Assignment #2 (Privatization In The Philippines)

DefinethetermPrivatizationandgiveatleast2examples.W asprivatizationinthePhilippinesef fectivelyimplemented?Explain...(20pts)Privatizationdescribestheprocessbywhichapieceofpropertyorbusinessgoesfrombeingownedbythegovernmenttobeingprivatelyowned.Itisintroducedasawayofenhancingcompetitivenessandef ficiencyandreducingtheburdenonthestateofsappingandcorruptstate-ownedindustries.Privatizationhassuddenlybecomeoneofthedominantthemesofpublicpolicythroughouttheworld.Privatizationembracesmanydif ferentpolicies.Oneofthecharacteristicfeaturesofprivatizationisthesubstitutionofthemarketsystemandallocationfornon-marketsystems.Itisthechangeinownershipofassetsparticularlyinindustrializedanddevelopingcountries.Aimedatchangingthemixbetweenthepublicandprivatesectorswiththegoalofshrinkingthelatterandincreasingthescopeofreachoftheprivatesector .Ithasseveralwaystoachievesuchobjectivesnamely:Divestiture-T ochangetheownershipofassetstoprivateownership.Privatizing-Assetsareleftuntouchedandequityisleftalone.Deregulation-Achievebyindirectionanderosionofthestate sroleunlessthestateactivitycancompetewithderegulatedcompetitors.ThefoundationofthePhilippineprivatizationprogramwasestablishedinthelastyearsoftheMarcosAdministration.PresidentCorazonC.Aquino'sProclamationNo.50formalizedthePhilippinePrivatizationProgramandlaunchedthespeedydispositionandprivatizationofcertaingovernmentcorporationsandassetsonDecember8,1986.Underthesaidproclamation,itcreatedtheAssetPrivatizationT rust(APT)andtheCommitteeonPrivatizationwhosemainfunctionistoexecutetheprivatizationofthegovernment.TheAPTandCOPasprovidedthereinshallexistforaperiodoffive(5)yearsfromthedateofproclamation.ThetruststarteditsformaloperationonMarch1,1987.ExampleofPrivatizedCorporation/CompanyinthePhilippinesOneofthefewsocialservicescompaniesthatwereprivatizedarethePhilippineLongDistanceT elephoneCompany(PLDT)in1986,ManilaElectricCompanyalsoknownasMeralcoin1986,andMWSSin1997,whichbecameMayniladW aterServices,Inc.andManilaW aterCompany ,Inc.Whileitcouldbesaidthatprivatizationrescuestheinef fectivenessofthegovernment sresponsibilitytosomesocialservices,itremainsafactthatitdoesntservetheinterestsofthepeople.Privatizationofsocialservicescreateshighercostsofproductsandservicessincegainingprofitistheaimofengaginginbusiness.Unlikethegovernmentwhichmustthinkofsocialservicesasitsresponsibilityratherthanbusiness,privateinvestorsthinktheotherwayaround.