Private Sector Participation in Asian Ports

Asian container ports suffer from a number of problems including insufficient port and/or terminal
capacity, inefficient management and bureaucratic administration. This may be due in part to the fact
that the majority of the region’s ports are controlled and/or operated by public entities.
To deal with these problems, port authorities of a number of countries in the region have launched
programmes that aim to attract private capital into both the existing and new facilities. As a consequence,
these schemes have kick-started a revolutionary new operating milieu where inter- and even
intra-port competition is rife. In many instances, this has engendered the perception that organisational
restructuring (including privatisation) is not only desirable, but necessary.
A key claim made with respect to organisational reforms is that the transformation of ownership from
public to private sector will improve economic efficiency, as well as general welfare. Associated economic
theories and existing empirical studies, however, fail to establish clear-cut evidence supporting
this claim. Indeed, econometric analysis of the relative productive efficiency of the port sector pre- and
post-privatisation seems to suggest that ownership itself does not seem to be categorically related to
efficiency in port operations. It may well be the case, as proposed by the UN Conference on Trade and
Development (UNCTAD, 1995a), that the apparent absence of a clear-cut theoretical and empirical
relationship may reflect, to some extent, the unique socio-political situation in which these business
entities undertake their economic activities.
Against this conceptual background, this paper analyses the administrative and ownership structures
of the major container ports in Asia by relating them to the ‘port function matrix’ and assesses their
relative efficiency.