Contoh PAD104 Privatization Policy kertas kerja PDF

Preview

Summary

[FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIESAM110: DIPLOMA PUBLIC ADMINISTRATIONPAD104: INTRODUCTION TO MALAYSIAN PUBLIC POLICYTITLE: PRIVATIZATION POLICYPREPARED BY:1. NURIN INSYIRAH BINTI MOHD NAJIB (2019265294)2. NOR DIANA BINTI MOHD KAMAL (2019202334)3. NURASYIKIN BINTI MOHAMAD NASIR (2...

Description

[

FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES AM110: DIPLOMA PUBLIC ADMINISTRATION PAD104: INTRODUCTION TO MALAYSIAN PUBLIC POLICY

TITLE: PRIVATIZATION POLICY

PREPARED BY: 1. NURIN INSYIRAH BINTI MOHD NAJIB (2019265294) 2. NOR DIANA BINTI MOHD KAMAL (2019202334) 3. NURASYIKIN BINTI MOHAMAD NASIR (2019671886) 4. MUHAMMAD AIMAN THAQIF BIN OSMAN (2019448552) 5. MUHAMMAD NOR SYAKIRIN BIN MOHD SHAROM (2019281253) 6. MUHAMMAD SYAFIQ EZUAN BIN MASTOR (2019200944) 7. MUHAMMAD AIMAN THAQIF BIN OSMAN (2019448552)

LECTURER’S NAME: MISS JENIWATY BINTI MOHD JUDY

CLASS: N4AM1102I

DATE OF SUBMISSION:

TABLE OF CONTENT

1.0 INTRODUCTION

Privatization policy is the transition of government ownership, properties or company to the private sector is called privatization. The government ceases to be the owner of the company or entity. The process in which a few individuals take over a publicly owned corporation is often called privatization. The company's stock is no longer listed on the stock exchange and ownership interest in such a company is withheld from the general public. The organization gives the name 'limited' and uses 'private limited' as its last name. Privatization is considered to bring more effectiveness and objectivity to the company, something that a government company is not concerned about. It is also helps governments save money and increase efficiency. In this situation, private corporations are charged with enforcing government plans or conducting government assistance which had traditionally been the perception of state-run companies. On the other hand, privatization advocates argue that some services, such as healthcare, energy, education and law enforcement should be in the public sector in order to allow greater control and ensure fairer access. Throughout liberal thought, public and private have become common dualities or, maybe better said, polarities associated in one direction with the state, in the other with the individual. Intermediate organizations, such as companies, were usually divided between the two groups. There was no simple legal distinction between public and private corporations in the United States until the nineteenth century. Initially, cities were not clearly separated from business enterprises by law however, in the mid-1800s cities were known as state entities, while business enterprises were regarded as individuals. When public agencies, cities were allowed only those powers that were assigned to them by states as fictional entities, private corporations came to enjoy constitutionally protected rights. This bifurcation of powers and rights lies at the root of the contemporary legal distinction between the public and private sectors.

2.0 POLICY PROBLEMS

Governments follow a privatization strategy to raising their burden in terms of resource under-utilization, over- and unsustainable employment, fiscal burden, financial crises, heavy losses and subsidies with a view to improving and rising productivity, public finances, infrastructure funding and the quality and quantity of management services. The proposed categories include accounting reasons, economic reasons, political reasons, social reasons, discrepancies in the motivation of public vs. private ownership and performance incentives post-privatization. Therefore, government's position in the post-privatization arena is of vital importance without which the desired goals could not be achieved. It can be inferred, based on the study, that it is not acceptable for a country to decide for privatization based on all the variables, but to choose one or more of them. On the other hand, this segment discusses the problems and the decisions that governments themselves need to take before a privatization process begins. They will vary from one project to the next. The initial groundwork and target clarity recommended herein would allow the privatization of ports by government sponsors to more clearly chart their direction. That, in effect, will lead to a quicker, smoother process inside. It will also draw more interested, skilled and eligible investors / operators, thereby providing government with the widest option and the best opportunity to achieve goals.

