growth and 75 per cent of new employment were contributed by the private sector

Growth and 75 per cent of new employment were

This preview shows page 33 - 35 out of 48 pages.

growth and 75 per cent of new employment were contributed by the private sector. Box 6.9 provides a case study of private sector participation in China. 6.7.6 Privatization of urban infrastructure and services In many Asian cities, the private sector currently carries out the financing, operation and management of urban infrastructures such as transport, electricity, gas supply, telecommunications, and solid waste collection and disposal. All government does is to set policies and procedures for private companies to go by. The main argument in favour of privatization is that private companies tend to be more efficient than public bodies when it comes to managing business-like operations like public utilities. The profit- making rationale is said to result in efficiency gains that make private ownership and management of urban services more cost-effective than public ownership, whereas in developed countries government agencies tend to be prone to political interference, patronage, nepotism, and graft and corruption. The crucial issue facing urban authorities in Asia is how to determine the benefits and drawbacks of privatization schemes. Important questions raised by privatization include: a) Are such schemes really more efficient and cost-effective than publicly-run utilities? b) Do such schemes actually tap into private sector capital and expertise? c) How does privatization affect the lives of the urban poor? d) Are privatization schemes conducive to political interference, anomalies, graft or corruption? A case study of the water provision in Greater Jakarta (‘Jakarta Raya’) provides some insights into the effects of privatization (see Box 6.10). The switchover resulted in greater efficiency, especially because it cut down overstaffing and patronage in the water agency. The scheme brought in international financing, but the extent of local private investment was unclear because the private partner (the son of President Suharto) relied more on political connections than local capital. A major criticism of the scheme was that it delivered more water services to well-off communities than to low-income areas. In 1999, when President Suharto was overthrown, the political anomalies involved in the scheme were exposed. This would go to show that like other economic arrangements with demonstrated positive potential, privatization is exposed to the risk of corruption and mismanagement. 6.7.7 Land as a resource for development In Asian cities, a frequently neglected resource is the use of urban land. Tapping land as a resource is a distinct advantage in socialist countries like China and Viet Nam where land is owned by government. In these countries, land is usually not sold outright but leased for periods of 50 to 70 years. In China, Art. 18 of the Administration Law on Real Estate (1994) sets out that all fees paid by developers when granted land use rights are to be turned over to the State Treasury. These funds
Image of page 33
239 URBAN GOVERNANCE, MANAGEMENT AND FINANCE Private sector participation under a variety of
Image of page 34
Image of page 35

You've reached the end of your free preview.

Want to read all 48 pages?

  • Summer '20
  • Dr joseph
  • Test, Urban studies and planning, Urban decay, urban governance

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture