Chapter 7:

Administrative Reforms in Malaysia

KLB 2213: Introduction to Public Administration

Class Activity

A public talk by the selected students are being held as to cover this topic

Public Talk: Administrative Reforms

The Malaysia ExperienceModerator:

Yusrin

The Speakers:(i) Noor Kamilah(ii) Yugendhran

(iii) Eissa

The Topics

i. Introduction to Administrative Reforms Concept

ii. The Malaysia Experience: Administrative Reform in Malaysia

Phases of Administrative Reform Efforts

The Concept of Malaysia IncorporationThe Concept of Privatization

An Introduction to Administrative Reforms

Administrative Reforms• Administrative reforms is meant to improve administrative

capability and capacity, for the purpose of achieving national goals effectively.

• It is meant to encourage an effective administration capable of bringing about economic, political and social development (Caiden, 1969).

• The changes that are to bring about in an organization to cover both (a) structure and procedures of public bureaucracy & (b) the attitudes and behavior of public bureaucrats. ( Quah , 1976)

Administrative reform is needed in the following circumstances:

i. When the administration is obviously failing to meet the demands put on it.

ii. When the administration, though meeting current demands, is not equipped to tackle extra demands.

iii. When the administration with reserve capacity is unable to anticipate future demands.

iv. When the administration does not adopt the most effective method

Administrative Reforms in Malaysia

Background to Administrative Reforms

Malaysia Three Phases of Administrative Reform Efforts

The Colonial Period

Pre-Independence Period

The New Public Management (NPM) Era

Phases I: The Colonial Period. • British replaced the traditional-feudal administrative system with a

more modern, organized and systematic administrative structure.

• The British laid down the basic principles of the modern public administration system in the country.

• The British model of financial accounting and judicial system which are more structured and advanced were introduced in Malaysia (then Malaya).

• Based on this background, the Malaysian public service had developed and progressed.

Phase II: Pre - Independence Period

• The second stage called Development Administration – emphasized mainly the structural changes in the government administration

• Main changes was Malayanising the bureaucracy – replacing the expatriates with Malayan civil servants (from 67% in 1957 to 9.2% in 1963).

• As a newly independent countries, the government function as national building has been added with a new role in national development – the one directly involved in the country economic development. Implementation of New Economic Policy (NEP)

• Resulted in the growth of the public sector department - from 10 in 1957 to 659 in 1988 and over 1, 000 in the 1990s

• The government started interfere into economic and commercial activities by establishing the public enterprises (PE) – to lead the developmental programmes.

National Training Institute to train public sector employees

To identify major issues and suggest recommendations on public administration issues

• Resulted in the growth number of public sector employees - from 139, 476 in 1970 to nearly 521, 818 in 1983 in 1957

• The growth had caused not only fiscal crisis for the ruling government but also resulted in the ineffective in the public service.

Phase III: The NPM Era• Impressed on the government the need to review the effectiveness and efficiency of its public

service in line with its efforts to ease its financial difficulties. – overhaul the government’s policies and the government’s machinery

• Government administration upheld the philosophy of public-private sector cooperation by the Japanese experience in economic growth – inspired the Malaysian government to formulate the Malaysia Incorporated (MI) Policy

• Later, strengthened by privatization programme, to provide the avenue to the emergence of an effective and dynamic private sector.

• By 1990 the New Economic Policy (NEP) was replaced by the National Development Policy (NDP).

• The main objective of NDP is to obtain a balanced development in order to establish a more united and just society - advanced stage of social engineering process to restructure the multi-racial society which stress not only economic and social aspects but also moral and ethical values.

The Concept of Malaysian Incorporated

• Launched in 1983

• Provides the framework for public-private sector collaboration in pushing the economic agenda of the nation

• The public service should play the role of a facilitator, supporter, regulator and adviser.

• The private sector play an important role in deriving the market growth.

The Malaysian Concept of Privatization

• Privatization is the process of selling state-owned enterprises to the private sector.

• Privatization was policy taken by the government to:i. counter the poor performance of public

enterprises and ii. combat the public sector deficits as well as the

debts problem.

• In Malaysia, the term privatization was officially defined as the transfer of ownership and management of government services and enterprises to the private sector. limiting the government’s role and reducing the

size of the government bureaucracies to promote market efficiency

an alternative form of delivering services previously provided by the public sector

Objectives of Privatization

• FIVE (5) major objectives in implementing the privatization programme:i. Relieving the Financial and Administrative Burden of

Governmentii. Improving Efficiency and Productivityiii. Facilitating Economic Growthiv. Reducing the Size and Presence of Public Sector in

the Economyv. Helping to Meet the National Development Policy

Targets

Methods of Privatization

• FOUR (4) methods of privatization government entities:i. Sales of Assets or Equity

- Sales of Equity (SOE): transfer of all or any of the three organization-related components of management responsibility, assets and personnel.- e.g: EON, MISC and Syarikat Telekom Malaysia

ii. Lease- transfer of rights to use or occupy the assets for a specific period, in return for specified amounts of payments- e.g: Privatization of the Aircraft Maintenance Depot

iii. Management Contract- Involves the management of government entity by the private sector for a fee.- Entails the transfer of management responsibility, may or may not involve the transfer of personnel.- e.g: Semenyih Water Treatment Plant

iv. Build-Operate-Transfer (BOT) and Build-Operate (BO)- Applicable in privatizing new project, developed by the public sector.- usually utilized for infrastructural and utility project - BOT methods: private sector construct a facility using its own funds and operates for a concessionary period.- e.g: North-South Highway- BO methods: does not involve transfer of the facility to the government- e.g: Light Rail Transit (LRT)

Thank You