Why Privatization in Indonesia Has Been Resisted

In trying to come up with an answer, many have maintained the view that since state owned enterprises are cash cows to political parties, partisans do tend to prefer status quo to unknown future ownership.

But isn’t it true that the people at large also have the same tendency to reject privatization, out of personal preferences rather than political propaganda. If it is so, this aspect is not addressed by such an answer.

A better view may be that privatization cannot work well in an environment with weak protection of property rights and low regards of legal contracts such as under a corrupt judiciary system. Privatization is no mere simple transfer of property rights from the hands of the state into the private. It cannot be achieved just by changing the composition of ownership of individual economic institutions. There is supposed to be a coherent thinking explaining a country’s economic orientation, stated clearly or otherwise, and the extent to which it relates with the market economy. There must be consistent justification of what the nation wants to achieve. Without consistency, it would be perceived as shifting one precarious circumstance to another situation as risky.