Can anyone think of any failed government enterprise that was privatized and became a success story in the Maldives? Dhiraagu? MWSC? Maldive Gas? Not many people agree that these companies were privatized in the first place. Further, on closer look the success of such organizations may not be related to privatization at all.
A former board member of Dhiraagu says the success of the company was mainly due to the management expertise of the foreign partner, which also had the advantage of a signed agreement with the government through which they were able to control government interference to a minimum. The exclusive monopoly on telephony also helped of course. It’s the same story basically with MWSC.
Will privatization help a company such as STO? A former STO board member doubts it. According to him the main problem with STO during his time was government interference, particularly from relatives of the former president. It was particularly difficult when two very close relatives were vying for influence and giving conflicting commands to STO.
From these examples it appears that the remedy for poor performance is reducing government interference, not privatization. This is exactly what Deng Xiaoping did in China. He did not privatize the village factories, which were the engine of the growth of the rural economy. In fact, they were almost all owned by local governments in Deng’s China. In the cities too, reforms in industry didn’t include privatization at all. What Deng did was cutting government influence from the factories and open them up to market forces. Perhaps we can learn something from his policies.
“It does not matter what color a cat is as long as it catches mice.” –Deng Xiaoping