Privatisation Law: Comparative Study on the Privatisation of State-Owned Enterprises in Indonesia and Greece: What is the Role of CSR in the Privatisation Process?

Abstract

In the last twenty years Indonesia and Greece have been seeking to profitably privatise the majority of their state-owned enterprises (SOEs) and assets. This obligation is either imposed by international institutions such as the International Monetary Fund (IMF) and the World Bank in order to repay their international external debts or by fiscal arrangements which require the elimination of their public financial deficits and the maintenance of their governmental spending. Both countries are struggling to develop, organise and institutionalise an efficient privatisation framework, to attract private investment and generate stable cash flows. In exploring the historical background of their economic development and contemplating on the recent financial Greek crisis by making a comparison with the past Indonesian financial crisis (1997-1998), their route in this privatisation path seems mutual.

In the introduction to the article, the authors will briefly demonstrate the historical and economic reasons which led both countries to aspire towards privatisation. The development of the Indonesian and Greek privatisation schemes and policies will be thoroughly examined. A comparative analysis will reveal to what extent the privatisation processes in both countries have caused negative impacts. A detailed description of the existing legal regimes will provide a clear view of the present legal frameworks applicable to privatisation in these countries. The chapter will conclude with a normative analysis which generates useful observations and recommendations on how a Corporate Social Responsibility (CSR) framework could be introduced into the current privatisation schemes to alleviate the negative impacts of the privatisation process.

Implementing this CSR framework would embrace the principles of social justice, general interest and sustainable development as described in the Indonesian 1945 Constitution and the Greek Constitution of 1975. Particularly, the authors will examine how a CSR new policy could be implemented in the new privatisation vehicle currently established by the Greek government, under the name Hellenic Republic Asset Development Fund (HRADF). Furthermore, the authors will explore how some particular aspects of CSR could be introduced in a new Indonesian ministerial regulation about the privatisation of SOEs.

Keywords: Corporate Social Responsibility, privatisation process in Indonesia and Greece, transparency, accountability, Hellenic Republic Asset Development Fund, Code of Ethics