PRIVATIZATION CONCEPT

PRIVATIZATION CONCEPT

Privatization is defined as a policy whereby certain public service function usually carried

on by national, state, or local units of government are administered by the private sector

(Chandler and Plano, 1988: 100). Meanwhile, Shafiritz and his colleagues provide that the

limitation of privatization is the removal of the government from spheres of activity, the returning

of functions or property by government to private sectors (Shafritz, 1991: 109). From the

definition above, it can be said that privatization is the handover of several public facilities or

affairs (SOEs) by the government to private management, the transfer of government companies

to the private sector or appointed bodies. The purpose of the handover is to make SOE activities

not, in which the government pays contractors in its implementation; (2) Francises (franchises),

the affairs of work are left to private institutions, but control remains with the government; (3)

Voucher system, the government issues money (cash or emergency money) to consumers/the

public, then the voucher is used to consume goods or services; (4) Producer subsidies, the

government gives a certain amount of money directly to the private sector that produces bars or

services for the sake of services to the public; (5) The market place, entrepreneurs produce goods

or services according to market needs; (6) Voluntary arrangement, private or otherwise, working

to meet the needs of the public, then he withdraws a certain amount of money from the public

voluntarily, and; (7) Self-service, organizations, individuals or other communities in meeting their

needs by producing themselves. (Savas in Lane, 1986: 500).

its forms. Meanwhile, the subsidy is given by the government to the private sector to provide

public goods at low prices, for example; education, housing and others. Likewise, market places

that are allowed by the government to operate are also to serve the public interest cheaply. The

sixth form is the voluntary provision of goods or services by several institutions that are free to

make their contributions and to maintain the public interest, such as maintaining the cleanliness

of parks, street cleanliness organizations and others. F

inally, a form of privatization is where each individual provides goods and services to

meet his or her own interests, through a number of his own activities. The success of this thought

in practice, then followed by several other thinkers, with studies in various countries, which were

then outlined in his works, among others; Privatization and the welfare state by Le Grand and

Cowan in his work A Global Overview of Privatization in Hanke (1984: 8 – 14) for example, the UK

by privatizing telecommunications in 18 months can remind the profit of approximately $ 30

billion; then Italy in 1985 could increase profits by $200 million in less than 1 year; France in 1986

was able to generate 50 percent of its state budget from the telecommunications sector; America

can save its budget as much as $870 million a year. Meanwhile, in countries classified as Less

Development Countries (LDCs), changes in macroeconomic policies through privatization

programs are also able to increase efficiency and profitability. For example; Mexico, with the

privatization of 51 state companies from 236, could reduce its state budget by about $500 million

from $700 million in 1986.

In addition, countries that also profit from the privatization program with privatized

not all of the above concepts and forms of privatization can be implemented, but at least the

wisdom can be taken as a lesson. He explained that the concept of privatization carried out by

the Indonesian government through Presidential Instruction No. 5/1988 which was followed up

with the Decree of the Minister of Finance No. 740/1989 and 74/1989 and several other

implementing regulations that support and describe the main regulations does not always mean

privatization as the process of transferring shares of SOEs on a voluntary basis, but is more

emphasized on increasing the degree of efficiency and effectiveness of SOE performance.

Through these provisions, the policy of privatization of SOEs, as stated by Ruru (1996:41),

focuses more on all efforts to absorb the business environment from private companies into

public sector management, through the handover of part of the business court to the private

capital market to strategic partners (go public).

Meanwhile, Setayanto P. Santoso, proposed an alternative that the mechanism for

transferring the wealth of the state sector to the private sector can be pursued in the following

ways; (1) Auction, where SOE assets are sold to the highest bid in an open auction, (2) Negotiated

sale, the price and terms of the transaction are agreed upon in direct negotiation between the

seller and the buyer, (3) Tender, where the tender participant submits his bid in a closed manner

which will be opened at a predetermined time, (4) Stock-flotation, government shares will be

offered in the capital market both domestically and abroad (Santoso, 1996: 51). Based on the

form of privatization offered above, of course, choosing which SOEs can be privatized, economic

azs in article 33 of the 1945 Constitution and Government Regulation No. 3/1983, which

PJKA and Procurement Agreements of Public Companies. Finally, in addition to the issuance of

Presidential Instruction No. 5/1988, and several other implementing decisions, which essentially

provide a definition of assessment of the performance of SOEs in terms of their finances so that

they can be privatized, a selection model based on capital market provisions was also issued.

Three criteria are used to assess finances from the side; profitability, liquidity, and solvency. Then

from the assessment, SOEs will be classified as very healthy, healthy (sound), less healthy (less

sound) and unhealthy (unsound). The assessment is given with the aim that SOEs can move

freely like privately owned enterprises. The effort

Finance and the Ministry of Technology can still intervene through the general meeting of

is 7.3 for life insurance; 4.8 for housing companies and loss insurance; 19 for banking; and 1.8

for other sectors. Meanwhile, the qualitative criteria are: (1) Attractiveness of the business sector

for potential investors, (2) Degree of dependence on funding support from the government, (3)

Level of need for investment capital and investment return proposition (Ruru, 1996: 43-44).

Based on the privatization study above, it is clear that there is a development in privatization

policy. In other words, the privatization policy of SOEs issued by the government was initially a

rational and bold policy choice, in the sense that the government was quite firm to change the

mission of SOEs which initially according to Government Regulation No. 3 of 1983 was prioritized

more on public services, then changed its orientation not only to provide public services, but also

to be oriented towards profit making. On the next trip, it shows that the privatization policy is

sector (SOEs), the definition of the state is first known. The state is defined as the highest

organization and encompasses the broadest sense. (Budiman, 1996: 84). In relation to policy and

government, the state is defined as an inclusive concept that includes all aspects of policy and

the implementation of legal sanctions, while the government is only an agent who implements

state policies in a political society (Larson quoted by Lawson quoted Budiman, 1996: 84).

Furthermore, in relation to the government and society, the state is a community organized for

political purposes: the government is an individual or a team of individuals who make decisions

that have an impact on the citizens of a society (Calvert quoted Budiman, 1996: 84). In state

practice, what policies are taken by the state with all its consequences, the motive cannot be

separated from the life of the political system running in the country concerned. Whether it is a

country that adheres to a capitalist, socialist (communist) or mixed system. Although there are

namely: traditional functions, nation building functions, economic-management functions,

social welfare functions, environmental control functions, and human rights functions. (Caiden,

1982: 103-122).

In relation to the writing of this book, the important function of the state is to carry out

economic and management functions in the form of monopolizing several certain state

companies (SOEs), public utilities and making a number of regulations in the fields of primary

and secondary industries, employees, and economic planning. Monopoly is carried out mainly

to provide public goods, which cannot be implemented by institutions outside the government

government's monopoly is gradually decreasing, so that the government only carries out its

is a logical consequence of the development of civilization and environmental conditions, both

internal and external. To illustrate, at the time of the textile industry revolution in Britain, the role

of the state was small, because investment was not expensive; small capital needs; and the

market is still empty. After that, industrialization in France, Germany, America, and others, the

role of the government is increasingly needed, because the market network is getting bigger, and

the need for capital is also large, and competition is getting more competitive. In third world

countries, the role of the government is indispensable and growing, unlike in previous events.