privatization

NAME: MUHAMMAD ‘ARIFF PUTRA BIN ANSARUDDIN AGUSMATRIC NO: A 132588

The term “privatization” refers to the process of private, usually for-profit businesses

taking over the provision of public, government provided services. This includes contracting

with or selling to private parties the functions or firms previously controlled or owned by

governments.

Some types of privatization which may be considered in this project are outsourcing,

means that a government agency delegates some of its in-house operations or processes to a third

party. Besides that, Design, Build, Operate (DBO) means negotiating a contract with a private

firm for design and construction services with comprehensive operating agreements for new,

expanded, or upgraded facilities. Public-Private Partnership refers to a cooperative arrangement

between a local government and a private organization in which both parties assume some

responsibility for operating a program or service. The last one is asset sale. Asset sale means the

sale of government-owned assets to private companies, such as the sale of water/wastewater and

electric utility assets.

To propose a viable solution to ensure the success of the Innovative Research Park

project, this problem can be solved by the method of privatization the project itself. Privatization

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

with lower cost to be worried. It is a lot cheaper because it leads to lower prices and greater

supply and least corruption. The municipal wouldn’t have to worry about the cost as it is develop

by the private company itself, operates by them, and maintained by them. The municipal just

have to monitor the project and this will lead both party benefits. Privatization will give a chance

to many private companies to handle bigger project.

One of Kajang’s landmarks is Stadium Kajang which is situated in the center of the town.

The proposed site for Innovative Research Park is at the Stadium Kajang. Kajang Municipality

intends to redevelop the stadium into an Innovative Research Park. This research park is a

research facility that is often linked with a major research university. Basically the purposes of it

are to create linkages between the university, industry and the community.

TASK 3 PRIVATIZATION


Kajang Municipality should always be planned as part of an integrated public transport

system, not as a separate money-making venture. Kajang Municipality should make sure that the

tram lines should go where the demand is (present or planned), not where there is a disused

railway line or other surplus land. Monitor of the tram service in the city should be maintained. If

a tram interchange is necessary it should be at-grade and involve as short a walk as possible.

Frequencies of all services should be good enough that exact time keeping and connections are

not necessary.

Kajang Municipality have to monitor the cost structure and ticketing should be totally

integrated with the rest of the public transport system. All improvements to tram facilities should

be designed with potential conversion in mind. The release areas at the edge of Kajang may be

suitable as it can be planned for from the beginning. This would be dependent on the population

density being high enough to support a line, and that tram would take people to at least a major

centre without having to change.

To redevelop the stadium into the park, there are some possible problems in future that

may happen. The first one is loss of economies scale. One of the major advantages of

nationalized industries is that their sheer size allows them to take advantage of economies of

scale. Privatization normally involves the break-up of a large entity into many smaller ones. This

was particularly true with the railways. These smaller units will not be able to take advantage of

economies of scale in the way that British Rail could in the past.

Besides that, abusing of the 'public interest' there is one of the problems that may happen.

Those who have opposed privatization argue that the public utilities were nationalized in the first

place in the public interest. The utilities are products and services that are essential to all

members of the general public. A private company in charge of one of these industries, interested

only in profit, is likely to close down or marginalize unprofitable elements of its operations.

Privatization forces the new private companies to be efficient, or at least find some way

of reducing their costs in order to make a profit given the strict pricing formulae used by the



regulators. By far the most popular way of cutting costs for these firms was to shed labour in

large quantities.

Some advantages that will get when transformed the stadium into the park, such as

competition will be increased. Often privatization of state owned monopolies occurs alongside

deregulation such as policies to allow more firms to enter the industry and increase the

competitiveness of the market. It is this increase in competition that can be the greatest spur to

improvements in efficiency. For example, there is now more competition in telecoms and

distribution of gas and electricity. However, privatization doesn’t necessarily increase

competition; it depends on the nature of the market.

Besides that, managers of privately owned companies are accountable to their

owners/shareholders and to the consumer and can only exist and thrive where needs are met.

Managers of publicly owned companies are required to be more accountable to the broader

community and to political "stakeholders". This can reduce their ability to directly and

specifically serve the needs of their customers, and can bias investment decisions away from

otherwise profitable areas.

Performance and improvements are also play the role of advantages. State-run industries

tend to be bureaucratic. A political government may only be motivated to improve a function

when its poor performance becomes politically sensitive, and such an improvement can be

reversed easily by another regime. Conversely, the government may put off improvements due to

political sensitivity and special interests — even in cases of companies that are run well and

better serve their customers' needs.

The last one is the removal of political interference. In the private sector, decisions are

made on the grounds of efficiency and profit. Politicians may make decisions to further their own

political ends and not those of the industry in question.



There are some disadvantages that may happen when the stadium will be transformed

into the park. The first one is regulating private monopolies problem. Privatization 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.

Lacking of market disciplines is one that may happen. Poorly managed state companies

are insulated from the same discipline as private companies, which could go bankrupt, have their

management removed, or be taken over by competitors. Private companies are also able to take

greater risks and then seek bankruptcy protection against creditors if those risks turn sour.


privatization

Engineering