ADVANTAGES AND DISADVANTAGES OF PRIVATISATION

Contents 1.0 INTRODUCTION 1 2.0 ADVANTAGES OF PUBLIC SECTOR PRIVATISATION 2 2.1 Improving Efficiencies 2 2.2 Reduction in Government Cost and Spending 3 2.3 Focusing on Core Competences 3 2.4 Streamlining Businesses to Allow Productive Job Creations 4 2.5 Obtaining Goal Congruences 4 2.6 Effective Utilization of Taxpayers’ Money 5 2.7 Generate Income Tax Revenue 5 2.8 Improving Government Financing 6 2.9 Reorganisation or Restructuring Government Systems and Performance Measures 7 3.0 DISADVANTAGES OF PUBLIC SECTOR PRIVATISATION 7 3.1 Possible Control of Foreign Entity on National Interests 7 3.2 Monopoly Risks 8 3.3 Management Incompetencies 8 3.4
Over the last several decades, in governments at all levels throughout the world, the public sector’s role has increasingly evolved from direct service provider to that of an indirect provider or broker of services; governments are relying far more on networks of public, private and nonprofit organizations to deliver services.
The states most successful in privatization created a permanent, centralized entity to manage and oversee the operation, from project analysis and vendor selection to contracting and procurement. For governments that forgo due diligence, choose ill-equipped contractors and fail to monitor progress, however, outsourcing deals can turn into costly disasters.

2.3 Focusing on Core Competences

Transforming public sector towards privatization would help ease government cashflow and financial burdens. Plus, government could focus on its other core competences such as healthcare, military forces and education spending which any of such issues contains substantial contributions towards well being of the people.
There are several reasons for this argument, including the undesirability of a large bureaucracy, the inefficiencies of centralised planning and the crowding-out of private investment. The implementation of privatisation could be undertaken in such a manner as to undermine the benefits that would otherwise