Privatization Drives in Asia: Brisk, but Brutal

By N. GUNASEKARAN

In the 2012 elections in South Korea, Park Geun-hye, as a presidential candidate, pledged to rebuild the middle class and increase its size to 70% of South Korean society. It turned out to be an effective political strategy that greatly contributed to her election. In many Asian economies, economic polarization has become an important issue and it has its impact on the political debate.

It is to be recalled that South Korean economy was severely affected by the Asian financial crisis in 1997. The majority of the working population and many middle-class people lost their livelihoods due to layoffs, early retirements and business failures. But,a small elite group with financial resources utilized the adverse conditions of credit-scarce market and benefitted with the connivance of ruling elites in the government. For the past two decades, the policies were framed to further the interests of the corporate financial groups and for their capital and profit accumulation. One could see this development in all Asian countries for the past two decades. Among all such neoliberal initiatives of the governments, the privatization of public services contributed to the fast growth of the financial assets of top-level corporate groups.

The growing inequality in Asian societies is strongly connected with an economic initiative, the privatization at all levels of industry, agriculuture and service sectors. The announcements of the Ministers and Prime Ministers about the privatization measures are the regular new-items in the media.

The public services, which were under state patronage for a longtime, have been privatized in all countries. In many countries in Asia, the governments are vigorously pursuing privatization in the service sectors like water, electricity, education, health etc. They were steadily handed over to private corporate groups, causing gloominess in the lives of working population and the poor. The people were affected by the increases in service charges, rate-hikes and were denied access to water, electriticity and other basic necessities.

Over the last two decades, the water lobby companies were using water resources for their profit-pursuit while peoples’ movements have been defending ‘the human right’ of the common people to have access to water resources.

Public water and sanitation management have actually disappeared from the field of state governance. The UN bodies, major bilateral agencies like EU, OECD, multilateral banks like IMF, African Development Bank are all promoting that mixed management models such as Private-Public-Partnerships. They recommend privatized management as a panacea for the water crisis.

The several corporations in the field of water resources have gained a lot from the water projects undertaken by the World Bank. Two of the Bank’s most often cited “success” stories were in Manila, Philippines, and Nagpur, India. But in both cases real beneficiaries were not the people but the companies like Veolia.

In 1997, the International Finance Corporation (IFC), the private sector lending arm of the World Bank, advised the Philippines government to contract with two private corporations — Maynilad and Manila Water Company — to manage the city’s water system, and took an equity stake in Manila Water Company. The results of these measures were disastrous. The people have had to face the drastic increase of the rates to over 500%; the existing workforce was reduced; poor quality of water has led to various disease outbreaks; many communities in those areas were deprived of access to water.

In Nagpur, India, a water project involving a Veolia subsidiary in which the IFC holds a 13.9% stake, had also been a failure. The promised infrastructure improvements have never been done and project delays, inequitable water distribution, service shutdowns, and allegations of corruption and illegal activity have all contributed to the grand failure of the scheme. People were heavily disappointed and held series of protests. In spite of these utter failures, the Bank celebrated these two projects as successes! Also, the Bank is promoting these models as the viable ones to be emulated elsewhere!

The privatizations in the power industry have also been a dismal failure and the people have still been suffering from regular power tariff-hikes in many countries including India. Both domestic and global private companies have amassed huge profits in this field also. The experience of the last two decades have given a lesson: public ownership of power infrastructure is the best option for peoples’ welfare.

Asia’s experience was well-stated in the report by the United Nations, titled as “State of the Indigenous Peoples Report.” It stated that privatization and free market economies have had devastating effects on on indigenous health and wellbeing of the common people. “Neo-liberalism is based on a belief the market should be the organizing principle for social, political and economic decisions, where policy makers promote privatization of State activities and an increased role for the free market, flexibility in labor markets and trade liberalization ... The benefits of these policies frequently fail to reach the Indigenous peoples of the world, who acutely feel their costs, such as environmental degradation and loss of traditional lands and territories.” Asia’s failures have to be seen in the light of these UN assertions.

In India, the government recently decided to replace the current Planning Commission with a new institution called, NITI (National Institution for Transforming India – Aayog).The Left criticized it, calling it “a regressive step” to push India further towards a market-driven economy. They expressed fears that through this step the public resources would be “put at the disposal of the private sector and the market forces.” Such new kinds of ventures by the ruling elites for more and more privatization are going on across Asia.

In Japan, the postal privatization initiative that began a decade ago is getting accelerated now. The Japan Post group’s holdings and its banking and insurance units plan to debut on the Tokyo Stock Exchange in September of next year. At present, the Japanese government owns 100% of Japan Post Holdings while the postal group’s net assets are around $116 billion.

While the outbreak of Ebola virus has conveyed the precarious state of the global healthcare industry, in Asian region, the corporate investors are flocking into the industry since it has solid and secular growth characteristics in terms of huge profit-potentials. The governments are withdrawing themselves as the health providers for working people. Healthcare spending as a percentage of GDP is still quite low in Asia compared with Europe or the US. At the same time, incidences of chronic diseases such as diabetes and cancer in the region are alarmingly rising.

In Pakistan, doctors, paramedics and other health workers have been agitating against the gradual restructuring and privatization of Pakistan’s public health services. The health sector employees from the Jinnah Postgraduate Medical Center, National Institute of Cardiovascular Diseases, and National Institute of Child Health protested in Karachi in opposition to the planned handover of hospital management to the private sector.

So, the people have not been the mute spectators. Resistance is also growing in many Asia countries.

N. Gunasekaran is a political activist in Chennai, India.

From The Progressive Populist, February 1, 2015

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