3.0 MAIN OBJECTIVES AND GOALS OF THE POLICY

Malaysia's privatization programme has been formulated and implemented by the Economic Planning Unit (EPU) in the Prime Minister's Department. According to the Director General of the EPU, "Privatization is a strategy by the government of rolling back its involvement in favour of freedom, competition, efficiency and productivity." The privatization policy of the government is designed to achieve the following objectives: • Relieve the financial and administrative burden of the government • Improve efficiency and productivity. • Facilitate economic growth. • Reduce the size and presence of the public sector in the economy. • Achieve the national economic policy targets.

An important objective of privatization is to reduce the financial burden of the government. Throughout the post-independence period, the government had incurred substantial expenditure in a number of sectors such as transport, communication, energy, public, utilities, and several development programmes. The government's commitment to provide adequate resources for a large number of development programmes to ensure rapid economic growth imposed a heavy toll on its financial resources. Moreover, the accelerated growth in the development expenditure together with slow growth in revenue earnings and inflexibility in operating expenditure contributed to a significant increase in the fiscal deficit. By the early 80s, operating expenditure, transfers, and debt charges accounted for more than half of the total federal operating expenditure. The rapid growth of government expenditure far exceeding the growth of government revenue resulted in the widening of the resource gap. This development prompted the government to find new approaches in relieving its financial burden, and privatization was considered to be one of the most effective and feasible alternatives.

Privatization is expected to provide the impetus towards raising competition, efficiency, and productivity. The government agencies are often constrained by restrictive rules and procedures which affect the decision-making process and the overall efficiency of the public sector undertakings. Moreover, the government also feels that protection of several public enterprises from market forces has bred complacency, inefficiency, and low productivity. Since the private sector is likely to be more efficient and innovative than the public sector, privatization is viewed as an effective remedy.

According to the EPU, the privatization policy is expected to contribute to growth by enlarging the role of private investment in the economy and widen opportunities for private enterprise. Since a substantial part of the activities and public enterprises that would be privatized under this policy is already profitable, this policy would provide incentive for the private sector to acquire assets of such undertakings and make them even more profitable. In fact, the EPU envisages that privatization would act as a catalyst for further economic growth and contribute towards fulfillment of the country's aspiration to become a developed nation. The commercial and profit orientation of private enterprises is expected to provide the thrust for further growth. Moreover, through higher efficiency and the generation of higher profits by the private enterprises, the government would also be able to gain additional revenues to finance its development plans. In addition, privatization of several new projects will result in further growth, because these projects might otherwise have been shelved owing to financial constraints of the government. An obvious intention of the privatization policy is to reduce the size of the public sector through withdrawal by the government from active and direct participation in economic activities. During the 70s, the government's role in economic activities had extended beyond the traditional areas of providing of public goods and social services into the areas of commerce and industry resulting in a large public sector. The feeling within the government is that this development is not healthy. The government, therefore, has decided to withdraw its involvement progressively and instead encourage more active private sector participation. The National Economic Policy of the Malaysian government is based on the principle of equitable distribution through growth. Privatization is expected to provide vast opportunities towards the achievement of this objective. While the number and involvement of Bumiputra (son of the soil) entrepreneurs and their participation in various economic activities have been growing since the implementation

of the NEP in 1970, there is an urgent need to achieve further rapid progress in respect of restructuring the ownership pattern in the economy. The privatization policy would enable many Bumiputra to participate directly or indirectly in the privatization projects.

