Clearing hurdles to enable private sector’s greater participation in public service delivery

Thursday, 2019-05-23 12:11:22
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The notary service has been outsourced to the private sector. (Photo: Bao Phap Luat)
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NDO - A government decree issued in 2013 has raised the number of public services which are subject to bidding from 8 to 26, thereby allowing and encouraging the private sector to take a larger part in the provision of public services which were previously restricted to state-owned enterprises.

In fact, the role of private enterprises has become increasingly important and indispensable to public service delivery.

In the retail domain, the once dominating state-owned commercial stores of the past have now been taken over by a network of modern supermarkets and shopping centres. In the road transport area, run-down vehicles of state-owned companies have vanished and given way for the newer and cleaner ones of taxi companies, passenger transport companies and travel agencies to meet a wide range of needs.

In education and healthcare, more and more private schools and hospitals have been opened. And even in the legal field, several services, such as notary service and judicial expertise, have been outsourced to the private sector. Recently private enterprises have suggested investing in large airports and seaports, which are crucial to the country’s socio-economic development.

The participation of the private sector in delivering public services will not only increase capital for economic development and enhance administration capacity but will also drive competition in the field, compelling service providers to make efforts to provide the best services at the most competitive prices.

Such outsourcing activities have brought about enormous benefits, such as saving costs, enhancing accountability and management capacity, and improving the expertise and skills of service providers.

Nevertheless, the contribution of the private sector has yet to meet expectations. Many popular services such as certification, public utility services, social services and infrastructure investment still require greater and deeper participation of the private sector, but several obstacles remain.

Experts have stated that public services are the last remnants of a subsidised economy where a full market mechanism is non-existent.

It is a right policy to open the provision of public services to the private sector, but more concrete steps are needed to bring this area’s operations in line with market principles so that resources can be utilised effectively.

The government needs to break up monopolies and introduce more open policies for the private sector to provide public services. Then the government will gradually back away from unnecessary public services, downsizing its apparatus and resources so as to focus on fine-tuning the institution and act as arbitrator for enterprises in a competitive market.

Besides the advantages, the participation of the private sector in public service delivery also causes concern over uncontrollable price hikes and quality. Therefore, the government needs to create fair and transparent rules and keep a close watch in order to curb the risks associated with this new market.