Khao wrote: >...what a crap !! Khao, I do not see any reason for you to be upset with what I posted. Besides it is perfectly harmless and informative piece that goes well with the original inquiry made the initiator of the thread. Anyway, Happy Dashain to you. May you have the festive mood and sensibility to celebrate a fellow Nepali's struggle and triumph. ***** ***** ***** **** **** For others interested in learning more about Roger, here is an educational piece by him on the issue of privatization in Nepal. I do not know if cases of the failure of privatized domestic companies he cites are accurate. However, the examples he gives about successful semi-private companies in foreign countries are indeed educational to the confused policy makers in Nepal. Here is his piece for your reading pleasure. Myth of Privatization: Ownership or control? Effectiveness of privatization has less to do with the ownership in the organisation and more with the control that is vested in the ownership By Roger Adhikari As Nepal once again embarks on a democratic path and presumably a market driven economy, some of the policies which were cut short due to the Maoist uprising and the royal mischief may soon resurface. Among such policies, privatization of the government owned business enterprise may once again see the day light soon after the parliament election. However, hopefully, this time around the path to privatization is different than the path adopted earlier. The ‘90s road map lead to the collapse of almost all of the companies soon after they were sold to private parties. Once famous and profitable companies such as, the Bansbari Shoe Factory, Hari Siddhi Brick Factory and Bhrikuti Paper Factory etc, have either completely demised or taking their last breath. All of this has cost the country in the form of loss of thousands of jobs, a shortfall of millions of rupees in tax revenue and the damage of public confidence in the privatization. So what went wrong? Should not the companies in private hands be running more efficiently than companies run by the government? Yes indeed, if the value of the sold business operations was higher than the value of the assets of the very business. However, in these instances, the political machine empowered to make privatization decisions awarded the businesses to the private entities at a questionably low price, causing the value of the real estate of the businesses far greater than the actual business operations. The other reason for the failure was the government’s lack of comprehension of the purpose of privatization. They mistakenly believed that the purpose of privatization was to sell off 100% equity of a government owned business to a private entity, as opposed to the bottom line improvements resulted by the ownership transformation. Further, they were also under the pretense that once the ownership of the business is transferred to a private hand every thing will be hunky-dory. Contrary to such myth, the effectiveness of privatization has less to do with the ownership in the organization and more to do with control that is vested in the ownership. The Neptune Orient Line (NOL group) is the largest shipping company in the world. The government of Singapore owns 69% of this company through its investment arms known as the “Temasek Holdings”. The company employs over ten thousand people globally and has earned $1.8 billion in net income between 2004 and 2005. Despite being a majority share holder, Temasek Holdings maintains only one member on the executive board. The company is run by the representatives (board members) of the minority share holders, who are voted independently. Similarly, yet more significant examples are Fannie Mae and the Freddie Mac. Both of these companies were created and funded by the US government to help more Americans own home. Together, these companies own $3 trillion of the $6 trillion U.S. real estate mortgages and have been credited for 10 percent of Americas Gross Domestic Product (GDP) in 2003. Both Fannie and Freddie are run by the group of people with a very minimal ownership share in the company through proxy support. The above examples (Singapore and US) are typical of almost all publicly traded companies with corporate structure. Nepal’s insolvency of the state owned businesses have been the result of the government’s meddling in the business affairs and unwarranted control of the business operations by the people in power. One way to deal with such a predicament is to sell small shares (5% to 10%) of the government owned business to a private entity and let the representatives of the private share holders run the company through proxy support of the government. Just like the NOL group, the government may appoint one or two of its own board members to ensure honesty and the integrity of the company. The future sale of the additional shares can be tied to the performance of the company. As the company improves its balance sheet, more shares may be sold to the public. This approach will gradually shift the ownership of the businesses from the public to private domain by maintaining the health and the future viability of the enterprise. The new concept will require a major paradigm shift and change in existing corporate charters for which it must get the approval of the parliament. However, since this formula doesn’t dramatically change the government’s ownership in the business for the foreseeable future, even the Maoists shouldn’t have any problem accepting it. (Adhikari works as a finance consultant in the Silicon Valley, California and can be reached at roger.adhikari@gmail.com) Source: - http://www.nepalnews.com/archive/2006/others/guestcolumn/aug/guest_columns_01.php **** **** **** **** And one more picture from ANA 2006. Roger (right) is talking with a successful Nepali businessman from Canada, Mr. Aditya Jha (left).