Real Problems & Countermeasures To Privatization Of Infrastructure Facilities In Changchun

As a physical carrier to existence and development, and prerequisites for economic growth and social progress of the city, construction and development of urban infrastructure facilities will directly influence the speed and quality of urbanization. In the past, it is the government organizations who make investment for construction of the infrastructure facilities. However, such an operation and management mode has many disadvantages, which lead to expansion of financial expenditure, and increase of financial deficit. The most extruding problem found to construction and development of the urban infrastructure facilities is the shortage of funds, and therefore, to introduce the private capital and to propel the privatization of infrastructure facilities will be the most urgent thing to do to accelerate the construction of urban infrastructure facilities.The Introduction of this thesis generalizes the theoretic foundation and history of development of the infrastructure facilities privatization. Infrastructure facilities can be interpreted in broad sense and narrow sense, of which, this thesis starts is statements in narrow one. According to definition of public goods and labor made by Samuelson, the nature of diversification of infrastructure facilities has decided that none of them belongs to the public goods, and their mode of supply is neither dwell within the public domain. Therefore, the private capital can absolutely come in, and the funds can be provided by the private sector, i.e. the privatization of infrastructure facilities. The infrastructure facilities are gradually supplied by the private sector after the World War II, and since 1979 when Mrs. Thatcher governs the Britain and 1980 when Mr. Reagan becomes the president of the United States, vigorous privatization movement have been developed one after another in the developed Western countries. Later, most developing countries and transforming countries (e.g. former Soviet Union and east European countries have also participated in the privatization movement. Privatization in China advances gradually from rural to urban area, from agriculture to industry and from competition to monopolization, and so far good effects have be achieved in some areas and fields.Part I of this thesis introduces the present situations and problems existing in investment and operation of infrastructure facilities in Changchun. In recent years, construction of urban infrastructure facilities in Changchun have obviously speeded up its pace, which vigorously accelerates fast economic growth and renew the appearance of Changchun, however, shortage of funds for construction of infrastructure facilities looks increasingly extruding, which has already become a main barrier restricting seriously the fast and sustainable development of urban construction of Changchun. One of the main reasons is that construction of infrastructure facilities in our city mainly rely on financial budget, and the source of funds is very limited. Therefore, the first thing first is to widen the financing channel, actively introduce private capital and implement the privatization for construction of infrastructure facilities. Privatization of infrastructure facilities in Changchun is truly feasible, and Changchun has the substantial legal system and environment, and actual dynamic power such as the actual pressure, commercial dynamic power and social enduring force, etc. Meanwhile, private investment into the infrastructure facilities will produce great present significance. Firstly, experience home and abroad has revealed that the privatization of infrastructure facilities is the most efficient way to run the infrastructure facilities. Secondly, it is advantageous for solving the shortage of funds necessary for construction of the infrastructure facilities and promotion of both investment and operation efficiency for construction of infrastructure facilities, and facilitate reform of investment and financing system of our city. Finally, it is beneficiary for propelling development of related industries and maintains the national economy to grow at higher speed.Part II of this thesis introduces mode of practice for privatization of infrastructure facilities and probe into the city of Changchun. Infrastructure facilities have the special characteristics different from other production industries, and require greater amount of investment and longer period of construction. The amount of private capital is big but also scattered, and such a feature decides the nature of diversification of the privatization of infrastructure facilities. According to statistic data about domestic cities in recent years, some cities have already made important achievements in privatization of infrastructure facilities, and they have gained excellent social, economic and environmental effects, and summarized some feasible modes for privatization of infrastructure facilities, which refer mainly to lease, sale, TOT, BOT, and stock system joint by both private and public sectors. Construction of infrastructure facilities in Changchun grows slower, and implementation is mainly organized according to requirements of the owners in way of BT (building and transfer), BOT (building, operation and transfer, BOO (building, ownership and operation, and BOOT (construction, ownership, operation and transfer), etc. Since 1994, Changchun has completed the project construction in Chongqing Road Section, Qingming Street Section, Hualian Commercial Building Section, Yongchang Street Section, and Road Intersection over Shengli Street. In November, 2005, as the tenderer, Changchun Jingyuetan Tourism Economic Development Zone Construction and Development Corporation has signed a Contract for Construction of 5 Road Works including Phase II of Xincheng Street in Changchun Jingyuetan Tourism Economic Development Zone with Capital (Loan) in Mode of BT with China Construction No. 4 Building Company and Beijing United Zhitong Investment Co., Ltd. Jointly; the Infrastructure Facilities Construction Office of Changchun Government has signed the BT Contract for construction of eight roads and bridge including the North Yatai Street with Changchun Municipal Engineering Group in 2006; Changchun Urban Development Group has signed BT Contract for construction of 10 projects including old road innovation project and Weixing Road works with Changchun Economic Development Zone in 2006. Further, Jingyue Tourism Development Zone has signed the BT Construction Contract amounting 30.00 million RMB with Changchun Hongda Municipal Group; and the Infrastructure Facilities Construction Office of Changchun Government has signed the BT Construction Contract amounting 170 million RMB with Jilin Province Golden Bean Group, which are all operated in the mode of privatization.Part III of this thesis in points out both subjective and objective barrier restricting privatization of infrastructure facilities in Changchun. As a new shoot to the nation, the privatization of infrastructure facilities are sometimes misunderstood by some people as such viewpoint as that the privatization of infrastructure facilities means denationalization, sale, and increase in price of products and service. The above viewpoints are wrong due to misunderstanding of the privatization. Beside the subjective barrier, there are also administration barrier restricting privatization of infrastructure facilities in Changchun City such as low level of marketization of main operation body, demand for regulation of functional positioning of the government, too complicated approval procedure for privatization of infrastructure facilities, lack of government service, and lack of government system and regulations, which are deemed to be all the factors that seriously affect access of private capital to the construction of infrastructure facilities.Part IV of this thesis submits some countermeasures to accelerate the pace of privatization of the infrastructure facilities in Changchun. The first thing is to create advantageous media atmosphere for privatization of infrastructure facilities; the second thing is to transform governmental functions to create excellent conditions for the privatization, e.g. to reduce or even eliminate system barrier and artificial restriction for private sector to enter the field of infrastructure facilities, to give preferential financial and taxation policies to private enterprises in the field of infrastructure facilities, to create excellent external environment for civil funds to flow into the field of infrastructure facilities, and to improve the early stage preparation for privatization. Also, it is recommended to set up independent supervision and control organ, and efficient supervision and control system such as supervision and control over access to market and price, and create the supervision and control for competition and investment. The final point is to perfect related laws and legislative system.To sum up, the privatization of infrastructure facilities is a product of increasingly deepened reform, and also, general orientation and trend of development of the public utility, which has its own grounds of production and development, where, rapid growth of private economy is one important propelling force to privatization of infrastructure facilities. Privatization of infrastructure facilities in Changchun started late, and methods used are not so rich, and policies, laws and regulations and governmental supervision and control still need to be improved, however, new experiment has been conducted on construction of infrastructure facilities in Changchun, which has contributed a lot to accelerate the pace of urban construction in Changchun. To make a success for privatization of infrastructure facilities in Changchun, the government should play an active function, place a proper balance between opening and control, practically change the governmental functions, perform governmental responsibilities and improve the supervision and control so as to prevent the privatization course from coming from one embarrassment into the other. Governmental guidance to private enterprises will finally serve the realization of the public interest, and thus, triple-win can be achieved by and among the social public, the government and the private enterprises, which will be of course the action for construction of the government of sound legislation, of practical responsibility, and of public service.