4.0 ACTORS IN THE CREATION OF THE POLICY

According Dr. Mahathir he was introduced with the objective of privatization is easy to solve the government's financial burden and stimulate economic development. In line with the Government's new approach based on the new economic model in the Tenth Malaysia Plan, the Government intends to stimulate its effort in encouraging the private sector to invest in development projects. As such, the Government's allocation for development projects will be reduced and it can then shift its attention to projects that will be implemented and funded by the private sector whether through privatization and Public Private Partnerships (PPP), or through direct investment of the private sector in country's development programme. The Government has also set up a facilitation fund under the Tenth Malaysia Plan in order to support development projects implemented by the private sector as the Government's contribution through the cooperation of the public and private sectors. 3PU is the core agency that has been given the responsibility to coordinate the Privatization and the Public-Private Partnership (PPP) projects which have made an impact to the country's economy, and which can be given injection from the facilitation fund. The Privatization Policy was launched in 1983 to support the Malaysia Incorporated Policy towards increasing the private sector's role in the country's economic development. The main objective of this policy is to lessen the financial and administrative burden of the Government, improve skills and production, accelerate economic growth, reduce the size and involvement of the public sector in the economy, and to assist in reaching the country's economic policy's goal. In line with the implementation of the policy, a Privatization Section (in the earlier days known as the Privatization Special Task Force) was formed by the Government and was put under the Economic Planning Unit of the Prime Minister's Department (EPU, PMD) which acts as the secretariat to the Privatization Committee, which in turn is made up of various agencies working towards finalising and confirming the proposals on privatization for the Ministers' Council's approval.

In 1985 the Government produced a Guideline On Privatization which detailed out the objective of the policy, method of privatization, as well as the implementation mechanism. And in 1991 the Government produced a Master Plan on Privatization to explain the policy and strategy for privatization.

5.0 IMPLEMENTATION/ STRATEGY OF THE POLICY

Important decisions, such as which state-owned enterprise (SOE) to privatize and at what pace they need it for have to be made when embarking upon privatization. These decisions for the strategy of implementing a privatization policy’s issue will be briefly discussed that there are many exclusionary terms of privatization policy. There are many differing opinions regarding decisions on which SOEs to privatize and at what speed to implement this policy. Some authors believe that the correct strategy is to begin with those firms that are easy to privatize and work up to the more difficult cases. SOEs could be the smaller public firms or those that for various reasons lend themselves to the privatization process. For example, a few observers believe it is wise to start with SOE success stories so that buyers will be attracted to the sale and provide momentum for the new policy. Governments may, however choose to begin with a large scope of work and tackle the most burdensome SOEs first. Additionally, some governments option for an unselective, broad privatization process while others prefer to narrow down systematically their choices of which SOEs to sell. The latter option is considered a case-by-case strategy in which policy leaders reach consensus on which individual SOEs will be the target of their privatization efforts. Which SOEs to privatize may also be determined by the preparation costs involved. Here again, authors give differing advice. Some believe that SOEs should be sold as it is with no government investments made, as the government is most likely trying to reduce expenditures and avoid increased debt. Others state that government investment in SOEs may greatly pay off when the enterprise is put up for sale. The study of preparation costs entails much analysis, and observers point out that thorough study of the feasibility of the privatization of SOEs is highly recommended. Also, thorough exploration of privatization options should be explored, for maximization of policy effectiveness about what privatization see of forms and mechanisms discussed. Regarding the speed at which privatization is implemented, many authors caution policy leaders not to go too quickly while they believe that in going too fast implementors are prone to making serious mistakes. The observers also admit that if

