State Intervention May Provide Solutions Not Found In Privatisation: Experts

KUALA LUMPUR, Nov 9 (Bernama) -- State intervention or state ownership could provide solutions which are not found in privatisation especially for infrastructure projects, say experts attending a conference here. David Delfolie, a sociologist at the Institutions and Historical Dynamics of Economics and Society (IDHES - Paris 1), said state-owned firms could provide longer-term strategies compared with private sector firms. Citing an example, he said the railway system, which is deemed as an infrastructure that needs long-term views and strategies, should be run by state-owned companies. "Railway infrastructure needs long-term views, because it's not about the question of daily transport, but related to questions of the future, economic and development strategies," he said. He was speaking at a panel session at the Malaysia-French International Conference here Tuesday. Delfolie said the United Kingdom, the world leader in railway systems in the 1920s, had to seek technical advice from France after the privatisation of British Rail in the 1990s as the system had deteriorated. "Sometimes, when things are okay, the private sector can do something, but when there is some strategic direction, only the state can have the long-term strategies. "And many of us have realised that the private sector is not the only solution," he said. France is well-known for its railway system, and many believe the system could not have developed successfully without government intervention in 1842. Echoing Delfolie's views, Prof Jomo Kwame Sundaram of the Institute of Strategic and International Studies (ISIS) said privatisation could lead to abuse of market power. He said the privatisation of Sydney Airport in 2002 led to tremendous abuse, as consumers and airlines reportedly complained about the charges for use of the airfield, car parking and other services after the privatisation. "It is a major error to say that any kind of state intervention or state ownership is bad for the economy, despite instances where many of the interventions are quite unnecessary. "But the solution does not lie in privatisation," said Jomo, who is also a visiting senior fellow at the Khazanah Research Institute. -- BERNAMA