《Abstract》

Privatization, a policy tool of New Public Management, has been used in many countries since the early 1980s. For example, the US, UK, Australia, New Zealand, and others, are undertaking privatization in different forms. Even the socialist countries, such as China, have privatized the state-owned enterprises. Of course, the government of Taiwan is also effected by the administrative reform movement.

More than one decade ago, the author Jan published the first book about privatization policy in the field of public administration in Taiwan. Since then, there have been more and more researchers focusing on the issue. When revisiting the policy tool after their development in Taiwan for two decades, however, the major question to ask here is “could the privatization be panacea?”

As distinguished from the papers that may assess the result from different dimensions of efficiency, we want to examine the question of the fundamental policy philosophy which is usually unknown to the policymakers in Taiwan. The meaning and values of New Right which is the basis of privatization in Taiwan will be explored as well. In addition, there are many problems with privatization will be discussed, and remedy proposed. The case of Chunghwa Telecom Company, an example of privatization in Taiwan will be examined in this paper. Finally, some suggestions about Taiwan’s privatization in the future will be made.

Key words: New Public Management, privatization, policy philosophy, corruption, public interest

1. Introduction

Since the late 1970s, there have been many countries that have suffered the pressures of national deficits and government inefficiency. To solve those problems, the government and scholars al concern with the topic of government reform. Under Thatcherism and Reaganism government philosophies from the 1980’s, the core values of government reform are entrepreneurship and competition; this is the so-called “New Public Management (NPM)” movement.

Being a significant policy tool of New Public Management, privatization is exercised widely around the world, not only in the western countries, but in Latin America, Eastern Europe, and Asia, and even Africa (Hodge, 2000; Banerjee and Munger, 2004). In past two decades, many issues of privatization have been discussed, such as the methods (Berg and Berg, 1997; Mishra, 2005) and performance (Hodge, 2000). However, what we are concerned with in this paper is the policy philosophy and policy outcome of privatization, especially in the context of Taiwan.

Why do we focus on the policy philosophies and outcomes in Taiwan? The first book that discusses privatization in the field of public administration in Taiwan was written by Jan in 1993. After making observations during this decade, he found that many of the policymakers in Taiwan did not probe into where privatization comes from, and what the basis of privatization is? If we do not clarify these important issues, it might lead to a misuse or contradiction of privatization. Besides, since Taiwan has had its achievement in economic and democratic politics since the early 1980s, we think it will be a significant reference of other developing countries in the world.

In this article, we will begin with a simple definition of privatization, and then we will examine the question from the fundamental idea, the so-called policy philosophy, which is usually ignored by the policymakers in Taiwan. We try to define the nature of the New Right, which is a basis of privatization. Furthermore, we would like to discuss why there are corruption and problems with privatization, and we try to provide strategies of curing those problems. Third, we examine the case of Chunghwa Telecom Company, which is an example of privatization. Finally, we make conclusions and provide some suggestions for Taiwan’s privatization in the future.

2. Privatization and the New Right
2.1 A glance at Privatization
As Banerjee and Munger (2004: 214) observed, from the 1930s to 1980s, the trend was toward centralization, meaning the nation must have pervasive public ownership of assets. However, because of economic conditions, international agencies, and neo-conservative political ideology, the role of the state has been transformed. Jan (1993: 24-26) pointed out that there are four motives for governments to amend their positions: pragmatic, ideological, commercial, and populist. In order to respond to these changes, privatization became an useful policy tool for governments.

Not only NPM, but also other different approaches are concerned with the topic of privatization. In public administration, the “publicity”and “privacy”of privatization are argued (Lin, 2002). From the perspective of politics, Feigenbaum and Henig (1994) considered that privatization policy could be seen as an political phenomenon, not as a simple technical adjustment for the outside environment. Stigler (1971) and Buchanan (1986) analyzed regulation policy from an economic perspective and pointed out that state-owned enterprises will be comparatively inefficiency. The focal point of the approach to NPM is how to achieving better government performance and by what method (Whitaker, 1994: 255). In short, the point of privatization is “to scale the activity of public services and the ownership of assets of government down, make the private sector play more in public services delivery, and make the role of government could have a fundamentally change.”


All of these studies show that privatization is an hot issue in our field, however, it also prompts us to rethink one thing, and that is what Pollitt and Bouckaert (2000) reminded us “do the principles of reform in the Anglo-American Countries could be universal in different political economic context?”.

Therefore, the question now raised is: If we cannot distinguish the ideological basis of privatization, how can privatization be implemented effectively? Take Taiwan for example. We find there exist at the same time privatization and large-scale social welfare programs such as kinds of subsidies and national health insurance. Are they contradictory? It will be helpful to our understanding of the essence of privatization if we first explored the ideology of the New Right.

2.2 The Ideology of the New Right and Privatization
As Eatwell (1989) pointed out, “the first use of terms ‘left’and ‘right’in the context of a specific political situation stems from revolutionary French in 1789. Subsequently, especially during the twentieth century, the terminology has become a universal aspect of political debate...,” the debate between the left and right has influenced politics for more than two centuries. However, this historical development is not our present concern. Instead, we limit the discussion to the subject of the ‘new right’, especially its development since the late1970s.

The idea of an emergent “new right”appears to have been preceded by the idea of “the new left”which could be understood as the liberationist and asserts social justice during the 1960s (Scruton, 1985; Levitas, 1986; Welsh, 1993). Welsh (1993) pointed out further, “…The new right…is essentially a ‘label of convenience’…’Left’ and ‘Right’ simply do not function in this context as mere neutral descriptions. They play an important role in distinguishing friend from foe…” Here, it seems the “new right“ is still a blurred terminology.