policy leaders go too slowly and opposition to privatization may gain momentum and thwart future gains. Experts also note that the goals of governments are to privatize quickly and raise public income in government revenues. The more dire the need for money, the quicker the governments will sell their property. In Malaysia’s Privatization Programmed in implementing their privatization policy which an inter-departmental Privatization Committee headed by the EPU under the Prime Minister's Department in charge of implementing the privatization policy. This committee looks into the overall problems in implementation and monitors the progress of the privatization policy. For detailed studies relating to individual undertakings, technical committees comprising of personnel from relevant departments and ministries are formed. Based on their recommendations for necessary steps are taken to initiate the process of privatization of the undertaking. It is evident from Exhibit 1 that the methods used by the Malaysian government for privatization of public entities are quite varied. The Privatization Masterplan (1991) prepared by the EPU with the help of a consortium of local and foreign consultants has vividly described the following methods followed for implementing privatization in Malaysia. First for the sale of equity, this mode of privatization applies to government companies and it results in the transfer of three organization-related components, namely, management responsibility, assets and personnel. Sale of equity can either be partial or complete. A complete sale represents a transfer of 100 per cent government equity in a company, while a partial sale represents a transfer of less than 100 per cent. Some examples of privatization by this method are Tenaga Nasional Berhad, Cement In dustries of Malaysia, Sports Toto Malaysia, Malaysian Airline System, and Malaysian International Shipping Corporation. Secondly, for the sale of assets this method can apply to any kind of government organization to be it a company or any other type of entity. It may or may not involve the transfer of all the three components. Some examples of this method are Quarries in Selangor, Perak and Pulau Pinang. Next, for the lease of assets involves the transfer of rights to use the assets for a specified period of time in return for specified payments. The length of the period depends on the type of the project. For instance, in the case of Port Klang, the lease period is 21 years while in the cases of the North or South Highway and Malaysia Airports Berhad, it is 28 years and 60 years respectively. It is usually applicable to fixed assets particularly if the assets are large and strategic in nature such as seaports and airports. Lease rentals are based on future business prospects and not on the current value of the assets and the payments are calculated on the basis of a stream of income and expenditure flows over the lease period.

6.0 EVALUATION ON THE EFFECTIVENESS OF THE POLICY

6.1.1 ESTABLISHING INSTITUTIONAL REFORM There is a recognition that textbook principles of microeconomics take the presence of institutions for granted. Rodrik (1999) admitted in his research, that "the broader point that markets need to be supported by non-market institutions in order to perform well took a while to sink in". In fact, the interest in institutions has motivated empirical work on institutions and their contribution to the improvement of aggregate incomes (Acemoglu, Johnson & Robinson, 2001; Easterly & Levine, 2003). Various institutions are considered necessary for economic growth, such as property rights, regulatory institutions, institutions for macroeconomic stabilisation, institutions for social insurance and institutions for conflict management (Rodrik, 1999). Rodrik (1999) emphatically states that participatory political regimes deliver higher-quality growth. The overall principle at stake is competition. Regulatory bodies must ensure that competition, rather than specific competitors, is protected.2 With this idea forming the backdrop to policy-making, the overall welfare of society must be given due consideration rather than the interests of particular sectors or groups. Broadly, the intention of any microeconomic policy (and by extension, of any regulatory body), should be to safeguard the principle of attaining the highest possible welfare for the economy as a whole. The policy process in Malaysia deeply lacks some of the elements of 'good' regulation that we have been describing. While the practice of privatisation was, in essence and in principle, appropriate for Malaysia, execution was flawed due to a lack of the right institutions. The fundamental flaw, as we shall discover in subsequent sections, was the absence of appropriate institutions to guarantee that privatisation was carried out efficiently and effectively. Indeed, even the central documents that were released prior to privatisation exercise listed the goals, but were largely silent on the institutions necessary for the successful implementation of privatisation.

The second area that demands attention is the assessment and review process. Presently, there is no clear process through which assessments and evaluations are carried out. Private consultants are engaged on occasion, but the process is otherwise executed internally. In both cases, the independence of the assessment process comes under question. Finally, it is necessary to institute an agency that could monitor and report on the organisational aspects of the policy process. The ministries for their respective policy implementation would monitor those aspects that are related to the implementation of a policy. The function of monitoring would ensure the followings:

i. Routines in policy executing follow recommended flows and organisational structures; ii. Lines of responsibility are adhered to; iii. Implementation flaws are detected and improvement are advised on; and iv. Recommended procedures and standards are followed.

Since claims of mism...