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Privatisation Failures in Indonesia

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Author Info
McLeod, Ross ()
Abstract

Abstract: Despite repeated commitments by successive governments in Indonesia to divestment of state-owned enterprises, little has occurred. There has been considerable experimentation with a different kind of privatisation, however, involving reforms that opened up markets previously dominated by state firms to the private sector. The spectacular failure of some of these experiments has weakened the appeal of privatisation. It is argued here that these disappointments do not reflect any conceptual shortcoming of privatisation as a means of improving efficiency, but are attributable to moral hazard resulting from the failure to ensure that business risks were shifted into the private sector along with ownership.

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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 2002-06.

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Length: 20 pages
Date of creation: 03 Sep 2002
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Handle: RePEc:pas:papers:2002-06

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Keywords: privatisation state enterprise moral hazard banking civil aviation electricity.

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  1. Prema-Chandra Athukorala, 2002. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 38(2), pages 141-162, August. [Downloadable!] (restricted)
  2. Peter McCawley, 1970. "The Price of Electricity," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 6(3), pages 61-86, November. [Downloadable!] (restricted)
  3. Ross McLeod, 2000. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 36(2), pages 5-41, August. [Downloadable!] (restricted)
  4. Ross McLeod, 1993. "Survey of Recent developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 29(2), pages 3-42, August. [Downloadable!] (restricted)
  5. Hadi Soesastro, 1999. "The 1999 Election and Beyond," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 35(2), pages 139-146, August. [Downloadable!] (restricted)
  6. Severin Borenstein, 2002. "The Trouble with Electricity Markets: Understanding California's Restructuring Disaster," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 191-211, Winter. [Downloadable!] (restricted)
  7. George Fane, 2000. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 36(1), pages 13-45, April. [Downloadable!] (restricted)
  8. Paul R. Deuster, 2002. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 38(1), pages 5-37, April. [Downloadable!] (restricted)
  9. Iketut Mardjana, 1995. "Ownership or Management Problems? A Case Study of Three Indonesian State Enterprises," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 31(1), pages 73-107, April. [Downloadable!] (restricted)
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