Wednesday, March 26, 2014

Some observations on privatized service delivery system in the Philippines

Privatization seems to be an ideal solution to our problem in water. Providers compete in a race-to-the-bottom bidding making them offer the best and most acceptable promises in improving our water service delivery. While such promises were very enticing, they proved to be superficial.

There are undeniable issues in privatization that are being overlooked. In fact the side effects of privatization can lead to more unfavorable outcomes for developing countries Philippines developing countries and they may be worse off than before. Below are general issues that can be observe in the privatization of our water sector.

Advantage only to the advantaged. Although privatizing the water sector is intended to benefit all citizens within the covered area, the reality is that the main beneficiaries of the reforms are those that are well-off. Privatization has resulted in increased cost in water of many Filipinos contradictory to the promised decrease in water bills.

The poor are at the disadvantaged end since the service is delivered at a higher price laying greater burden on them.

Shift in Values. Privatizing public services, critics claim, undermines public interest in favor of economic gains. This happens because providers are at the natural tendency to maximize their profits. Hence, values such as quality or customer satisfaction maybe overlooked. This very true in the case of our water sector. Since water is a necessity, the demand is relatively price inelastic and people will continue to consume anyway. Hence, private concessionaires, in attempts to maximize profits will increase their prices knowing very well that demand will not be decreased.

Centralization of decision-making. Under traditional public service delivery, the people are being involved in the identification of their own needs and in the planning and design of the services they need. However, with privatization, people’s participation becomes unnecessary. This is because the provider is using its own resources to operate and thus solely responsible for its own self. Again, this characteristic of privatization undermines public interest.

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