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| With the exception of Thailand, privatization proceeds in East Asia and the Pacific considerably declined in 1998, raising an estimated $992 million compared to $10.4 billion in 1997 (see Table 1). Many deals in the region were postponed given the adverse economic and market conditions. China’s public offering of shares on the Hong Kong Stock Exchange was reduced by more than half in 1998 compared to 1997. China experienced a slight rebound in 1999 but revenues remained low partly due to a lack of investor's confidence in the market. In 1998, key divestitures have included the H-share listing of a 33 percent stake in Yanzhou Coal Mining reaping $256 million and sale of a 10 percent stake in Jianglin Motors for $55 million. In 1998, Indonesia’s privatization
program garnered $122 million (despite the economic, political, and social turmoil of 1998) with the sale of a 14 percent stake of PT Semen Gresik (a cement maker) to Cemex of Mexico. Thailand’s private sale of Electricity Generating Company (EGCO) raised $241 million, and the public offer of PTTEP raised about $112 million. Malaysia’s privatization activity, which raised over $10 billion from 1990 to 1997, saw the deals planned for 1998 deferred.
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| Initial estimates for 1999 show that privatization
activity has picked up in the region. Economic recovery and stronger demand will encourage governments to privatize assets whose sales were delayed in 1998/99. Privatization programs will accelerate in the East Asian crisis countries (in particular, Indonesia, Thailand, Malaysia and South Korea) as governments will re-privatize financial assets that were nationalized in the aftermath of the crisis. Therefore, divestiture of the financial sector will account for an important share of future privatization proceeds for the region. Governments will also continue to encourage private sector activity in the telecommunications and power sector mainly through greenfield investments to compete with (rather than divest) its own assets. In addition, recently announced policies in China, Indonesia, Thailand, Philippines and the Republic of Korea hint at a more comprehensive power sector reform which may also include restructuring and privatization. Other sectors which may witness significant divestitures in the region will include airlines and airport-related companies ( in Thailand, Malaysia and China) and oil sector (in China and Indonesia).
Source: Progress in Privatization, Appendix 4, Global Development Finance 2000 produced by Development Prospects Group
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