The politics of public enterprises in the third world : the ASEAN case

Abstract

The main objective of this dissertation is to inquire into public enterprise systems of the Third World in order to understand their actual behaviour of the policy processes related to public enterprises. This research project is a comparative study and the area selected for the case study concerns the country members of the Association of Southeast Asian Nations (ASEAN) comprising Indonesia, Malaysia, the Philippines, Singapore and Thailand. The study is divided into four parts: (1) the introductory, which reviews the previous literature in this field and questions whether concepts and theories of public enterprise originated in the West are applicable to the Third World environment and conditions; (2) the country studies, which provide administrative development, organisational structure and processes, and the profile of policy makers in each public enterprise system; (3) the case studies, each with various aspects of public enterprises, namely decisions, and motivations for public or private enterprises, the internal management, and the expansion of the public enterprise sector, and corruption; (4) the conclusion, which summarises the findings and attempts to formulate some generalisations in regard to public enterprises in the Third World. It was found that all public enterprise policy issues, particularly those traditionally debated by earlier writers (such as reasons for public enterprises, their institutional frameworks and processes, and their autonomy vs control), cannot be viewed in isolation from their specific national and organisational environments. The major weakness of previous concepts and theories of public enterprise, usually emphasising structural aspects, arise from their failure to recognise the significance of such variables and their impact on public policy content and outcomes. Thus, in many respects these theories are not relevant of the Third World environment and conditions which sharply differ from those of the Industrialised West where such theories originated. Public enterprise can be viewed as an integrated subsystem of the whole political and socio-economic system and a complete system in itself with a number of subsystems, in which policy participants convert inputs of various resources into outputs. The most important variables in a public enterprise system are political and socio-economic contexts, formal institutions and processes, and policy participants, each of which relates to the others and to public enterprise policy, but their type and degree of influence are different. The real motivations for public enterprises are often related to politics, i.e. the manoeuvre to gain political and economic control or to balance power, not other publicly stated reasons dealing with social and economic development. Ideologies affect the proliferation of public enterprises in some countries, but their impact has been increasingly insignificant. In contrast, political systems appear to be unrelated to the size of the public enterprise sector, but they greatly affect policy content and outcomes of all policy issues, including types and scope of activities, institutional forms and processes. Legal arrangements, according to the previous theories, are designed to create efficiency and effectiveness: public enterprises are to be efficient and effective only if they are out of politics and if a balance between autonomy and control is created. It was found that such arrangements are very much influenced by political considerations. Further, the actual practice tends to depend on the degree of influence each individual and group possesses and exercises because legal forms and processes are not institutionalised. Nevertheless, the performance of Third World public enterprises is not as deleterious as claimed. Despite excessive political interference in the management, they still manage to maintain some degree of flexibility, profitability and public accountability, largely because of some political arrangements, i.e. intra-ruling group fighting, foreign influences, and the need for mass support. The term national profitability is suggested to replace the ambitious goals of efficiency and effectiveness because it includes economic efficiency, social profitability and "political profitability", the last of which is significant in the Third World environment.