SUSTAINING PRIVATIZATION

This dissertation examines the factors associated with sustainable privatization of infrastructure projects. Privatization offers a way for governments to make infrastructure delivery more effective and efficient than exclusively public provision, but often the promise is fraught with peril. The three essays that constitute this dissertation seek to use empirical data and analysis to answer three selected questions regarding sustainable privatization: ,,h What causes the private sector to exit from infrastructure projects? ,,h Do Public-Private Partnerships (PPPs) provide value for money to governments? ,,h Does privatization lead to benign outcomes? The first essay of this dissertation takes the broadest view, looking at cross-country, cross-sector regression analysis to unearth patterns in infrastructure privatization failures - with a view to understand as well the factors that lead to success. The second essay takes a further step from the broad overview of the first essay by looking in detail at individual projects and examining what factors could lead to better value for money to governments. Finally, the third essay looks at the choice between asset sales and share issue privatization as two specific methods for privatization and their subsequent impact on the performance of the privatized company. The three essays thus represent a progression from survival to good health and finally to growth. My major conclusions are: ,,h Project cancellation rates, though rising, are still low. Although ownership may change hands, for the most part, the private sector is staying in private infrastructure projects. ,,h Although trends in cancellation may not be an issue for private infrastructure projects as a whole, it is a concern in the water and sewerage sector. The high probability of cancellation and relatively low level of fresh investment in the sector suggests a declining role for the private sector in making available this essential service. ,,h There is value for money to governments from entering into Public-Private Partnerships in infrastructure. ,,h Divestment leads to significant improvement in profitability, efficiency, and real output of firms, besides providing some fiscal boost to the government. However, the impact on employment is negative

Recommended tax law changes

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The Future of Financial Liberalization in South Asia

The paper defines financial liberalization, distinguishing between liberalization of domestic financial markets and capital account convertibility. It then examines the stages and the strategy of Indian financial reform. The Indian strategy followed a well thought out sequence whereby full capital account liberalization was to come after deepening domestic markets, and improving government finances. One alone is dangerous without the others. The experience of the global crisis has validated the Indian strategy and also shown that foreign entry has benefits but cannot resolve all issues. Deepening domestic markets and better domestic and international regulation is a necessary prerequisite for full convertibility. The direction of future liberalization should be such as meets Indian needs of financial inclusion, infrastructure finance, and domestic market deepening.liberalization, capital account convertibility, regulation, inclusion, markets.

PFP library guide to risk management and insurance

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The financial impact of direct and indirect taxes on a company in Business Rescue

Companies form the backbone of the South African economy and contribute significantly to the tax revenue of the country through both direct and indirect taxes. As a result of the 2007/2008 financial crisis businesses, especially private companies, have been under increasing financial pressure with many companies finally being liquidated as a result of these financial pressures. In 2011, as a means to aid financially distressed companies, the government introduced the concept of Business Rescue ("BR") into law through Chapter 6 of the Companies Act, No 71. of 2008 ("Companies Act"). Despite this attempt by government to provide companies with a means of financial relief BR has been relatively unsuccessful in SA with very few companies managing to be rescued. Companies due to their very nature are subject to many laws and regulations. It is for this reason that, when trying to consider the effectiveness of a particular law or regulation, one must look not only at the primary law but also consider the impact of any auxiliary laws and regulations that work in conjunction with the primary law. This dissertation therefore seeks to understand the financial impact of direct and indirect taxes ("Tax Laws") on a company in BR in order to determine whether these laws support or hinder BR. In this dissertation an overall understanding of BR is obtained by considering the development of BR in SA, the BR process as detailed in the Companies Act and the application of BR in SA including various statistics relating to BR. Thereafter we obtain an overall understanding of the Tax Laws that have been introduced in to SA law since the introduction of BR in SA law as well as some existing provisions of the Tax Laws that are applicable to companies in BR. From the understanding of these two laws we develop a financial evaluation criterion that is used to assess the financial impact of various tax strategies on a company in BR. For the final assessment of the financial impact of the Tax Laws an assessment is performed on the deductibility of BR expenditure in terms of S11(a) and 23(g) of the Income Tax Act, No. 58 of 1962 ("ITA"). Ultimately a conclusion is reached on the financial impact that the Tax Laws have on a company in BR and, at a high level, additional considerations that may improve the success rate of rehabilitating companies in BR

Impact of liberalisation on public safety in the transport, water and health care sectors

The loss of 304 lives in the sinking of the MV Sewol 14 April 2014, was South Korea’s second worst maritime disaster in its history, and the worst in nearly half a century. This was made all the more tragic by the fact that most of those killed were secondary school students. The immediate cause of the sinking was a sudden and extreme turn to starboard, causing cargo to shift and making the ship unmanageable. However, investigations into why such drastic manoeuvres were undertaken have revealed a litany of safety failures on behalf of the company, Chonghaejin Marine, inspectors and regulators. Mark Dickinson, general secretary of Nautilus, the international union for maritime professionals, summarised the failings: “Issues including training, experience, safety management, ship design and construction, and the effectiveness of the regulatory regime are all critical factors in this disaster…” The Korean Confederation of Trade Unions (2014) has drawn attention to the role played by the deregulation of the transport sector: “Safety experts are now pointing to excessive deregulations, privatisation of public transport and emergency services, the use of precarious work arrangements and the corrupt appointment of officials in oversight agencies as causes of the Sewol tragedy.” This report will examine the complex linkages between liberalisation and public safety in transport. From this preliminary investigation, there does not appear to be a universally applicable causal linkage running directly from liberalisation to a deterioration in public safety. However, from a range of case studies, which examine the transport, water and health sectors as well as deaths of workers and members of the public in contracts operated by Serco, what emerges is that the way in which liberalisation is carried out is critical for safety outcomes. The careful construction of a safety culture built up through learning from decades of experience can be swept aside by ill-conceived policy reforms. Increased competitive pressures can lead to a prioritisation of performance and the bottom line over more abstract concerns over public safety. Corruption can play a key role. Institutional realities may mean that a newly liberalised transport sector is subject to new or increasingly corrupt practices