Growth and 75 per cent of new employment were

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

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URBAN GOVERNANCE, MANAGEMENT AND FINANCE
Private sector participation under a variety of