To explore the essence of the New Right, some concrete perspectives are provided as the following discussion. Bosanquet (1983) thought the New right is based in economics and on ideas about individualism and market while the old right was based in political philosophy and on ideas about tradition and hierarchy. King (1987) believed “the New Right has two main and mutually antagonistic strands-economic liberalism, which endorses limited government and free market, and social conservatism, which advances claims about social order and authority base on traditional social, religious and moral views.” Ashford (1993) organized the ideas of New Right into four main schools-Milton Friedman and the Chicago school, Freidrich Hayek and the Austrian school, the Public Choice school, and the Supply-Side school. Throughout those discussions, maybe it should not be pushed too far, but there is considerable validity to say the “New Right” is based on the concepts and values of individualism, free market, and social order.
The ideas of New Right spread around the world soon after the 1970s. Although Edward Heath’s Conservative Party in the UK in the late-1960s managed to assemble a policy program that approximated to what would now be seen as the New Right, most of the scholars would accept that Ronald Reagan in the US and Margaret Thatcher in the UK were the pivots who put the New Right ideas into practice (Jordan, 1993; Ashford, 1993). In fact, in the 1990s, the New Right has begun to be promoted its influence around the world, not only in the western countries (Espinal, 1992; Minkenberg, 1992; Bronner, 1993; Castellina, 1994). Reflecting on the policy field, there are several common issues in these countries, such as the reduction inflation, taxes, and privatization, as well as constitutional reform.

What is the relationship between the New Right and public policy? The debates between D. King and B. Evans provide ponderable viewpoints of this issue. In 1993, King published the article “'The Conservatives and Training Policy, 1979-1992: From a Tripartite to a Neo-Liberal Regime,” explaining the British training policy from four New Right-based components of the Conservatives training objectives. These include: the weakening of trade unions and the apprenticeship system, linking the receipt of unemployment benefits with participation in training or work activity, advantaging employer preferences in the implementation of training programs, and minimizing government intervention and acting only in response to unemployment. However, Evans (1994) argued that King “exaggerates the extent the new triumph of neo-liberal ideology,” and also “exaggerates the unity of attitude, or ignores the problems of internal government fragmentation, toward training among neo-liberalism the effect of ideology in the policy-making process.” To this objection, King (1994) replied that “…Evans is still unable to grasp that no matter how often evident theoretical inconsistencies are identified in New Right arguments, these have succeeded in providing an ideology sufficiently coherent to enjoy electoral and political success…”

We admit that unlike any other major political ideologies, there may not be a strong internal coherence when we discuss the New Right. However, using the metaphor of the “ideological stream,”we could still explain the relation between the New Right and the public policy. This could be shown in figure 1.

Sources from: Jan, 2003.[1]

Figure 1 indicates the upstream, midstream, and downstream of the river. In the upstream is “the forest of knowledge,”which represents values and fundamental assumption of an ideology. The midstream shows the different “isms”which come from the ideology, just like the materials for the lumber mill come from the forest upstream. Downstream, the construction company will use the wood which comes from the lumber mill. Those constructions are the concrete public policies. Following the ideological stream, we could find that several values such as individualism, free markets, and opportunity equality are represented. This will support the formation of neo-liberalism, conservatism, and neo-managerialism. Finally, some public policies, for example tax reduction, privatization, and social welfare reduction are based on those ideologies and isms.

Some works demonstrate a further analysis and examples of the relationship between the New Right and public policies, such as King (1987), Thompson (1990), Ashford (1993), Swann (1993), etc. The above can be summarized in the following way: though this is not a strong internal coherence in the New Right, we could still realize the relationship between it and the public policy to some degree.

3. The Pathology and the Remedial Strategy of Privatization
The literature on privatization has grown at a rapid rate since the 1980s. For example, the British privatization program is widely acclaimed as a major economic and political success (Marsh, 1991: 459). However, while reviewing the experiences of privatization in this decade in other countries, what we must ask: “is privatization the panacea?” Overall, the core spirit of privatization is “steering rather than rowing” (Osborne and Gaebler, 1992). However, it is important to ask whether the government is capable of steering? We will discuss two major issues that are usually faced when the government assets or public services are privatized: corruption and the public interest.

3.1 The Pathology: Corruption and the Ignorance of Public Interest
3.1.1 Corruption
Marsh (1991) conducted a review of the literature on privatization under Mrs. Thatcher, and found that there are several aims of privatization, including reducing government involvement in industry, increasing efficiency, reducing the public sector borrowing requirement (PSBR), curbing public sector union power, increasing employee share ownership, and gaining political advantage. Undeniably, those aims support the base of the New Right, and it seems the lack of efficiency and financial deficits will be cured under the prescription of privatization.

Nevertheless, some bad results did occur. Besides the critiques of “hollowing government”(Lan and Rosenbloom, 1992), “the debate of efficiency and democracy”(Bellon and Goerl, 1992), “dominating people inside and beyond their organization”(Terry, 1993; 2005), among other things. The problem of corruption when privatization occurred is getting more and more serious in developing countries.

A good deal of evidence demonstrates these relationships. Weisskopf (1992) described the negative peRCEPtions of the link between privatization and corruption. Kaufmann and Siegelbaum (1996) noted that the scale of privatization in the former Soviet Union and Eastern Europe were large and unprecedented, and at the same time the corruption has reached endemic levels with this historic ownership transfer. Tangri and Mwenda (2001) explored the corruption and cronyism in Uganda’s privatization in 1990s, and pointed out that discrimination and corruption have been common because political leaders have wanted public companies to be divested to their favored clients. China has also attracted a good deal of attention (Chow, 2005).

