Dear Editor,
All over the world there are governments that own companies. They are generally called state-owned enterprises (SOEs). All over the world there has been the realization that states running companies can be problematic and unproductive and that in some sectors it is completely hopeless and in other sectors it is a necessary evil if social goals are to be met.
Let’s take two sectors for example: the utility sector and airport ownership.
In the case of the utility sector there remains significant value in state-owned ownership because the supply of water and electricity has such extensive and broad consequences if and when the supply is reduced or not competitively priced. So, many progressive governments have kept the essential control but have also privatized where the risk to the community is at a lower level.
Airports on the other hand are a sector where privatization is extensive and clearly proven that state involvement is unnecessary and unproductive. In the case of a private operator the operator’s interests are identical to the public’s interests to a very large degree and hence privatization in this sector does not bear a risk for the community and generally produces more tax income (rental, dividends, etc.) for the taxpayer and the community. Privatization usually results in greater efficiency and the possible downside of privatization can be a higher cost of capital for the operator.
In every case of privatization the government still retains extensive control through regulation in numerous areas .
In St. Maarten the majority voter view seems to be that “if we own and operate the airport we get more benefits”. In reality, the opposite is very likely true. If we have a private company take the risks and do the management the people of Sint Maarten are likely to have more benefits rather than less.
Whilst the financial logic for privatization is clearly in place, the most likely resistance to such a move is most likely going to be based on antipathy to the direction of foreign directors playing a major role in “our” airport. The fact that in this complex industry a specialized party (local or otherwise) might produce greater value to the St. Maarten community as a whole will not get the breathing space it deserves because of the extensively perpetrated myth of ownership value.
Robbie Ferron
