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Proceedings Opening Session
Official
Opening Remarks by Dato
Paduka Haji Abd Wahab bin Juned, Parmanent
Secretary, Prime
Minister’s Office, Brunei
Darussalam
Assalammualaikum Warahmatullahi Wabarakatuh and a very good Morning to
all. Yang Mulia, Mr. Rachadi Iskandar,
Director Financial and Administrative, NAM- CSSTC and Dr. Azaharaini Haji
Mohd. Jamil, Acting Director of the Civil Service Institute as Joint
Chairperson, Excellencies, Distinguished Experts
and Participants, Senior Government Officials, Honoured Guests, Ladies and
Gentlemen, On behalf of the Government of His
Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam, it gives me
great pleasure to warmly welcome you all to Brunei Darussalam to attend
the Experts Group Meeting on NAM Reform : Public-Private Partnership and
Privatisation for NAM Member Countries. This being the second time Brunei
Darussalam given the honour to host NAM’s Expert Working Group Meeting,
the first was in January 2002. I hope you will also have time from your
tight schedule to enjoy the country during your short stay here in Brunei
Darussalam. Excellencies, Ladies and Gentlemen The task ahead of you is certainly
most challenging and timely when we consider the global economic
environment we are in. I have no doubt, countries, particularly developing
economies, share the common goals of developing their respective economies
that are sustainable; a sustainable GDP Growth; minimal unemployment and
controlled inflation.Similarly, every economy vies for as much direct
foreign investment as possible, and every country will continuously strive
to ensure a stable social and political environment to support its
continued well-being and prosperity. The current uncertainty in world
economy meant that the government alone can no longer act as the main
source of provider for public goods.
Pressures have intensified for government especially in developing
countries to find alternative source of funding to finance their
developmental programmes Over the last decades, there has
been a widespread change of opinion about the role of the state and
private enterprises in promoting developmental programmes and economic
growth. The role of the private sector in contributing towards the
development and economic growth of a country is undeniably crucial and is
becoming more and more
evident. 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. Privatisation represents
a potential revolution in the roles of both the government and private
sector in promoting economic growth and development. A key element of this
new market orthodoxy has been the privatisation of state-owned enterprises
(SOEs). According to the World Bank, by mid 90s alone, more than 6800
state-owned enterprises (SOEs) have been privatised around the world since
1980. Excellencies, Ladies and Gentlemen The ever growing need for
infrastructure, namely public utilities, is a major challenge for every
government especially in the developing countries. Recent development
indicates that the gap between infrastructure needs and implementation in
the developing countries is widening and the concept of privately
developed infrastructure in these countries is still not fully capitalised.
Public-Private Partnership (PPP) presented an attractive option because it
facilitates investment where a public sector can barely afford; and
because they allow the private sector to operate without the need for
lengthy regulations to be in place before hand.
