Should Malaysian Government encourage privatizati

Essay by EssaySwap ContributorUniversity, Master's February 2008

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In 1983, the Malaysian Government introduced the privatization policy. Governments main objective in introducing privatization policy is to relieve the financial and administrative burden of the Government, to facilitate national economic growth, to promote achievement of the New Economic Policy targets, to improve the efficiency and productivity level of the country, and to reduce the size and presence of the public sector in the economy (

Since 1983 when privatization was first launched, a total of 457 projects have been privatized. The majority of privatized projects involved the corporatization of government-owned agencies and transfer of existing entities to the corporate sector. Privatization is being used in Malaysia to reduce the public sector and develop the economy.

As a first step in implementing the government's privatization policy, the National Electricity Board was corporative in 1990 as Tenaga Nasional Berhad (TNB) and subsequently privatized and floated on the Kuala Lumpur Stock Exchange, with the Ministry of Finance holding about 70% of the shares.

The Malaysian model of privatization of the power sector, which was designed to meet the country's social and economic objectives, has been able to secure adequate supply of reasonable quality, ensure affordable and stable electricity prices, provide confidence to the investors, meet the funding challenges, promote competition and improve efficiency and productivity(

Privatization in now a world phenomenon used to denote the transferal of ownership and operation from the public sector to private enterprise. It is used by former socialist countries to quickly introduce capitalism. Malaysia is using it to introduce new technology and expertise through government concessions and sub-contracts. It is also used to redress the capital ownership distribution among the ethnic groups, where the Malay Bumiputra are the main beneficiaries. The major implication of privatization is that it reduces the public sector, implying relief on the fiscal...