Success in privatization

Topics: Privatization, Public sector, Economics Pages: 9 (2634 words) Published: September 28, 2014

1.1 History of Government Privatization Policy
The Government Privatization Policy was first announced as a national policy by Prime Minister of Malaysia, Tun Dr Mahathir Mohamad in 1983. It represents a new advent of preceding government policy although it was very much consistent with his own personal ideological and policy preferences as well as new wave of conservative market reforms beginning in the West. Thus, in the Eighth Plan period, privatization will continue to be applied to facilitate economic growth in Malaysia in line with the Vision 2020.

1.2 Key concepts of Government Privatization Policy
Government Privatization Policy can be defined in terms of the transfer of enterprise ownership from the public to the private sector. This means the enterprise which already posses by the Government and to new project which normally have been carry out by the public sector. This transfer takes the form of issue and sale or outright distribution of shares to the general public. Broadly used, the term privatization includes other policies such as "contracting out" that is, the process by which activities, while publicly organized and financed, are carried out by private sector companies. For example, street cleaning, garbage collection, housing, education. In addition, a private company is when a publicly traded company become private; investors can no longer invest a share in that company. Besides, Government Privatization Policy means the transfer of three components, namely government management responsibilities, assets or rights to use the assets, and personnel to the private sectors.


There are five objectives of Government Privatization Policy. Firstly, the policy is designed to relieve the financial and administrative burden of government. The policy is implementing to hand over government management to the private sector and let to government focus on traditional function of maintaining law and order. Besides that, this privatization policy allows government opportunity to provide support achieving growth and distribution objective. Secondly, the next objective is to improved efficiency and productivity level of the country. There are few meaning that the efficiency could be advocate such as introduction and enhancement of competition, releasing of Government enterprises from political supervision and service rigidities and the introduction of employee incentives. The earning of new and modern technology, expanded capacity and service network, fostered changes in management and organization could be achieved through of Government Privatization Policy. In addition, privatization also led to faster implementation of projects, especially in construction industry. Thirdly, facilitate national economic growth is also one of the objective of this policy. This is because privatization will provide chance for the private sector to its role in development therefore, the person able to manage their owned business without any obstacles. Thus, the trust for further expansion could be issue through the commercial and profit orientation of the private sector. The public could get advantages through privatization because able to make available earlier compared to if they were to be handle by the government. Next, privatization could reduce the size and presence of the public sector in the economy. The shoot up economy in Malaysia will occur if privatization because of the reduction in the size of public sector. The government also get benefit due to proceeds from concession payments, corporate taxes and savings from the reduction in public expenditure. Besides, the government administrative burden could be lessening by transferring the employees from public to private sector.

Lastly, the objective of privatization is to promote achievement of national economic policies target such as New Economic Policy (NEP)...
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