Topics: Public sector, Privatization, Public ownership Pages: 6 (1646 words) Published: May 27, 2014
The problems and benefits of privatization of public sector organizations Generally, privatization has been defined in provisions of the transfer of enterprise ownership from the public to the private sector. More generally, privatization refers to shifting the status of a business, service or industry from state, government or public to private ownership on control. Privatization can be strictly defined to include only cases of the sale of 100 percent, or at least a majority share of a Sale of Equity (SOE), or its assets, to private shareholder. Although the economic crisis affected the operation of some projects, remedial measures were undertaken promptly to revitalize the affected projects such as rescheduling their implementation and reducing the project scope. From the initiation of the privatization policy through 1990, a total of 37 projects were privatized. The momentum picked up in 1991-1995 when a total of 204 projects were put in private hands. The number of privatized projects dropped to 68 during 1996-1998, mainly due to the economic slowdown that hit Malaysia in the second half of 1997. There are several major methods of privatization in Malaysia, but those of significance are shares issued privatization (SIP) firms. These entities, such as Tenaga Nasional Berhad (the national power generator and distributor), Malaysian Airline System Berhad (the national airline), and Telekom Malaysia Berhad (the national telecommunications provider), are huge and highly visible, and they could be privatized only through a public share issue There are several benefits in privatization of public sector organizations. Efficiency and productivity is one of the benefits of privatization. The services and administration of privatized entities improved significantly as evidenced by increases in the efficiency and productivity indicators of selected entities. This was due to the improvement of facilities by these companies which were also able to obtain new and modern technology, in business sense the best yet simple alternative to measure efficiency and productivity is profit. Besides, increase in sales and market shares, or reduce in cost and customer’s complaint may also serve as pointer for improve efficiency and productivity, expanded capacity and service network, fostered changes in management and organization, as well as inculcated positive attitude among their employees. In addition, privatizations also lead to faster running of projects, particularly highways and ports. In this regard, the construction of the Port of Tanjung Pelepas in Johor was completed six months ahead of schedule, while the construction of the Damansara-Puchong Highway was completed in 28 months instead of 36 months. Besides that privatization will benefits to the public. The privatization programme benefited the public as the facilities provided through privatization were made available earlier than they would have been if they were to be undertaken by the Government. This was due to the limited capital on the part of the Government. The public also benefited through the provision of more efficient and wider exposure of services. The introduction of rail services such as Keretapi Tanah Melayu Berhad (KTMB) Commuter Services, Light Rail Transit System I (LRT-STAR) and LRT-System II (LRT-PUTRA) provided a fast and efficient alternative transportation system in the Klang Valley. These rail services reduced travelling time and contributed to the improvement of the urban traffic congestion. To increase ridership, park-and ride facilities and covered walkways were also provided. The ridership of the KTMB Commuter services showed a positive trend since the start of commercial run in August 1995. The significant rise in the ridership signalled an increase in public acceptance of the use of rail services, particularly in urban transportation. The construction of the privatized toll highways changed the travelling pattern of road users, as they benefited from...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Negative Effects of Privatization Essay
  • Airport Privatization 2 Essay
  • Privatization of Public Enterprises in Bangladesh Essay
  • Privatization Essay
  • Objectives of Privatization Essay
  • History of Privatization in Pakistan Essay
  • Privatization and Advertising in Public Spaces Essay
  • The Privatization of Rhône-Poulenc, 1993 Essay

Become a StudyMode Member

Sign Up - It's Free