Sub-themes of the 16th GAB Annual Seminar:
1. The readiness of the regulatory environment to monitor privatization and the development of relevant regulations and legislations
The process of privatization is often characterized by a variety of different stages, form, and content and for the optimal monitoring of these stages it is necessary to rely on a wide range of regulations related to the subject of privatization, from appraisal and evaluation to transferring ownership to individual and institutional investors. Although Saudi Arabia has some successful privatization experiences, these have been comparatively on a small scale, in a somewhat different legislative and regulatory environment, and in certain sectors with significant profitability. To enable the implementation of the monitoring of privatization and the establishment of clear and specific implementation regulations, through which the control process can be complementary without being restrictive, it is necessary to stand on regulatory rules and procedures, and address the monitoring barriers, to achieve very high levels of transparency and clarity in different stages of privatization.
Fair evaluation and appraisal are some of the most critical steps in privatization as the success of this stage has many public and private benefits, and failure or inaccuracy may lead to consequences that may be difficult to address. Although the evaluation of an asset or service in less than its real value points to direct damage to the public purse, overpricing in privatization may also have serious consequences. For instance, in the case of public utilities, the excessive valuation of these enterprises may result in a series of monopolistic practices of overpricing, demobilization of employees and damage to Saudization programs as a result of investors trying to offset the unfair margin assessment.
Since the concept of privatization is not limited solely to the transfer of ownership of assets from the public sector to private sector, it may extend to transferring specific government services to the private sector, including full or partial sale contracts and various public-private partnership contracts. A general and comprehensive review of all aspects of the regulatory environment should be undertaken to monitor the privatization. It is expected that this theme will discuss the local regulatory environment for the privatization monitoring system, and the readiness of the regulatory policies and legislation to complement the privatization process. The speakers will also try to answer the following questions:
1. What are the governance mechanisms of the entities subject to privatization (internal control, environmental monitoring, human resources) and the role of governance quality in reducing the costs of subsequent government control of the privatization process?
2. What is the adequacy and appropriateness of the laws and regulations related to privatization?
3. What are the control methods associated with the commitment of enterprises subject to privatization to achieve the Sustainable Development Goals (SDGs)?
4. Do the costs associated with the monitoring of privatization play a role in determining the quality and form of the monitoring process?
2. Challenges facing enterprises in transitioning from the governmental regulatory system to private sector control and governance systems
The different form and mechanisms of control between the public and private sectors is a real challenge for those subject to privatization. Therefore, it is necessary to take into account some of the side effects of privatization, in the regulatory context, in an attempt to deal with them and find mechanisms to mitigate them. The Supreme Audit Institutions (SAIs) in various countries are the government agencies mainly responsible for accounting and performance control, in conjunction with other legislators in enacting relevant laws and regulations, which differ significantly from the control of private sector enterprises. This session will discuss the theoretical and practical ways of transitioning from the governmental monitoring systems to their counterparts in the private sector, taking into account the different structural and administrative aspects.
In addition to the challenges of the transitional period, the supervision of harmful practices in the later stages of the privatization process should be addressed. The most important of these are monopolistic practices and potential social and environmental abuses in the absence of the supervisory aspects or their ineffectiveness and efficiency in dealing with such violations, including unfair layoffs, price hikes, and other post-privatization practices. It is expected that this session will discuss local and global experiences in addition to reviewing the theoretical aspects of the control challenges of the different stages of privatization and practical applications that may contribute to overcoming them. Speakers will also try to investigate the following questions:
1. Do the benefits of monitoring outweigh the costs? Taking into account lower long-term regulatory costs (smaller number of government agencies covered by oversight, transfer of supervisory responsibility (agency costs) to investors etc.)
2. What are the most prominent protectionist tools to limit post-privatization negative practices?
3. What are the specific mechanisms and criteria for controlling the privatization process at different stages?
4. To what extent does the nature and size of the assets subject to privatization affect the choice of monitoring strategy?
