Evaluation of Market Liberalization in developing countries in the case of the ASEAN and the Philippines in particular

摘要

The market liberalization case of the Philippines showed that the regulatory framework needs to be adjusted to avoid collusion in the procurement of PSAs. This ultimately leads to the question if those regulatory loopholes existed purposely or mistakenly. With the Philippine’s and and Meralcos history on corruption it cannot be dismissed that the regulations were not implemented in favor of Meralco. According to the Corruption Perceptions Index (CPI), the Philippines rank at 95 on par with Mexico, Mali and Armenia and behind other ASEAN countries such as Thailand. Further considering the positive correlation between the Human Development Index (HDI), which assesses the development of a country, and the CPI, one can derive the conclusion that for developing countries, market liberalization attempts tend to be impaired through corruption.Governmental interference with the electricity market affected the attractiveness for investors to invest into the electricity market of the Philippines. With this in mind one needs to consider the risks involved in a completely deregulated electricity market structure for developing countries. Looking at the Californian electricity crisis and the subsequent electricity rates as the worst case scenario the risks need to be assessed adequately. The impact on the Philippines rising economy would have possibly been worse than on the developed economy in California and therefore the amount of governmental interference needs to be carefully measured when introducing a liberalized market in a developing country.