Introduction

In the rapid economic growth and significant improvement in living standards achieved by each of the ASEAN countries over the last three decades, the government has played an important role. This role, however, has not been static, and the mix between the public and private sectors has undergone significant changes over time. In some countries such as Indonesia, the state's relative role in the economy has varied positively with resource mobilization possibilities by the state, and inversely with the need to attract foreign investment. ASEAN countries have over time shown a strong tendency towards co-operative relationships between the public and the private sectors. The demarcation line between the two, however, has not always been clear in ASEAN because of the importance of government-linked companies (GLCs) and the close connections between the ruling parties and certain business groups. As a result, collusive behaviour is regarded as a normal state of affairs. This has resulted in the absence of an active competition in key sectors in ASEAN.

The main objective of this chapter is to examine the role of government in ASEAN, particularly as it concerns the mix between the public and private sectors. It is, however, useful to begin with the examination of the recent developments in the literature concerning the role of government in the economy (section two), and the privatization phenomenon which has gathered momentum since the mid-1980s (section three). Section four provides the main features of the role of government and privatization efforts in ASEAN. It should be stressed that the government can influence the economy not only through its budgetary activities but also through state-owned enterprises (SOEs), rules and regulations in both economic and other spheres, credit policies, and the like. Seen in this broader context, the role of government has been most pervasive and extensive in Singapore, followed by Indonesia, Malaysia, post-Marcos Philippines, and Thailand.