From the theoretical perspective, Kaufmann and Siegelbaum (1996) defined corruption as “the abuse of official power for private gain”They suggested that privatization will not suffice in addressing corruption per se, but corruption occurs when the exercise of control during the privatization process, including speed, level of administration discretion, transparency or access to information, and independent administration of the program.

However, Kaufmann and Siegelbaum (1996) noted that
“…in practice,such approaches have consistently failed to work, primarily because governments have been unable or unwilling to honor these market-friendly arrangements or separate politics from business decisions.” (p. 412)

Chou (2005) attempts to explain the corruption of bureaucracy and thought “it is reasonable to assume, as an economic hypothesis, that the person or bureaucrat having control of such an asset will take advantage of his control to maximize his gain, possibly illegally subject to the consideration of the risk of punishment.” The principal-agent theory also provides a useful analysis framework to this issue. The problems of different interests and goals between the principal and agents (Alchian and Demsetz, 1972), adverse selection and moral hazard (Arrow, 1991), and contract designation (Horn, 1995) are significant for government when privatized.

In sum, government corruption during privatization is due to two major reasons: incapacity to supervise, and some affiliates with the power of the government who try to maximize their gains from privatization.

3.1.2 Ignoring the Public Interest
Public interest is a more general issue and needs deliberate discussion of privatization. To the development of public administration, public interest always plays a major role (Hart, 1984; Ventriss, 1991). The debate of public interest reached a high peak during the period of New Public Administration (NPA) that advocated by D. Waldo et al. in the 1960s. In the early 1990s, it also became a core argument of “The Blackburg Manifesto.”

In order to sketch a useful and pragmatic meaning, Goodsell (1990) suggested there are both processes and substantive standards necessary to understanding the public interest. He identified six constitutive rules or values that are reinforced by the concept of the public interest and speak directly to the world of public administration. These are: legality-morality, political responsiveness, political consensus, concern for logic, concern for effects, and agenda awareness.

Will privatization serve the public interest? Goodman and Loveman (1991) pointed out that critics of privatization believe that profit-making strategies by private sector managers will make essential public services unaffordable and unavailable to large segments of the population. They considered that “the problem is not private ownership, but the controls and performance measurements of the private owners.” Hefetz and Warner (2004: 187) suggested, after their empirical survey, that “public choice theory offers markets as a mechanism to improve public service delivery, but we have shown that even under contracting, market solutions are not a substitute for government planning and management.” It is also what NPM has been challenged for “hollowing government” (Lan and Rosenbloom, 1992)” or “eroding the publicity of public service (Christensen and Laegried, 2002).”


Some scholars reconciled the privatization and public interest, and make the point of them could be compatible. Hurstel and Mary (1994) explored concession of privatization, and thought “if a system of concession is implemented, the conception of privatization will be more easily accepted as it will not jeopardize the protection of the public interest.” Lin (2002) explored the characteristics of public interest and efficiency of privatization, and tried to ensure the public interest in the premise of efficiency. Chen (2005) established a counter-argument and showed that the theory of public choice could contribute greatly on the issue of “publicity”.

The lack of criteria of measuring the public interest, however, still stimulates scholars to continue their endeavor on the exploration. Instead of an extensive discussion, some scholars focus on issues of accountability and equity. For the former, Goodman and Loveman said (1991: 38) “accountability and consonance with the public interest should be the guiding lights (in privatization). They will be found where competition and organizational mechanism ensure that managers do what we, the owners, want them to do.” Gilmour and Jensen (1998) also argued that “the existence of an effective public accountability scheme requires a coherent understanding of state action—both before and after privatization decisions.” In the issue of equity when privatized, scholars pay attention to the impacts on privatization on distributional equity (Birdsall and Nellis, 2003) and universal service (Lin, 2004a; 2004b).

In short, with the development of transaction theory, principal-agent theory, and public choice theory, we could accept the explanation and necessity of privatization when the government was failure. However, those theories will also remind us the problems of who serves the public interest. If the private mangers or firms serve public on the basis of self-interest when privatized, it will be inevitable to bring the bad influence on shirking, unaccountability, or inequity of distribution.

3.2 Remedial Strategy
As we noted above, two major pathologies, corruption and the ignorance of public interest, will occur when privatized due to the following: （1）governments are incapable; （2）the political affiliations want to maximize their self interest or abuse their power; and（3）the speculation of self-interest of economic institutionalism, and it includes the self-interest of private managers and firms. The former (self-interest of the individual persons) usually led to unaccountability, and the later (self-interest of the organization) will result in the inequity of distribution.

In order to remedy those pathologies, we provide some suggestions in the following:
（1） To re-enforce the steering ability of government.
As discussed above, New Public Management emphasizes on steering rather than rowing. We think governments should pay more attention to the formulation of vision of privatization. On the other side, governments should also enforce their own capability to face the new challenge of social transformation.
（2） To improve the institution arrangement.
Transparency is one of the most significant elements of democracy and equity of distribution. In order to have a healthy democratic, free and competitive market, we should also strengthen the supervisal mechanism for the privatization.
（3） To increase cost of shirking behaviors and provide incentives to act public interest.
What is “public” interest is hard to define by private managers. However, it could be defined as “the interest of stockholders” in minimum scope. Here we need to provide incentives to stimulate their motivation to act in the public interest, such as rewards or approval, and on the other side, to increase penalties if regulations are not met.
（4） To ensure the universal service while privatized.
To private organizations, to profit themselves is always more important than to make interest to the public. We can ensure public interest by not only reminding those organizations the conception of social responsibility, but also by asking government to design an incentive mechanism to encourage the private sector to serve the disadvantaged groups.

