Two years since the publication of the government's White Paper on privatisation, the Chamber of Commerce says it is finding great difficulty with the government's strategy on private enterprise and tactical involvement in the market place.

In the editorial of the May issue of its magazine, the Commercial Courier, the chamber says the entire privatisation programme over the coming three years was meant to contain an element of state involvement in the economy, "to allow the government to concentrate on core activities by limiting its economic role, and encourage an 'enterprise culture'".

However, the editorial says, there seems to be a conflict between the stated objectives and intentions found in the White Paper and that which was being observed in certain enterprises where the government was sole or major shareholder.

"Consequently, it is now evident that the 1999 privatisation document is incomplete. While it outlines the potential units that could eventually be transferred to the private sector, the document does not identify the respective strategies that these same units could adopt in the interim period before they are privatised," the editorial says.

"In the absence of a clearly defined role for the government, the private investor can never rest assured of an efficient supervisory authority and a conviction that the state is an institution that is supra partes in commercial activities.

"Where state enterprises compete with the private sector, either directly or indirectly, they are bound to enjoy an upper hand in trade, particularly within the small domestic environment which characterises local business.

"The opportunity cost of state involvement is the long-term retrenchment in the private sector, which sector is unwilling to risk and invest money and effort to compete with the state for a place in the market. This retrenchment is costly to the country in terms of foregone employment, investment and wealth-creation opportunities."

The editorial said that the outcome was a disruption in the respective markets, including salary inflation, quoting of non-market prices which were cross-subsidised by monopoly privileges, and abuse of ethical and insider information and captured markets (imposition by main shareholder to conduct business with other state owned companies to the detriment of competing private sector firms).

It said it expected the government to re-address its policies related to direct involvement in business.

"The government should opt out of the business if there is no socio-political need for its intervention in a particular sector. If there exists a socio-political need, then the state must ascertain whether this need is already adequately fulfilled by the private sector. That being the case, the government should opt out. If not, the government should enter the business with limited functions and re-visit the purpose on a continuous basis."