Partnership between the private sector and the government: Integration or conflict (part1)

By Najat Juman

source:  Yemen Observer

Introduction:

The relationship between the private sector and the government has become one of the issues that gain the attention of many researchers, economists and government leaderships in Yemen. The importance of the private sector is always being referred to in economic development as well as the expected role of the government in helping the sector to play its own role effectively.

The government, by its economic policies, represents a powerful tool for achieving an economic environment that stimulates the private sector performance. The policies of the state are the basic standard and the tool by which the government can either stimulate or suppress the private sector or even prevent it from being able to perform its role effectively.

First: the concept of partnership between the private sector and government:

Partnership means interaction and multilateral cooperation between the government and the private sector in terms of the employment of its human, administrative, financial, organizational and intellectual potentials on basis of participation and commitment to the objectives, freedom of choice and shared responsibility and equality, so as to achieve economic and social objectives of interest to the largest number of members of the community with a long- term impact on their aspirations in order to enable the society to keep up with the contemporary developments effectively and achieve a better competitive position.

Partnership; integration or conflict:

The complementary relationship between the government and the private sector has been established through the roles required for each. These roles are clear in terms of the concept of both the government and the private sector, where the government is obliged to play its role mainly in providing an atmosphere that is appropriate for production and investment, which are usually the role of the private sector. Hence, it is required to clarify the role of both the government and the private sector within the laws and legislations.

Government's vision in the private sector partnership:

The attitudes and tendencies of the Economic, Financial and Administrative Reform Program have constituted a solid foundation to unlock the potentials of growth of the private sector, expand and diversify its investment activities while tackling new areas that had long been of the state monopoly, such as education, health, communication, etc. The Third Development Plan for Poverty Alleviation has represented the right tool to achieve this transformation. The plan seeks to strengthen the aspects of partnership with the private sector through a focus towards completing the requirements for the appropriate investment setup, the provision of infrastructure, providing an enabling environment for economic, political and security stability to encourage the local and foreign private sector to invest in various sectors.

The past few years have also witnessed the government's undertaking of a number of policies and practical procedures to create a genuine partnership between the government and private sector institutions. Therefore, the Food Council has been established by the government and representatives of the private sector along with a General Holding Corporation for Investment and Real Estate Development to administer the State's lands for investment and solve the investment and investors' land problems. The establishment of the Deposit Insurance Corporation to guarantee bank deposits has strengthened the pillars of financial stability while the concept has of partnership been promoted with the creation of the Public Private Partnership (PPP) Unit in the Ministry of Planning and International Cooperation aimed at strengthening the partnership with the private sector and enabling the establishment of a directorate for infrastructure services. The single window system has been developed in the Ministry of Industry and Trade through which all transactions and services are conducted.

Despite the clear theoretical vision of the government regarding the role of the private sector in economic development, when it comes to practice the institutions of government are tainted by many of the distortions and constraints which lead to having such a vision very difficult to be put into practice.

The private sector's view in the role of government:

The private sector usually deems the government as being of predominant influence over the wealth of the society due the power granted to it by its control over the strategic decision making on how to use this wealth and how to distribute it over the community, making the private sector in a state of fear and instability resulting from the fear of abuse of power by the government to the detriment of the private sector's interests. Generally, the private sector believes that the role of government shall be concentrated in the utilization of good governance methods in distribution of wealth, justice, the community's wellbeing.