4. The Case Analysis of Chunghwa Telecom Company
4.1 Background
The service of telecom in Taiwan was provided by the Directorate General of Communications (DGT) of the Ministry of Transportation and Communications until 1996. On 1 July 1996, under the direction of the Ministry of Transportation and Communications according to the “Telecommunication Act” and “Memorandum of Chunghwa Telecom Corporation”, Chunghwa Telecom (CHT) company completed its corporatization due to the pressure of market liberalization. Incorporated with a registered capital at NT$96.477 billion, CHT chiefly provides telecommunication and information-related services. Its scope of services covers city call, long-distance calls, international calls, GSM, data communication, Internet services, broadband networking, satellite communication, intelligent network, mobile data, and multimedia broadband.

In fact, tracing back the development of liberation of telecom service, three stages could be divided (Lin, 2004a):

（1）1987-1995: Under deregulating the provision of government, customers could use their own telephone but not only the one provided by the DGT. At this stage, there is a primary competitive mechanism in the market of telecom devices.
（2）1996-1998: The points in the stage were focused on the supervisal and managerial structure and the deregulation of the mobile and satellite telecom service. In January 1996, after the Act of Telecommunications was amended, CHT was established, and the operations of telecom services were separated from the Ministry of Transportation and Communications from then on. Also from this stage on, due to the market competition, the number of mobile phone users has increased greatly, and the charges have been reduced relatively.
（3）1999-2001: At this stage, the focus was on opening up the fixed line international cable, and long-distance cable.

The processes of privatization of CHT included: enterprise owned by the state, corporatization, and privatization which meant more than 50% stocks were held by private owners. As the sale of stocks, table 1 shows the content of the stocks sale.

Table 1 The Planning Timetable of Stocks Sale of CHT
Phases Objects Methods Rate of the Sale of Stock
The First Phase
(Jul., 1999 - Dec.,2000) First
Sale Domestic Legal Persons Auction 3%
Domestic Natural Persons Apply for Purchase 13%
Employees of CHT Employees subscription 3.2%
Second
Sale Sale Abroad Depositary Receipts Abroad 12%
Employees of CHT Employees subscription 1.8%
Subtotal 33%
The Second Phase
（By the end of 2001）Domestic Natural Persons Sell to the public 20%
Employees of CHT Employees subscription 13%
Subtotal 33%
Amount 66%

Source from: Lin, 2004a: 18.

From table 1, we could find that there were two phases of CHT’s sale of stocks. The first phase was planned to sell the stocks through the auction by domestic legal persons, application for purchase by domestic natural persons, subscription by the employees, and issuing depositary receipts abroad. The total rate of stock sale from the government was 33%, and the sale was dealt with twice. The second phase focused on selling the stocks to the public or citizens and subscription by the employees. The subtotal of this phase was also 33%. Cumulating the two phases, there would be 66% stocks sold to the private owners, and the CHT would become a real privatized company.

Nevertheless, the process of stock sale seems not to be so smooth, table two shows the actual implementation of CHT’s stock sale.

Table 2 The Actual Implementation of Stock Sale of CHT
Time Methods Rate of the Sale of Stock
Aug. to Sept., 2000 Auction, apply for purchase, and subscription by employees 2.86%
Jun., 2001 Sale by After –Market Auction 1.81%
12/17/2002 Sale by tender 13.9％
3/3-5/2003 Sale by After –Market Auction 0.08％
4/10-16/2003 Sale by After –Market Auction 1.8％
7/18/2003 Sale by After –Market Auction and Issue ADR 14％
8/9/2005 Sale by After –Market Auction 3％
8/10/2005 Issue ADR 14％
Amount 51.45%

Source from: Zhichao Zeng, 2005. http://www.npf.org.tw/PUBLICATION/TE/094/TE-R-094-022.htm, Visited on 01/20/2006.

Table 2 shows that CHT has started to sell its stocks to private owners since August to September in 2000. Undergoing the different methods, the Cabinet Spokesman of Executive Yuan announced that the CHT had achieved privatization as more than 50% of stocks were held by the private in August 10th, 2005, four year later than planed.

4.2 Policy Outcome and Pathology
In this section, we will examine the outcome of CHT’s privatization from macro and micro perspectives. The former focuses on the policy, liberalization of telecom service, and services to the citizens; the later pays attention to the organization operation of CHT. Then, we also explore the pathology of CHT’s privatization by analyzing two issues discussed above, corruption and public interest.

4.2.1 Policy Outcome: Examining from Macro Perspective
It is almost two decades since the telecom services has been liberalized in Taiwan, and the items of services, prices, clients, and so on are influenced by the liberalization. Especially in this decade from 1996, the market has a dramatic variation. In the end of 2004, the number of mobile service subscribers (including subscribers to second generation (2G) personal handy phone (PHS), and third generation (3G) services), totaled 22.76 million, a reduction of about 3.04 million subscribers from the same period a year before. Despite this drop, Taiwan maintained one of the world's highest mobile phone penetration rates at 100.31% (Directorate General of Telecommunications, 2005).

