Incoherencies with the Privatisation Debate Mohamad Mova AlAfghani The term privatisation is so contentious and controversial but

despite the controversy it caused, people often have no common understanding on what it actually means. As a result, the debates on privatisation are often misleading and incoherent. When the Water Law 7/2004 was submitted to a Judicial Review at the Constitutional Court, the petitioners argued that the law was meant to privatise the water sector despite the fact that the term privatisation is never mentioned in the law. Government representative denied that the water law is a privatising instrument since it does not regulate the transfer of shares from state-owned companies to the private sector. Why is it that the government often denies privatisation whereas NGO activists argue that privatisations are occuring? It is because when the government say privatisation, they often meant divestiture, i.e. the sales of state owned companies shares to the private sector. The government is technically correct because the Law on State Owned Entreprise define privatisation as a sale of equities. However, it is theoretically incorrect to say that other forms of private sector participation (PSP) such as management contract, affermage, lease, concession, are not privatisation since in those instances, the state have, to a certain extent, retreat from providing goods or services. This shows that legislation could also be misleading. The emphasis on privatisation debates in Indonesia tends to be focused only on the ownership aspect. The government will deny that privatisations are occuring since there is no divestiture and on the other hand civil societies are complacent when the private sector is prohibited from participating in the provision of goods and services. These debates missed the point. Starr (1988) explained that the term privatisation is fuzzy and broad. Privatisation could mean a shift from opennes to privacy such as when we say that some things are private and should therefore not be made available in the public domain. Privatisation could also mean disengagement from the collective into individuals. When people retract their engagement from the group, it also means privatisation. For others, private often means non-state, like when we oppose private employee with government employees, or when we say private hospitals or private schools. Other than the above, there are other meanings of privatisation. For example, when we say that religion and beliefs should be a private matter we are talking about secularisation, or in another word, the privatisation of religion. For most European countries, religion was a public affair. Indonesia on the other hand is still debating the subject. I am of the opinion that the discourse of privatisation is a continuation of the previous privatisation processes. It should be understood that privatisation is a continuum. Divestiture (the government version of privatisation) and long term contracts is a part of this continuum. But even ordinary procurements are privatisation in a certain sense since involve non state entities. Office stationary, internet service and other logistics must come from somewhere and they are usually provided by the private sector. The only difference between divestiture and simple logistics procurement is on the degree of the private sectors involvement in providing goods and services.

Therefore, ownership-focused debate on privatisation is too narrow and often missed the point. What is most crucial is to critique whether privatisation in terms of ownership also means a privatisation in terms of engagement, information and wealth distribution or indeed, if, despite an entity status of state ownership, privatisations are occuring in the other spheres. Civil societies often assume that privatisation of ownership will automatically result in the privatisation of wealth, engagement and information. But this is not always true. In some other countries, the increase of civic engagement and transparency is the result of privatisation. The very reason why public utilities were privatised in England during Tatchers regime is exactly because privatisation is thought to be in the public interest. Hence, the regulatory apparatus was designed to defend the public interest. Later after the labor government ascend to power, this role is strengthened by prohibiting denials of publis service due to inability to pay and through various hardship policies. Thus, in terms of transparency and social engagement, the privatised public utilities in England are much better than the State Owned Companies in Indonesia. Despite being owned by the state, Indonesian BUMN (State Owned Companies) is more secretive and more disengaged than privatised English Utilities. It is therefore not always true that privatisation in terms of ownership will automatically result in the privatisation of information and engagement. What follows the privatisation processes in England and other parts of Europe is the reassertion of the public sphere. The state reconfigures itself as a regulator to defend the public interest by applying transparency and participatory principles in the regulatory process. Since in Indonesia the debate focuses primarily on the ownership question, there is a lack of discussion and critique as to the role of the state as a regulator and the accountability of the private sector in public service. Privatisation through contracting have already occurred but this is not adequately put into scrutinies since most people are complacent that the companys ownership status remains public. This results in an irony. The irony is that our country is in certain ways more liberal than the neoliberals. The neoliberal England fully divested its public utilities but then they strongly regulate the privatised companies and guarantee the public sphere. Conversely, our country is very reluctant to formally retreat from the market. However at the same time shakes hands with the private sector through various contracts but without accompanying it with strong regulation. In terms of the public sphere, this kind of privatisation conducted by contract could be much worse than full divestiture. To conclude this article, I urge that the debate on privatisation should not be focused on the question of ownership alone. Ownership debate is tricky. State ownership is not a guarantee that things are not privatised and conversely, privatised ownership could be more public than than state ownership if accompanied by strong regulation. Our focus with the privatisation critique should not be on rejecting privatisation per se and then advocating state ownership. Instead, our focus must be on the role of state in defending the public interest, in reasserting the public sphere and in holding the private sector accountable for public service delivery. The author is a lecturer in law.