The privatization of public enterprises means entrusting state corporations’ ownership to private enterprises because of efficiency and improvement of productivity. Now, the privatization of public enterprises has become an issue.
Pro


For a few decades, many countries have concentrated on the privatization of public enterprises. Following this trend, Korea also is trying to privatize public enterprises. There are many advantages of the privatization of public enterprises.

First, the current management system of public enterprises is ineffective. It is difficult to reform public enterprises. Also, it is difficult to improve the culture and bureaucratization of the organizations. In addition, the audit of public enterprises is hard to practice fairly. Many public enterprises don’t perform auditing and when they perform an audit, they often offer a bribe to an auditor or an enterprise’s manager gives a false audit report to the auditor. They don’t reveal all of their management information. For example, the Korea Environment Corporation didn’t establish an auditor election committee and elected the auditor without specific standards or protocols. If public enterprises’ management was entrusted to private enterprises, private enterprises would control public companies efficiently and public enterprises could become transparent.

Second, operation by private companies is more efficient economically. Public enterprises might not pursue their own profits because they have to consider the public, so it is hard to improve the organization. It is harmful to the organization’s profits. From the privatization of public enterprises, stockholders and the owners of the organization can focus on pursuing profits. By changing ownership, definite aims can be established and enterprises’ executives can pursue profits. They consider the bad things about their business and try to avoid problems. These can help to promote enterprises’ efficiency.

Third, the range of consumer choice will get wider. When public enterprises operate, they can have a monopoly. Public service industries like electricity, telephone and water supply services need a large amount of investment to build production and delivery systems. This immense investment makes it difficult for new enterprises to enter the market. Therefore, public companies can have a monopoly. If public enterprises conduct unfair sales using the monopoly, consumer’s choices might be restricted. However, if public enterprises become private and are introduced to monopolized fields, competition will be strengthened. Through this competition, corporation’s profits and consumer’s choices can be increased.

There are lots of advantages to the privatization of public enterprises. Therefore, the privatization of public enterprises should be practiced.



Con


The privatization of public enterprises means that the government sells a company’s stock to the public for efficiency and productivity. Our country still has public enterprises such as the Korea Gas Corporation and the Korea Water Resources Corporation. However, if these kinds of public enterprises become privatized, many problems could come out.

First of all, one company could buy public enterprises and it could cause a monopoly. The government sells stock for privatization, and anyone can buy it. However, companies want to buy the stock rather than individuals. They prefer to buy as much stock as they can. This situation makes a monopoly. If the company becomes a monopoly undertaking, the price of electricity and water increases and the quality decreases like Bolivia’s water problem. The Bolivian government made the public water company private. It gave all power to the private company. Since then, the private company has sold water at a higher price but at worse quality. If these kinds of public companies whose products are essential for daily life become monopolized, people will suffer from it. To prevent this situation, the government should not allow the privatization of public enterprises.

Second, there are many jobless people and too much competition will come out because private companies want and seek profit. Private companies will focus on making money rather than promoting public interest. They will fire some people who can’t make a profit. That makes people jobless. Moreover, they want more profits than other companies and the competition between companies could go too far. This can damage our economy.

Lastly, the process of the privatization of public enterprises brings foreign businessmen. It means that our public enterprises are controlled by foreign stockholders or foreign owners. It is a great loss to the state’s economy. Most of the company’s finances go to foreign countries rather than our country.

There are many bad points in the privatization of public enterprises such as monopoly, lots of jobless, and capital going abroad. To make the national economy stable, we should not privatize public enterprises.