The Internet has emerged as an important tool for exchanging and creating information. It also plays an increasingly vital and broad role in economic activity, education, society, and culture; accordingly, it profoundly impacts people's daily lives. Through its vigorous opening of the telecom market, the government has enabled Taiwan to nimbly respond to Internet developments and enhance its competitiveness in this area. With more open markets, Taiwan's online population, both individuals and businesses, has steadily increased. According to the Institute for Information Industry (III), there were 9.16 million Internet users in Taiwan as of the end of 2004, raising the penetration rate to 40% from 39% in the year before. A survey in January 2005 by the Taiwan Network Information Center (TWNIC) indicated that 65.02% of all households in Taiwan have Internet access (Directorate General of Telecommunications, 2005).
Table 3 shows the variation of the number of subscriber in telecom services.

Table 3 Number of Telecom Services Subscribers
Years Local Tel. Mobile Phone Internet
Subscribers（Unit: 1,000）Subscribers（Unit: 1,000）Penetration Rate＊（Unit: %）Subscribers（Unit: 1,000）Penetration Rate＊（Unit: %）
1994 8,503 584 2.77 -- --
1995 9,175 772 3.62 -- --
1996 10,011 970 4.51 -- --
1997 10,862 1,492 6.86 1,660 8.00
1998 11,500 4,727 21.56 3,010 14.00
1999 12,044 11,541 52.24 4,800 22.00
2000 12,642 17,874 80.24 6,260 28.00
2001 12,847 21,786 97.24 7,820 35.00
2002 13,099 24,390 108.3 8,590 38.00
2003 13.355 25,800 114.14 8,830 39.00
2004 13,530 22,760 100.31 9,106 40.00

Note ＊: The rate is divided by the population in Taiwan
Source from: Directorate General of Telecommunications, 2005

Table 3 shows the development trend of telecom services in Taiwan after liberalization. We could find the dramatic development of mobile phone services and Internet after the year of 1996, the year of the amendment of Telecommunication Act and established of CHT. At the same time, the number of subscribers to prepaid card services fell slightly due to stricter application procedures. Besides, following Taiwan Cellular's acquisition of Mobitai, the number of major 2G service providers in Taiwan fell into three (Chunghwa Telecom, Taiwan Cellular and Far EasTone) in 2004, indicating a healthy state of competition in the market (Directorate General of Telecommunications, 2005).

Prices could show the evidence of competition as well. Figure 2 indicates the variation of telecommunications tariffs of CHT in 1995 and 2003.




Figure 2 Comparison of telecommunications tariffs index in Taiwan
Note: Each tariff level of telecommunication services in 1995 is set as 100
Source from: Liu, 2004: 18.

We can find that the major services, such as domestic long-distance leased data circuit (T1) international phone, international leased data circuit (T1),cellular phone, and domestic long-distance phone, were much cheaper than the phase before telecom liberalization, which might reflect the market competition. On the other side, some basic services like public payphones, local phone, and 104 service (yellow page) arose which might reflect CHT’s arise operational cost.

4.2.2 Policy Outcome: Examining from Micro Perspective
When examining the outcome from micro perspective, we focus on CHT’s organizational performance, however, two problems we meet here. First, it is not an easy work to evaluate such a huge corporation like CHT, and a close study of CHT’s organizational performance is not a major concern for our purpose. Second, which might be more important, it needs some specific method when implementing performance evaluation, such as clarifying mission statement, goals, and setting the indications of performance measurement. We have reviewed the white books of DGT (1997 & 2002) and the annual report of CHT[2], however, hardly could we find those properties of performance measurement.

We can examine some perspectives instead, and they are the autonomy of operation, personnel, and finance (Lin, 2003). From the autonomy of operation, we can find that although the government is still a major stockholder of CHT, its percentage is less than 50% after August, 2005. Besides, the employees have a large scale reduction from 2000 to the end of March, 2005. The employees were from 34,707 to 28,020 persons, that is a 6,687 (19.26%) deduction, during these four years and three months. Finally, due to the increase of operation autonomy, the board of directors of CHT could have more autonomy to decide how to exercise their finance. The lowest and highest earning per share of CHT among 2000 to 2004 were NT$ 3.86 and NT$6.51, which showed its competitive capability, especially while Taiwan had a slack economy development these years.

4.2.3 The Triumph of the New Right?

The introduction of a competitive market and privatization seems a product of the New Right. Not only the discussion above of the macro and micro aspects, but also the white books of DGT in 1997 and 2002 present the belief of a liberalization telecommunication services. Nevertheless, can we say it is a triumph?

First, as Williamson (1993: 204) pointed out, the crucial question was how far the market was going to be allowed to rule? For a market to work, there has to be a choice of consumers and providers. For example, however, most of the consumers who do not use CHT (Hinet) as their Internet Service Provider (ISP) should also pay the leased circuit monthly rentals to CHT due to the leased circuit is still monopolized by CHT. Besides, although CHT has privatized since 2005, the Chairman and CEO are still nominated by the government. Nowadays, the government has 48% of stocks in CHT, which means it still preserves an important role in it.

Second, when mention the case of CHT and the National Health Insurance (NHI) in Taiwan, we doubt all along whether the two significant policies with totally differences ideologies (apparently, NHI was a production of the left side) could be compatible under a government. In Taiwan, however, they appear and are implemented by the government at the same time. Although we do not discuss much what will happen when the New Right and the New Left policies are practiced simultaneously, and it does not involve the controversy of which ideology is better, we just believe that it will incur some troubles when the government sells their asset and uses it to do social welfare at the same time.

