issues as well as regulatory requirements and draw a guideline for privatisation and commercialisation of public services. The full text of her paper is shown on page 16 of this report.

The second paper was on Restructuring State-Owned Enterprises Through Privatisation which was delivered by Ms Lumbini Kulasekera, Manager of Public Enterprise Reform Commission of Sri Lanka. In her presentation, she explained the state sector reform in Sri Lanka including the rationale and privatisation initiative and other reform measures which complemented and supported the privatisation of SOEs. She also identified the key policy and programme issues that should be addressed in moving ahead. Among the issues highlighted in her presentation include the following:

1. Privatisation and Enterprise Reform Strategy

2. Enabling Legal Framework

3. Retrenchment Benefits and Welfare

4. Accounts and Audits of Government Entities

5. Corporate Governance

6. Public Awareness and Support

7. Support to the Private Sector

8. Post-privatisation Monitoring and Performance Assessment

These issues and challenges, according to her, were reform imperatives for privatisation to stimulate efficiency, encourage investment and thereby lead to growth and employment. The full text of her paper is given on page 19 of this report.

The third paper was on  Increasing Government/Public Sector Efficiency Through Public-Private Partnership which was presented by Mr. Abdul Rahman Turay, Chairman National Commission for Privatisation of Sierra Leone. In his analysis of  the relative performance of privately owned firms and publicly owned enterprises in terms of allocative and internal efficiency, he found that the performance depends on a range of factors that includes the effectiveness of the monitoring systems, the degree of competition in the market, the extant regulatory policy and the technological progression of the industry.

Privately owned firms, he said, out-performed publicly owned firms when both operated in an effective competitive environment. He went on to say that privately owned firms won competitive tenders largely because of the efficiency derived from operating in markets which were relatively competitive. When competition was effective, private enterprise was generally preferred on both grounds of internal efficiency and, subject to the absence of other substantial market failures, on the social welfare criterion. In competitive markets, he added, it was possible to find public sector enterprises that were efficient but those that survived tend to be fewer in number. He argued that it was not so much the transferability of ownership that leads to the less efficient production in the public firms but rather the lack of competition. Ownership was necessary, he added, but not a sufficient criterion for the determination of the relative efficiency of firms.

He came to a conclusion that joint private-public sector partnerships might enhance the efficiency of the public sector enterprises if the product markets were competitive and there was a relevant regulatory framework that was designed to promote effective competition. Therefore, he recommended that in addition to encouraging joint public-private enterprise partnership governments should liberalise their economies and maintain regulatory institutions that would ensure barriers to competition were removed. Performance contracts, he added, should be adopted as benchmarks for judging the efficiency of the management of the public sector. Where public sector goods and services can be better produced by the private sector, their production should be hived off and offered for tender to both the private and public sector enterprises. The full text of the paper is given on page 25 of this report.

The paper presentations session was stopped at 12.15 p.m. for a lunch break and it was continued in the afternoon session at 2.00 p.m. The first paper in the afternoon was delivered by Mr. Sugihono Kadarisman, Executive Director, International Chamber of Commerce, Jakarta, Indonesia. The paper was on Public-Private partnership (PPP) in Providing Public Services and a Strategic Approach Towards its Implementation.

In his presentation, he explained that PPP involved sharing  risks and responsibility between government and the private sector in making public services available. It is also sharing of accountability for the services that they render to the public. He added that the implementation of PPP requires a win-win solution which entails a great change in perception on how public services are made available; change of vision from security oriented to prosperity oriented and reform in legislative, institutional and regulatory frameworks governing economic sectors related to public service activities.

He went on to say that successful PPP implementation requires, among other elements, the following principles:

Some of the crucial issues encountered in the implementation of PPP includes:

PPP, he said, is all about how to deal with these issues with the aim of achieving a “win-win” proposition both for the government and the private sector. The PPP models for consideration include BOT, BTO and BOO.  The full text of his paper is  shown on page 31 of this report.

