By Desamanya C. P. de Silva
When I read so much uninformed criticism of Privatisation I feel compelled to make some comment on it.

The first thing that everybody should realise is that regardless of who loses by privatisation, one group always gains. And that is the consumer. Consumers, who constitute the majority in any country, must gain from the increased competition and change of management that every properly implemented privatisation ensures.

I say 'properly implemented' because there could be a privatisation where all that happens is that a public sector monopoly is converted into a private sector monopoly. I shall touch on this later. Meanwhile it cannot be gainsaid that in the vast majority of privatisations, consumers must benefit from lower prices and/or better products and services.

A case in point is the palpable improvement in telecommunication services in Sri Lanka after the industry was de-regulated: which is another type of privatisation. It is competition with the private sector that has galvanised Sri Lanka Telecom into action. It is the consumer that is benefiting from it.

The complaints from the erstwhile public sector monopoly of unfair competition are to be expected, and should be ignored by the public; while they are looked into by the Regulator. The Regulator of such a one-time monopoly must be an independent, strong, competent individual who can withstand pressure from the institution that has lost the power it once had.

What the consuming public must realise is that every privatisation will be opposed by three different interested parties. The first is those politicians who wielded influence over the State Owned Enterprise (SOE) that is to be privatised. The second is the managers of the SOE. These two groups fear a loss of power and influence which, in these unfortunate days when corruption is very much a reality, can also mean a loss of income.

Managers tend to oppose privatisation because in addition to loss of power they fear the added pressure that they may have to face under private sector management where they could expect greater concern with the bottom line. Of course both these groups tend to oppose privatisation covertly because it would be unwise to be seen to openly oppose government policy.

The third group that usually opposes privatisation, and does so quite openly, is the trade unions concerned. They perceive a threat to the easy lives (as far as hard work is concerned) that they have grown accustomed to under lackadaisical public sector management.

In institutions such as Telecom they may even perceive a drop in the type of income they were used to earning by the simple expedient of putting a line out of order and then restoring it when the irate customer complains about it. Such restorations are always rewarded by 'santhosams' given (usually gladly) by the grateful customer.

In any event traditionally unions have opposed privatisation. My advice to government is to ignore this opposition because for every employee who opposes privatisation there will be a hundred thousand consumers who benefit from it. Therefore if votes are the things that matter, privatisation must necessarily be a political success.

The point I have made is that while there may be a lot of opposition to privatisation from those who perceive it as a threat, consumers who constitute the vast majority of the population should wholeheartedly support it. It is for this reason that, as far back as April 1995, I strongly recommended to Her Excellency, at a gathering of businessmen brought about by the World Bank in Paris, that she should ignore the opposition from the trade union of Telecom and de-regulate the industry thereby introducing competition. She did so, and the people of this country have benefited and are grateful.

When I read the allegations about the privatisation of Airlanka, I cannot help reflecting that regardless of how it was done, passengers are bound to benefit from it. I was constrained to write a letter to the newspapers some years ago recommending strongly that Airlanka should be privatised because it was being run largely as a source of perquisites for politicos and VIP cronies.

Routes were determined to suit powerful interests, and innocent would-be passengers with confirmed reservations were bounced off aircraft to acommommodate VIP's. As long as the privatised airline is managed without interference from politicos, customers of the airline are bound to benefit. So, while leaving it to the proper authorities to determine whether there has been any chicanery in the privatisation of Airlanka, let us all (at least those who need to fly) heave a sigh of relief that it has been achieved.

Which brings me to another recommendation I have always made. A privatised SOE will not be able to function at peak efficiency unless the majority of the board and the chairman himself are private sector men with a proven track record. The problem with public sector chairmen is that the vast majority, while they are usually clever, capable, individuals in their own right, are not used to making decisions under conditions of uncertainty - which of course are the conditions that always prevail.

Their entire training and experience inclines them to being averse to making mistakes, which while damaging to reputations and careers in the public sector, are accepted as unavoidable in decision-making in the private sector. Decisiveness is not a quality one usually finds in the public sector. It is the very essence of success in the private sector.

I shall end this brief comment with the hope that all SOE''s involved in commercial activity will be privatised sooner or later. Meanwhile it is also important that public sector monopolies that are converted into private sector monopolies should be properly regulated. Private sector monopolies that abuse their monopoly power to the detriment of the consuming public should be dealt with.

(The writer served as chairman of the Aitken Spence Group during a high growth phase of the company. He is now chairman of the Lanka Orix Leasing Co. Ltd. He has sat on the Bank of Ceylon board and served as chairman of the Securities and Exchange Commission.)