4.2.4 Pathologies of Privatization of CHT

As discussed above, when the governments are incapable of supervising, or some affiliates with the power of the government try to maximize their gains from privatization, the corruption is occurred. On the other side, if the private mangers or firms serve the public on the basis of self-interest when privatized, it will inevitably lead to a result of inequity when privatized.

In the process of CHT’s privatization, some pathologies have unavoidably happened. As for corruption, the most critical was almost its sale of stocks. In December, 2002, the Ministry of Transportation and Communications announced selling the stocks of CHT by having published a small advertisement in some newspapers, and then it was dealt only after eight business days in the amount of NT$ 65.4 billions. Two business consortiums got those shares, and both of their presidents were the consultants of the President of Taiwan. In the end of May, 2005, the Legislative Yuan made a recommendation that CHT should postpone its sale of stocks due to the suspicious process. In June 14, 2005, even some members of the Board of Directors of CHT considered that CHT should stop sale of stock because[3]
“…the privatization process is an act of selling the government’s assets below the market value and profiting certain interested businesses. Beside, this process is rife with abuses, subject to two corrective actions from the Control Yuan. Furthermore, the Legislative Yuan has passed many resolutions concerning the sale of stock in the past, and the Company has clearly violated the Legislative Yuan's resolutions...”

However, the Ministry of Transportation and Communications still continued selling the stocks of stocks. Two major critiques are raised here: unfitness of the “princpio da proporcionalidade”(principal of proportion) and suspicions of making profits for specific business consortiums. The former means the process should be more broadly announced and more days to all the private participants, and the latter means it might have the abuse of power.

For the issue of serving of public interest, besides of the distribution of stocks, the question of how to achieve the goal of “universal service”has gained importance gradually. Although universal service is demonstrated in the Article 20 and 21 of Telecommunications Act in 1996, the fact that the implementation of telecom universal service system was started in 2002 which showed the slowness of the reform and the insufficiency on this issue (Lin, 2004b). For example, the development of public payphone has declined in 2001 and 2002.

4.3 Strategies of CHT’s Privatization in the Future
According to the discussion above, we try to provide some strategies from four perspectives for the privatization of CHT in the near future:

1. On re-enforcing the steering ability of the government.
Comparing the plan and the implementation of CHT’s sale of stocks, we could find the gap between them. In order to make the privatization more workable, the government should pay more attention to the values and goals of CHT’s privatization, and that is to explain why CHT needed privatization more concretely, to describe the goals more specific, and let the participants and citizens know how to succeed in achieving them.

2. On improving the institution arrangement.
In the case of CHT, we could find that the supervision of the Legislative Yuan and Control Yuan were not very effective. In order to operate more smoothly and avoid corruption, the government and CHT still need to have transparent clarification of the privatization process. On the other side, the Legislative Yuan and Control Yuan should also make their recommendation or correction have more force of constrain.

3. On ensuring the universal service while privatized.
In this case, the DGT set a fund of universal service due to the relative laws and regulations[4]. To ensure the universal service, the government should make those rules feasible and broaden the scope of disadvantaged group rather than only define it by economy or geographic condition.

5. Conclusion
Since the 1980s, the pursuit of deregulation and liberalization has prompted a movement of New Public Management in public administration, and privatization is one of the most vigorous policy tools in practicing the ideology of the New Right. In this article, we define the relation between the New Right and privatization by using the metaphor of “policy ideology stream.” We indicate that the ideology is the policy philosophy, which could help policy to define its value, scope, and goal ultimately.

We also discuss that there might be some pathologies when privatized, and the main symptoms include corruption and the ignorance of public interest. The incapability of government’s supervising and the abuse of distribution power will result in corruption, and the pursuit of self-interest of private organizations or managers will lead to the distributive inequity or shirking respectively. To respond to these problems, we suggest that government should review and re-regulate the process of privatization from the aspect of institutions.

We use Chunghwa Telecom Company, the largest telecom company in Taiwan, as a case to explore its process of privatization. Although the value of competition is fulfilled due to the liberalization of the telecom market, some questions were still asked in the process of CHT’s privatization. We focused on the issues of its sale of stocks and the universal services, and considered that the government and CHT should act more transparent, which will make the competitive market more impartial. Finally, one thing we should keep in mind. For public administration, public interest should be our core value, and privatization will be kind of tool to reach it.





