Abstract: From the mid-1980s, private ownership and foreign investment began to be touted as solutions to many problems of the Third World. Starved of capital for projects they wanted, many officials in developing countries turned from efforts to evaluate potential foreign investments to marketing programs designed to attract ever more foreigners. The new attitudes encouraged enthusiastic home countries and multilateral institutions to turn attention to providing guarantees of property rights so that they could increase the flow of investment into the developing world. In no sector was the enthusiasm of development institutions for private foreign investment greater than for infrastructure, particularly electricity. Experiences in Indonesia echo those in many other countries and raise serious questions about when privatization is appropriate, how it should be implemented, whether there are better ways to finance and develop infrastructure, and even whether the new guarantees to foreign investors could survive.

Keywords: privatization, private ownership, electric power, Indonesia, foreign investment, property rights,