The final paper in the afternoon was on Privatisation in the Public Sector & The Public-Private Interface: Trends, Concepts, Experiences & Perspectives of Public-Private Partnership (PPP) .presented by an expert from Singapore, Dr. Eric Teo Chu  Cheow, Managing Director, Savoir Faire Corporate Consultants. After presenting the ten principal trends in the world socio-economic developments, Dr. Eric argued that privatization is no longer the answer to poor economic management and ills. He believed that the Public-Private Partnership is appropriate as an economic strategy than privatization. However, he emphasized that for PPP to succeed, the social, financial, economic management and political aspects should be taken into consideration in the implementation of PPP. He added that there is a role to be played by international and regional financial institutions to support governments, private sector and consumers in a PPP.  His full paper is given on page 38 of this report.

Dinner

At 7.30 p.m  the participants of the meeting were invited to attend a Welcoming Dinner hosted by Yang Mulia Dato Paduka Haji Abd. Wahab bin Juned, Permanent Secretary at the Prime Minister’s Office, Brunei Darussalam. The function took place at the Empire and Country Club Hotel. Among the events included in the programme for the night were the speech from the representative of the participants, welcoming speech from the Permanent Secretary, presentation of souvenirs to the participants and cultural performances.

Day Two, 17 December 2002

Country Reports Presentation Session

The morning session which started at 8.30 a.m was dedicated for the presentation of country reports. A total of 12 country  papers was presented  and the session ended at 1.10 p.m. The key points highlighted for each country are tabled as follows:

Group Discussions

The afternoon session started at 2.00 p.m. The participants were given a briefing on the groupings, room locations and the issues for discussion. After the briefing, they were then divided into 3 groups, each group with specific tasks to discuss. The list of the groups and the issues given is shown in Appendix 'D'. The discussion session ended at around 5.00 p.m.

Day Three, 18 December 2002

Presentation of Group Outcomes

The morning session started at 9.30 a.m. The three groups presented their discussion outcomes followed by a question-answer session. The experts were also invited to react to the group outcomes. The results of the group discussions are found on page 121 of this report.

Closing Ceremony

The closing ceremony started at around 11.00 a.m. In his closing remarks, Dr. Azaharaini Hj. Mohd. Jamil, the acting Director of the Institute of Civil Service thanked the Executive Director of NAM CSSTC for giving the Institute the opportunity to collaborate with NAM-CSSTC in hosting Experts Group Meeting for the second time. He said that although the participants have had the opportunity to learn from the experience of other countries in the last two days, it was not 'the know-how' of Privatisation and Public-Private Partnership which was important as an output of the meeting but rather it was the network that was developed which would facilitate continuous learning from the experiences of others in the network. He then went on to acknowledge and thank the contributions and support of  other government ministries/departments and individuals in the organisation of the Experts Group Meeting. The full text of his closing speech is shown on page 127.

Mr. Omar Halim, the Executive Director of NAM CSSTC, in his closing speech also thanked the Director of IPA for collaborating with NAM-CSSTC in the implementation of NAM  project. Mr. Omar went on to explain the background and the mission of his Centre. He said that it was the objective of NAM CSSTC to enhance the collective self-reliance of NAM member countries in attaining socio-economic development and capacity to become equal partners in international relations. The ‘gaps’ between developed and developing countries have enlarged politically, economically and technologically, he said, and it was time to do something about them.  NAM-CSSTC had decided to carry out this project by sharing the experiences of NAM member countries in the areas of privatisation and public-private partnership as options for economic reform.  He hoped that the participants have gained new insights and ideas on the 'know-hows' of economic reform from this experts group meeting. The full text of his closing speech is shown on page 129.

Group Tour/Visit

Some of the participants were scheduled to visit a number of places in the afternoon. The tour itinerary is shown in Appendix ‘E’.