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Privatisation Failures in Indonesia

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  • McLeod, Ross

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.

Suggested Citation

  • McLeod, Ross, 2002. "Privatisation Failures in Indonesia," Departmental Working Papers 2002-06, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2002-06
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2002/PrivatisationIndonDWP.pdf
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    References listed on IDEAS

    as
    1. Hadi Soesastro, 1999. "The 1999 Election and Beyond," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(2), pages 139-146.
    2. Hill,Hal, 2000. "The Indonesian Economy," Cambridge Books, Cambridge University Press, number 9780521663670, November.
    3. Mari Pangestu & Miranda Swaray Goeltom, 2001. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(2), pages 141-171.
    4. Ross McLeod, 2000. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(2), pages 5-41.
    5. 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.
    6. Prema-Chandra Athukorala, 2002. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(2), pages 141-162.
    7. Ross Mcleod, 2005. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(2), pages 133-157.
    8. Ross McLeod, 1999. "Control and competition: Banking deregulation and re‐regulation in Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 4(2), pages 258-297.
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    11. Mudrajad Kuncoro & Tri Widodo & Ross McLeod, 2009. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 45(2), pages 151-176.
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    More about this item

    Keywords

    privatisation; state enterprise; moral hazard; banking; civil aviation; electricity.;
    All these keywords.

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