Ending nationalised public services


  • Business
  • Saturday, 17 Aug 2013

IT is vital that the leaders of Asean countries recognise the huge discrepancies which exist from country to country, and that a person’s access to world-class water, electricity, transport and Internet services should not be dependent on where they happen to live.

These politicians should make a public commitment to fight for the creation of transparent and legal regulatory frameworks needed to govern privatised public services.

Economic nationalism acts as a barrier, preventing foreign companies moving into new territories and as a result stopping ordinary people accessing the first-rate, competitively priced public services they need to maintain a semblance of normality in their day-to-day lives.

Our YTL Corp runs water services in the United Kingdom, electricity in Singapore and Australia, and rail and Internet services in our native Malaysia. The reason we are able to operate successfully in these countries is because transparent, coherent regulatory frameworks are in place to encourage companies of all nationalities to compete to run key public utilities.

These legal and transparent frameworks also ensure that companies are held to account by independent regulators who are endowed with sweeping powers to fine or even strip operators of their licences. A regulatory framework also means that companies from any country with the right expertise can compete to run key public services safe in the knowledge that they will be free to do so completely independent of Governments.

To realise their full economic potential, Asian and Asean nations have to free public utilities from the clutches of those governments who control them simply for political or ideological reasons.

YTL has 12 million customers worldwide and we are dedicated to providing the kinds of services which we can be proud of. If we don’t provide high-quality, reliable services, then it is quite possible we could be put out of business overnight.

Unfortunately, this is not the case in many countries, particularly in Asia and most Asean nations. This is something which really concerns me and I am increasingly frustrated by the failure of some countries in Asia and Asean in creating the economic and legal environment for key public services to evolve outside Government control.

There are too many instances of countries only providing electricity for certain hours in the day, or large parts of China, India and many Asean nations still having no access to running water.

World-class public utilities

For Asia to implement world-class public utilities across the board, key services have to be opened up to private competition.

It is my experience that people are willing to pay competitive prices for quality utilities and move away from subsidised rates offering poor and inefficient key services. Many nations wrongly assume that citizens are prepared to live with sub-standard utilities as long as they keep forcing down prices with state subsidies.

For instance, every private company granted a licence to run public services in Britain, including YTL, faces tough reviews every five years. This allows for the recalibration of the industry in question if it is believed that one stakeholder is being favoured over another, be it the customer or the operator, whether on pricing or the quality of services. Only when such frameworks exist everywhere in Asia will those countries which are still excluded from basic services be able to create systems which work.

People don’t want inflexible governments or economic systems where monopolies can thrive. They simply want access to the kinds of basic services which will make their lives liveable. They want water, electricity, Internet access and transport systems which are affordable and reliable. If you give people these basic competitive tools to make life a little bit better, then it gives them one less thing to worry about.

Many government-run services are heavily subsidised by taxpayers and those in charge are not accountable to either shareholders or regulators. If the system breaks down with brownouts and blackouts, or there is a leak, water services can be interrupted for hours, sometimes days. This is because the right technology and systems have not been bought, developed or put in place to make sure that any breaks are brief and rapidly repaired.

At Wessex Water, we have only 70 people managing and monitoring leakages or other emergencies over 10,000 sq km of territory, and if there is a leakage, they know exactly where it is within ten minutes. This is because we invested heavily in ground-breaking technology. It is an expensive process, but we feel an enormous weight of responsibility to give customers the best possible service, and that means implementing the kinds of measures which can insulate consumers from interruptions.

Everyone looks to China and says: “Wow, you see a lot of new high-rise buildings”.

But have they solved their water problem? Have they solved their long-term transportation problems? They operate their public services at a loss and the government subsidises the massive short-falls. This might work now, but how long before it becomes too big a burden which the country can no longer afford? The current system is simply not sustainable.

Short-term investors have the same fascination with India, but again, without vital infrastructure and utilities competitively priced, India’s growth is not sustainable. Most Asean nations have similar problems.

A transparent, coherent, regulatory framework like Britain’s is the best way to go because it allows all the people to put forward their concerns publicly. They are debated openly and all reports and publications are available to the public.

Progressive

Singapore’s thinking on this issue is also very progressive. They do not practise economic nationalism. They allow the Japanese, they allow the Chinese, and they allow the Malaysians to compete for key services. In fact, Singapore allows a third of its electricity capacity to be owned by a Malaysian company and a third to be owned by the Chinese. The country is not afraid of its public utilities being in the hands of foreign firms.

It has found that by allowing foreign investment in this area, and the creation of infrastructure, leads to increased competition, and having a regulatory framework, leads to world-class services for the consumer which are competitively priced.

It’s no coincidence that YTL has 85% of its investment in territories where there are transparent regulatory frameworks in place. The leaders of Asean are now talking about connecting 600 million people, which is quite an exciting and remarkable market.

But Asean has to play a pivotal role in helping collect the political signatures needed so that every country in the region can enjoy world-class public services. And by bringing in companies with experience in creating such frameworks, these countries can short-circuit the entire process and avoid the Jurassic curve which others have had to endure.

Private competition from experienced foreign companies not only brings about quality services but the invaluable transfer of knowledge too.

It will be a long, long road, but a journey which must begin soon if Asia, and particularly Asean, is to realise its full potential and lead to the creation of an economic legacy which will last for generations.

Tan Sri Francis Yeoh is group managing director of YTL

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Business , francis , ytl , wessex , asia

   

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