However, privatization is not one clear and absolute economic
proposition. It means different things in different parts of the world,
where both the fundamentals of the economy and the purpose served by
privatization may differ. It is widely accepted fact that among the many objectives assigned to
Privatisation/PPP is aimed at reducing budget deficit and increased
economic efficiency through private sector involvement. It is also widely accepted that there are opposing interests between the
parties involved in the partnership; the government is concern with
meeting its obligations to provide social/public-welfare objectives while
the investors (i.e. private sector) are mainly profit motivated. The main
challenge therefore, is to try to bridge the dichotomy between the two
opposite motivations and make them into a synergy. The synergy
accommodates the government’s and investors’ concerns through sharing
responsibility and accountability to the public as well as sharing risks. There are instances where PPP/Privatisation have caused governments to
run into difficulties such as protracted legal, political and economic
battles. Other countries have seen electricity utilities crippled by
payments due to Independent Power Producers and some cases of
Privatisation have created private sector monopolies instead of increased
level of competition. The difficulties faced by governments are by no means entirely within
their control. Factors such as the regional and global economic conditions
could easily contribute to the privatization process from being
successful. The scenario is further aggravated by the need to implement
programmes timely or else they become lost opportunity for both sides. In the global environment, Governments acknowledge the importance of
information communication technologies. They are now forced to face with
another task of providing the necessary infrastructures as well as
providing the appropriate human resource within a short time frame lest
the country is left behind or bear lost opportunities. Closing the digital
divide is both a priority for
government as well as for the private sector, an opportunity with maximum
return of investment for both parties. Excellencies, Ladies and Gentlemen With the above problems in mind,
public policies embodied in legislative, institutional and regulatory
framework within NAM countries need to be reviewed and reformed if
necessary, to make them conducive for effective Privatisation and
Public-Private Partnership A number of crucial issues need to
be addressed accordingly and in proportion to each other, satisfying both
the interests of the public and private investors. These issues, which are
of high concern to private sector especially when investing in public
utility projects, include: -
Ownership of assets – collateral ability and control of the
assets by investors and their lenders -
Operation and management of assets – to ensure that
investor’s business plan can be realized with minimum risks -
Market access – fair access to the marketing selling
service products to the public -
Tariff of the service – acceptable tariff of the services
that are rendered to the public especially in the case of public utilities -
Tax and fiscal incentives – tax relief and other levies and
incentives especially during the years before project achieved its
breakeven point is accomplished -
Risk sharing and mitigation – including good judicial and
arbitration systems and legal investment protection. In order for privatization &
PPP to succeed, certain best practices need to be adhered to : -
Stability of the legislative framework and consistency of the
institutional and regulatory frameworks despite the need for periodical
adjustments as required by the changing business environment -
Boldness, prudence and transparency on the side of the public
authorities in enforcing state policies -
Pro-business attitude of the government in serving as
facilitator to the investors. ‘One stop service’ by government
bureaucracy is an important element in implementing best practices. -
Public consumers’ understanding and support to the
privatization/PPP concept especially in the provision of public utility
services -
Professionalism and sense of public responsibility on the
part of the private sector Another key area of intervention is
social security reform. A social security system covering both the state
enterprises and private enterprises is crucial to increasing labour
mobility, hence labour market flexibility. Having these public policies
reform, will help facilitate moves towards Privatisation of the Public
Sector in NAM member countries, that is, a freer private sector where
there is a greater facilitation by the state in areas of policy, legal
framework and financing. The issues that I have highlighted
are by no means exhaustive as I am sure that your experiences will verify
that no one model of corporation or privatization or any form of
Public-Private Partnership can accommodate all of the variables considered
by each individual state. However, I see a greater need on the second
generation reforms as opposed to that of the first generation on
macoeconomic stabilization and liberalization. As we know the administrative
capacity and capabilities of all governments, not least those in
developing countries, are severly stretched by the weight and gravity of
their numerous undertakings. There is always a constant need to see
wheather economic development could be accelerated by moving to the
private sector those responsibilities that could be handled more
efficiently there. This is to say that hard-pressed administrative systems
need to concentrate on activities that they are best equipped to provide. In this context, one of the second
generation reform areas is that of institutional change. This deserves a
greater attention in terms of looking at the reform of the state in
general, especially in areas such as decentralization, civil service
reform and capacity building. Finally, this Experts Group Meeting
on NAM reform, which focuses on the issues of PUBLIC-PRIVATE PARTNERSHIP
AND PRIVATISATION, hopefully will enable the NAM member countries to share
experiences and know-hows in
order to facilitate economic growth amongst the NAM member countries. Ladies and Gentlemen I wish you all a very successful
and fruitful meeting and I hope that you will have pleasant memories of
your stay here in Brunei Darussalam. With the kalimah Bismillahir
Rahmanir Rahim, I officially declare open the Experts Group Meeting on
NAM’s Reform: Public-Private Partnership and Privatisation for NAM
Member Countries, 16-18 December 2002, here in Brunei Darussalam. Wabillahit Taufik Walhidayah,
Wassalamu Alaikum Warahmatullahi Wabarkatuh And Thank You.
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