Phommasane, Sompasong (2017) Privatisation of state-owned enterprises and development of capital markets in Laos. PhD thesis, Victoria University.

Abstract

Laos, a small economy in Southeast Asia, has been undertaking reforms of its state-owned enterprises (SOEs) since 1989, as part of its 1986 New Economic Mechanism strategy. However, little research attention has been given to privatisation programs in Laos, partly due to the fact that data on SOEs (such as profits and previous privatisation programs) is extremely unreliable and publicly unavailable. Therefore, this study emphasised on studying and analysing views and perceptions of well-informed individuals through a mixed research methods: qualitative interviews and quantitative survey. In conducting this method, this study aimed at determining how privatisation should be implemented in a way that helps develop domestic capital (especially stock) markets and promote an equity culture and/or equity investing in a way that minimise the socialisation of risk through state ownership and intervention in the Lao economy. This study performed a thematic analysis approach to analyse 14 qualitative interviews, and Structural Equation Modelling (SEM) techniques to assess 359 quantitative survey responses. The findings from the two sample datasets indicated that seven essential factors were believed to influence the likelihood of favourable or positive privatisation outcomes. These factors were: government commitment; legal and regulatory framework; institutional arrangements; stakeholder involvement; public education and awareness; firm-level privatisation strategy; and fairness and transparency. However, only firm-level privatisation strategy was perceived as a key contributing factor to successful privatisation. Furthermore, positive privatisation outcomes were seen as influencing the development and strength of Laos’ financial system and people’s investment decisions in relation to SOEs being privatised. The findings also indicate that efficiency improvement was a preferable privatisation objective, rather than a focus on state revenues, social and economic benefits, and job creation. In summary, the firm-level privatisation strategy was thought to significantly contribute to successful positive privatisation outcomes. Specifically, efficiency enhancement objectives should be prioritised if the development of domestic capital markets and promotion of an equity culture and/or domestic equity investing is to be part of the Lao government’s future privatisation policy.

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