KKKH 4284

PERANCANGAN BANDAR LESTARI

Task 3

(Privatisation)

Nama : Nurul Afina Bt Abd Mutalib

No.Matrik : A 134187

Nama Pensyarah : Prof. Ir. Dr. Riza Atiq Abdullah Bin O.K Rahmat

Tarikh : 20/03/2014

Problem:

Kajang Municipality intends to redevelop the stadium into an Innovative Research Park. The

park is intended to take advantage of a number of universities and research centres in Kajang

area to turn the municipality into centre for innovative, high value added industries.   

However the administration is in no position to fund the proposed project.

You are required to propose a viable solution to ensure the success of the project.

Explain the responsibility of all parties involved in the project, project component, the benefit

of your proposal and the problem that might occur in the future. 

Solution:

This problem can be solved by the method of privatisation the project itself.

Privatisation is a good way to develop the research project because it is can generate very fast

development, with lower cost and more optimization on labours. The price that been given by

the privatisation are much more cheaper because it leads to lower prices and greater quality

of supply the quantities. Besides that, the privatisation will give a chance to private company

to handle the more bigger project. From here, the municipal can deal with the private

company that been chose based on criteria given.

Other than that, the privatisation is expensive and generates a lot of income in fees for

specialist adviser such as banks and professional workers. As well as the government being

motivated by short term pressures, this is something private firms may do as well. To please

shareholders they may seek to increase short term profits and avoid investing in long term

project.

For these project, some of the problems need to be identified and overcome it (Kajang

area). Mostly, they are facing flood problem which occur when a heavy rain come. Maybe

some of the building existed is not suitable with that area. The drainage and irrigation also

need attention. This is because it can be the main reason why the severe flood occurs once in

a while. Moreover, the contour or elevation/platform level of Kajang area need to be

considered in any research because it also contribute to the impact of flood problem.

Besides that, the traffic congested is one of the daily problem occur in Kajang town

area. It occurs in peak hour which is 7.00 am -9.00 am and 5.00 pm- 8.00 pm. From my point

of view, maybe the position of building or shop outlet are not suitable in that area. The

building is too near to the existing road and the parking area is situated in front of every shop

outlet. There are also illegal parking in that area makes the traffic become more worse.

ADVANTAGES

Privatisation and Growth

Privatisation played an important role in accelerate economic growth through greater

investment which led to corporate expansion. Growth was also generated through efficiency

gains as more output was produced using lesser amount of resources. The construction of

highways for example, led to increased growth in manufacturing activities for construction

based industries and resulted in time savings to motorists as well as reduced operating costs

for vehicle. With privatisation, more resources were also available for the Government to

spend on others sectors of the economy, thus contributing to the growth of those sectors.

Savings

Private companies have more profit incentive to cut costs and this lead to a more efficient

development. If we work for a government running a project, managers do not usually share

in any profits. Recurrent income from privatization in the form of lease rentals further

contributed to the Government revenue. These savings and proceeds from the sale of assets

and equity and corporate tax enabled the Government to reduce its borrowing as well as

reallocate resources to other sectors such as education and health. It also contributed towards

balanced budget, thereby strengthening public sector finances.

Lack of Political Interference.

It is mainly known that governments make poor economic managers. They are motivated by

political pressures rather than sound economic and business sense. For example a state

enterprise may employ surplus workers which is inefficient. The government may be

reluctant to get rid of the workers because of the negative publicity involved in job losses.

Therefore, state owned enterprises often employ too many workers increasing inefficiency.

Efficiency and Productivity

Privatisation contributed towards increased efficiency and productivity of the privatised

entities through improvement of quality of service and management systems. The overall

performance of the privatisation entities improved due to the expansion of capacity and

service networks as well as acquisition of modern equipment and technology. In addition, the

development of positive attitudes as well as changes in the mind-set of employees of

privatisation entities contributed to their increased efficiency and productivity.

Technology Transfer

Privatisation enabled Malaysian to acquire new technologies and expertise through

collaboration with foreign equity holders, management contract or consultancy services.

Local engineers acquired the latest technologies in concrete pavement design and

construction and made use of recycled materials in construction of road pavements.

DISADVANTAGES

Government loses out on potential dividends.

Many of the privatised companies are quite profitable. This means the government misses out

on their dividends, instead going to wealthy shareholders.

Problem of regulating private monopolies.

Privatisation creates private monopolies, such as the water companies and rail companies.

These need regulating to prevent abuse of monopoly power. Therefore, there is still need for

government regulation, similar to under state ownership. As the research park has been

developed, there will still be need monitoring by the municipal itself. The municipal must

enforce regulations and laws so that the private sector must follows and less dominate the

field.

REQUIRED PARTIES:

 Government (Majlis Perbandaran Kajang)

Transfer the land title to the developer 

Allow the developer to construct the Innovative Research Park 

Give assistance to get necessary approval

Give assistance to make sure developer follow the related guideline appropriately

Make sure the developer consider the environmental issue in Kajang area

Monitor all the works done by the developer 

Take any action if there is abuse of power by the developer 

Look after the righteousness of Kajang’s residents

Developer

Get the approval for running the project from the authority

Upgrade existing road infrastructure surrounding the development

Follow the guideline related to their development

Protect the righteousness of Kajang’s residents and not giving any problem to the residents of Kajang along the way of construction

Announce everyone about the project detail

Making the research park is user friendly to everyone as it also can act as theinformation centre for tourist

Commercialized any attraction that existed in Kajang

Making research on the problem happened in Kajang area

Provide a best solution to solve any problem occur in Kajang area

OTHER’S PARTIES:

Designer

This department has to design the complex and ensure the design approved by the municipal

according to the specification given

Builder/ Contractor

This department must build the complex and ensure the safety of the building and the insured

period.

Operation and Management

This department must hire workers for operation and manage the complex until the

concession ends.

Financial Management

This department must manage all the financial of this project before, during and after the

completion of the project until the operation.

Maintenance

This department must take safety measures to all aspect including workers, public and

environment.

BENEFIT OF MY PROPOSAL

The Innovative Research Park towards Sustainability

Develop faster with the interference of private sector

Reduce corruption

The righteousness of resident of Kajang is cared

Resident’s Kajang much more comfortable

The development of Kajang will improved

The facility in Kajang area will enhanced

More employment opportunities in Kajang area

THE PROBLEM THAT MIGHT OCCUR IN THE FUTURE

If the facility increase, the living cost will be higher

Air pollution in the area will be polluted because of the increasing construction

Burglaries and robberies will increased because the demand of living cost are higher

Conclusion

It shows that Kajang are the strategic place for progressive development and has a

good economic base as it can provide a good employment chance. The research park need to

come out with the idea to commercialized Kajang by using the resource that come from

Kajang itself. Hence, it will ensure brighter future for the sustainability of the development.