References
Ashford, Nigel（1993）. “The Ideas of the New Right.”In G. Jordan and N. Ashford（eds.）, Public Policy and the Impact of the New Right, pp. 19-45. London: Pinter Publisher.
Alchian, A. and H. Demsetz（1972）. “Production, Information Costs and Economic Organization.”American Economic Review, Vol. 62: 777-95.
Arrow, Kenneth J.（1991）. “The Economics of Agency.”in John W. Pratt and Richard J. Zeckhauser（eds.）, Principals and Agents: The Structure of Business. MA: Harvard Business School Press.
Banerjee, Sudeshna Ghosh and Michael Munger（2004）. “Move to Market? An Empirical Analysis of Privatization in Developing Countries.”Journal of International Development, Vol. 16, pp. 213-240.
Bellone, C and G. Goerl（1992）. “Reconciling Public Entrepreneurship and Democracy.”PAR, 52（2）: 130-134.
Berg, Andrew and Elliot Berg（1997）. “Methods of Privatization.”Journal of International Affairs, 50（2）: 357-390.
Birdsall Nancy and John Nellis（2003）. “Winners and Losers: Assessing the Distributional Impact of Privatization.”World Development, 31（10）: 1617-1633.
Bosanquet, N.（1983）. “After the New Right”in S. Hall and M. Jacques（eds.）, The Politics of Thatcherism. London: Lawrence and Wishart.
Bronner, S.（1993）. “The New Right: Reflections on an International Phenomenon.”New Political Science, 24（25）: 87-98.
Buchanan, James M.（1986）. Liberty, Market and the State-Political Economy in the 1980s. New York: New York University Press.
Castellina, L.（1994）. “The New Right Victory in Italy.”New Politics, V（1）: 26-29.
Chen, Don-yun（2005）. “A Case for Public Choice Theory: The Compartibility of Public Choice Theory and ‘Publicness’in the Field of Public Administration.”Public Administration and Policy, Vol. 40, pp.1-36. （in Chinese）
Chow, Gregory C.（2005）. “Corruption and China’s Economic Reform in the Early 21th Century.”CEPS Working Paper No.116.
Christensen, Tom and Per Laegreid（2002）. “The Public Management: Puzzles of democracy and the influence of citizens.”The Journal of Political Philosophy, 10（3）: 267-295.
Directorate General of Telecommunication（1997）. White Book of the Policy of Telecommunications Liberalization. Taipei: DGT. （in Chinese）
------（2002）White Book of the Policy of Telecommunications Liberalization. Taipei: DGT. （in Chinese）
------（2005）. Annual Report 2004. Taipei: DGT, Ministry of Transportation and Communications.（in Chinese）
Dunn, William（2004）. Public Policy Analysis: An Introduction. NJ: Prentice Hall.
Eatwell, R.（1989）. “Right or Rights? The Rise of the ‘New Right’.”In R. Eatewll and N. O. Sullivan（eds.）, The Nature of the Right European and American Politics Thought Since 1789, pp.3-17. London: Pinter Publisher.
Espinal, R.（1992）. “Latin America’s New Right”Hemisphere, 4（2）: 20-22.
Evans, Brendan（1994）. “Neo-Liberalism and Training Policy 1979-1992: A Rejoinder to Desmond King.”Political Studies, XLII:480-485.
Feigenbaum, Harvey B. and Jeffrey Henig R.（1994）. Shrinking the State: The Political Underpinnings of Privatization. Cambridge: Cambridge University Press.
Goodman, John and Gary Loveman（1991）. “Does Privatization serve the Public Interest?”Harvard Business Review, 69（6）: 26-38.
Goodsell, Charles T.（1990）. “Public Administration and the Public Interest”, in G.L. Wamsley, et al.（eds.）, Refounding Public Administration, pp. 96-113. CA: Sage.
Gilmour, Robert S. and Luara S. Jensen（1998）. “Reinventing Government Accountability: Public Functions, Privation, and the Meeting of ‘State Action’.”PAR, 58（3）: 247-258.
Hart, David（1984）. “The Virtuous Citizen, the Honorable Bureaucrat, and ‘Public’Administration”, PAR, V. 44, Special Issue, pp. 111-120.
Hefetz, Amir and Mildred Warner（2004）. “Privatization and Its Reverse: Explaining the Dynamics of the Government Contracting Out.”Journal of Public Administration Research and Theory, 14（2）: 171-190.
Hodge, Graeme A.（2000）. Privatization: An International Review of Performance. Boulder, CO: Westview Press.
Horn, Murray（1995）. The Political Economy of Public Administration: Institutional Choice in the Public Sector. New York: University of Cambridge.
Hurstel, Daniel and Mary Ann Carpenter-Pecquet（1994）. “Privatization and the Public Interest.”International Financial Law Review, 13（8）34-37.
Jan, Chung-yuang（1993）. Privatization Policy: The Theory and Practice Analysis of Public Administration. Taipei: Wu-nan. （in Chinese）
------（2003）.New Public Policy: History, Philosophy, Globalization. Taipei: Hwatai. （in Chinese）
Jordan, Grant（1993）. “The New Right and Public Policy: A Preliminary overview.”In G. Jordan and N. Ashford（eds.）, Public Policy and the Impact of the New Right, pp. 46-58. London: Pinter Publisher.
Kaufmann, Daniel and Paul Siegelbaum（1996）. “Privatization and Corruption in Transition Economies.”Journal of International Affairs, 50（2）: 419-458.
King, Desmond S.（1987）. The New Right: Politics, Markets and Citizenship. London: Routledge.
------（1993）. "The Conservatives and Training Policy 1979-1992: From a Tripartite to a Neo-liberal Regime." Political Studies, Vol. XLI: 214-235.
------（1994）. “The New Right and the Public Policy.”Political Studies, Vol. XLII: 486-491.
Lan, Z. and David Rosenbloom（1992）. “Public Administration in Transition?”PAR, 52（6）: 535-537.
Levitas, Ruth（1986）. “Ideology and the New Right.”In R. Levitas（ed.）, The Ideology of the New Right, pp. 1-24. Oxford: Polity Press.
Lin, Shu-Hsin（2002）. “Discussions about the Becoming Private Process of the Nation Telecommunication Enterprises in Japan from the Public Point View: Comparing to the Becoming-Private Process of the Chunghwa Telecommunication Company in Taiwan.”Open Public Administration Review, Vol. 12, pp. 217-247. （in Chinese）
------（2003）. “Research on Change of Legality and Its Effect Arising from Privatization of Chunghwa Telecom Co., Ltd.”Public Administration and Policy, Vol. 37, pp. 29-63. （in Chinese）
------（2004a）. “Effect of Liberalization and Privatization of Telecommunication Business on the Provision of Universal Service: Take Chunghwa Telecom Co., Ltd. As An Example.”Soochow Journal of Political Science, Vol.18, pp. 69-109. （in Chinese）
------（2004b）. “Empirical Study of the Impact of Privatization of Taiwan’s Telecommunication Industry on Universal Service.”Political Science Review, Vol. 22, pp. 221-254. （in Chinese）
Liu, Po-li（2004）. Telecommunications Competitiveness Analysis in Taiwan（III）. Number of Research Report: jhts007-930503. Taipei: DGT.
Marsh, David（1991）. “Privatization Under Mrs. Thatcher: A Review of the Literature.”Public Administration, Vol. 69, Winter, pp.459-480.
Minkenberg, M.（1992）. “The New Right in Germany.”European Journal of Political Research, 22（1）: 55-81.
Mishra, R.K.（2005）. “Methods of Privatization: The India Case.”Chinese Public Administration Review, 14（4）: 1-33.
Osborne, David and Ted Gaebler（1992）. Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector. MA: Addison-Wesley.
Pollitt, Christopher and Geert Bouckaert（2000）.Public Management Reform ：A Comparative Analysis. New York: Oxford University Press.
Rothman, Jack（1980）. Social R and D: Research and Development in the Human Services. NJ: Prentice Hall.
Savas, E.S.（1992）. “Privatization.”In Mary Hawkesnorth and Maurie Kogan（eds.）, Encyclopedia of Government and Politics, Vol. 12. New York: Routledge.
Scruton, Roger（1985）. Thinkers of the New Left. UK: Longman House.
Stigler, G.（1971）. “The Theory of Economic Regulation.”Bell Journal of Economics and Management Science, 2（1）: 3-21.
Swann, Dennis（1993）. “Privatization, Deregulation and the New Right.”In G. Jordan and N. Ashford（eds.）, Public Policy and the Impact of the New Right, pp. 120-143. London: Pinter Publisher.
Tangri, Roger and Andrew Mwenda（2001）. “Corruption and Cronyism in Uganda’s Privatization in the 1990s.”African Affairs, Vol. 100: 117-133.
Terry, Larry （1993）. “Why We Should Abandon Misconceived Quest to Reconcile Public Entrepreneurship with Democracy.”PAR, 1993, 53（4）: 393-395.
------（2005）. “The Thinning of Administrative Institutions in the Hollow State.”Administration and Society, 37（4）: 426-444.
Thompson, Grahame（1990）. The Political Economy of the New Right. Boston: Twayne Publisher.
Ventriss, Curtis（1991）. “Contemporary Issues in American Public Administration Education: The Research for an Educational Focus”, PAR, 51（1）: 1-9.
Weisskopf, Thomas（1992）. “Russian in Transition: Perils of the Fast Track to Capitalism.”Challenge, Nov.-Dec., 28-37.
Welsh, David（1993）. “The New Right as Ideology.”In G. Jordan and N. Ashford（eds.）, Public Policy and the Impact of the New Right, pp. 46-58. London: Pinter Publisher.
Williamson, Peter（1993）. “Good for Your Health: The New Right’s Ideas and the Health Reform.”In G. Jordan and N. Ashford（eds.）, Public Policy and the Impact of the New Right, pp. 193-212. London: Pinter Publisher.
Whitaker, G.（1994）. “The Future of Public Management.”Journal of Public Administration Research and Theory, 4（2）: 255-262.
Zeng, Z.（2005）. http://www.npf.org.tw/PUBLICATION/TE/094/TE-R-094-022.htm. （in Chinese）Visited on 01/20/2006.
Chunghwa Telecom Company Website: http:// cht.com.tw.
Directorate General of Telecommunications Website: http://www.dgt.gov.tw.


