Indah_Water_Konsortium

Indah Water Konsortium 1. Give reasons for IWK inefficient debt recovery system. The primary reason is that household billings are small and resorting to legal action to recover the amounts due is not commercially viable. Hence, the concessionaire could not collect the amount owed to it. Eventually, IWK was handed back to government in 2000. The change of ownerships four times in 7 years gave the impression of industrialists out to make quick money at the expense of public welfare and also in every change over, the previous concessionaire's interests were fully protected with each of them reaping a profit at taxpayers' expense. All these assets were privatized for no reason than for its stakeholders to make lots of money. IWK were built not by competitive tender but in such a way that the privatized company would be loaded with debt it cannot repay. Then this heavily indebted company is listed on the stock exchange, with the promoters making a second killing. Even with tolls increased regularly, the companies cannot repay its loans.   Besides, the internal inefficiencies, bad management, inadequate funding and lack of regulation also are the causes of inefficient debt recovery system. They do not have enough expertise in the business and the management could not do better and also the companies have no incentive to do better. So, the government takes over the debts and then returns it to the management that caused the debts in the first place. In my opinion, I think if the government is serious about turning a profit, it should bring in a different management chosen for their competence and but not political reliability.   Finally, due to their operation costs increases, the consumers for charging "exorbitant rates. IWK talks about consumers’ unsettled debt when they are not carrying out their responsibility. Non-payments of consumers severely hampered IWK’s investment program. As a result, unsettled debt rose. 2. Discuss the impact of “de-privatization” on IWK forwards or for the country. The de-privatization policies had disastrous effects on economy and had damage the confidence of investors in the country. Foreign investment will decrease if de-privatization increases. Hence, the room to maximize foreign profits will be small, long-term investment will be no longer valid as the government will have greater share in the local market and will force foreign investment to shrink, short-term investment may not be profitable enough to return the investment, renovation in technology may suffer as well, exceptional technology and knowledge will leave the country and will be expensive to attract again. In my opinion, I don’t think that mass deprivatization is in the best interests of the country. This step will slow down potential growths of the country, force some important factors to vanish that motivate the existing of the firms, impact the quality of the products and services, products and services variations, impact or freeze the price negotiations and eliminate competition. The local government, politicians, anyone endorses the de-privatization for his/her own goals will gains from de-privatization. Politicians and wealthy businessmen will abuse their power to help them increase their power and profits. But on the other hand, IWK bailout shows perils of privatization, so they should nationalize it and get a professional management to run it. Public utilities should exist for the benefit of the public, not for profit. If they are chasing profit in a monopoly market we can only expect higher consumer pricing