Review privatization policy

As the gap between the rich and the poor continues to widen, and as the ranks of the middle class continue to thin out, the need for a major rethink of the economic policies that have been persistently followed by our country has become even more urgent.

For years now, we’ve seen widespread criticism of neoliberal capitalism, which is the economic philosophy followed by our country. It’s a system that we’ve copied from Western countries because of our penchant for mimicking the ways of the wealthy West.

Among the primary features of neoliberal capitalism is the privatization of government enterprises, public utilities, and public infrastructure. Make a survey of public utilities and services essential in our daily lives, and you will realize that all of them are now owned and operated by private corporations—water, electricity, airports, public transportation, seaport terminals, and road expressways. A big number of our medical facilities and educational institutions are owned by private businesses. Even a huge part of our security needs has been farmed out to private security agencies, instead of being the responsibility of our police force.

This private annexation of virtually every public service in our country has jolted me once again when I read in the news about a proposal to privatize even our country’s air navigation services. It was reported last month that Dennis Anthony Uy of ComClark Network and Technology Corp. has partnered with JG Summit Infrastructure Holdings Corp. and Asia’s Emerging Dragon Corp. in submitting an unsolicited proposal for P33 billion to privately operate our country’s air navigation services. The Public-Private Partnership Center has endorsed the proposal to the Civil Aviation Authority of the Philippines (CAAP). If approved by the government, the business consortium will take control of our nation’s air traffic services, air navigation infrastructure, and the maintenance of air traffic services and communication, navigation, and surveillance equipment.

It is highly puzzling why our government would want to surrender control of our airspace to private business. First, there are potential risks to our airspace security, especially at a time when China illegally claims control and ownership of our waters and airspace in the West Philippine Sea. We’ve had defense personnel from the Department of National Defense, the Philippine Navy, and the Philippine Coast Guard who have been caught spying for China on “serious national security matter[s].” There have been multiple Chinese espionage incidents on our military installations, seaports, and key government infrastructure. There are reportedly thousands of Chinese nationals who have illegally gained Philippine citizenship during the Duterte administration. If it had been easy for foreign nationals to trifle with our government, it would be much easier for them to tinker with private business.

Second, privatization of a government monopoly has always resulted in higher fees paid by the public. Air passengers are already paying higher fees because of the privatization of the Ninoy Aquino International Airport (Naia), and they will end up paying another layer of higher fees if our air navigation services are privatized.

Third, if a private entity can be allowed to charge higher fees to recover its cost in upgrading air navigation services plus earn a handsome profit from its operations, why not make the government through the CAAP perform the task instead, which is its mandate in the first place? This way, air passengers can be charged relatively lower fees and the government can still earn a respectable income.

Fourth, what will be the reason for the CAAP’s continued existence if it abdicates its reason for being? It will be no different from the Manila International Airport Authority, which has become a white elephant after Naia was privatized.

One of the oft-repeated justifications for the privatization of so many government services and infrastructure is that the government does not have the capital to fund the construction or upgrading of big-ticket projects. But the government as a sovereign borrower (and printer of money) has far greater ability to access capital compared to private companies, which also borrow the capital they spend to bag a government project.

The handicap of government is that it does not attract the most qualified and the most motivated executives who innovate and who aim for financial sustainability as they do in the private sector. This is due to the lower salaries and the mindset of dependency on taxpayer money in government. The government should look at hiring top executives from the private sector with offers of private sector-level compensation, with the caveat that they must achieve financial viability to retain their jobs. It will be way cheaper for taxpayers if the government hires excellent managers with competitive compensation instead of handing over public facilities to private businesses that are driven to maximize profits.

It’s about time our government overhauled its policy of indiscriminate privatization. Excellent government services and facilities should not remain incompatible with lower fees charged to the public.

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