--------------------------------------------------------------------------------

[1] The idea is base on Jack Rothman, 1980, social R & D: R & D in the Human Services, and William Dunn, 2004, Public Policy Analysis: An Introduction.
[2] See website: http:www.cht.com.tw. visited on 1/15/2006.
[3] See website: http://www.cht.com.tw/CHTFinalE/Web/AboutUS.php?Module=NormalArticle&CatID=768&PageID=897, visited on 1/20/2006.
[4] Such as “Essentials of Establishment on Universal Service Fund Administration Commission” and ”Operation Essentials for Administration Commission of Universal Service Fund.” See website: http://www.dgt.gov.tw/English/Regulations/Regulations.shtml
As Savas suggests (1992), privatization includes types of divestment, delegation, and displacement. Banerjee and Munger (2004) considered it to mean denationalization（direct sale of public assets）, deregulation (introduction of competition in previously monopolized sectors), and contracting out (leasing, contract for concessions, built-own-operate, build-own-operate-transfer). In most countries, the implementation of privatization is a complex combination of those forms.

It is not easy to assess the performance of privatization in different, however, we could explore what happened of it during these two decades. In the empirical study of Banerjee and Munger (2004), they found that some facts of privatization in developing countries, and those include early adopters are later implementers, crisis-driven, and lock-in of institutions. Furthermore, we find privatization is now a pervasive policy around the world through huge literatures in this new century (Hodge, 2000; Birdsall and Nellis, 2003).

Why do we choose the case of Taiwan? First of all, because of everything Taiwan has achieved in economic and democratic politics since the early 1980s, we think it will be a significant reference for other developing countries in the world. Besides, that after making observations during this decade, the authors found that many of the policymakers in Taiwan did not probe into the origin of privatization? What is the basis of privatization? If we do not clarify this important issue, it might lead to a misuse or contradiction of privatization.