DEPARTMENT OF CIVIL AND STRUCTURAL ENGINEERINGFACULTY OF ENGINEERING AND BUILT ENVIRONMENTALTHE NATIONAL UNIVERSITY OF MALAYSIA

KKKH 4284 SUSTAINABLE URBAN PLANNINGTASK 3: PRIVATIZATION

STUDENT:WAN TALHAH BIN WAN IBADULLAHA133106LECTURERS :PROF. IR. DR. RIZA ATIQ ABDULLAH BIN O.K. RAHMATDR. MUHAMMAD NAZRI BIN BORHANPN. NORLIZA BT MOHD AKHIR

INTRODUCTION

Privatization is the process of transferringownershipof abusiness, enterprise, agency, public service, or public property from thepublic sector(a government) to theprivate sector, either to a business that operates for a profit or to a nonprofit organization. It may also mean governmentoutsourcingof services or functions to private firms, e.g. revenue collection, law enforcement, and prison management.Privatizationhas also been used to describe two unrelated transactions. The first is the buying of alloutstanding sharesof apublicly tradedcompany by a single entity, making the company privately owned. This is often described asprivate equity. The second is ademutualizationof amutual organizationor cooperativeto form ajoint-stock company.

BACKGROUND OF SUGGESTED SITE

The center of Kajang is the bustling Old Town, where all the roads meet. Most of the colonial-era buildings were constructed around 1920s to 1930s. The architecture of these shop houses is a combination of traditional Chinese and European designs. The ground floor was used mostly for commercial activities and the upper floor as the family living quarter.One of Kajang's landmarks is Stadium Kajang which is situated in the heart of the town. It is near a popular hangout place among the locals named Haji Samuri, which is also home to the famous dishsatay Kajang. People come from all over Malaysia to taste thesatayhere. The stadium can accommodate up to 5,000 people and is used throughout the year for the community soccer competitions.

CONCEPT OF PRIVATISATION

Privatization covers a wide spectrum of government operations and ownership arrangements. Where it can be apply to various commercial or industrial enterprises which are often owned, managed and implemented by the public sector which could otherwise be operated by the private sector. Commencement of the privatization in Malaysia initiative in 1981 and officially took off as a government policy in 1983. Government launches the Privatization Masterplan in February 1991.The objectives of privatization are: Inject private sector efficiency, productivity and technology into key areas of the economy Facilitate economic growth through multiplier effects of the private sector spending To relieve the financial and administrative burden of the Municipality Kajang To reduce the size and presence of the public sector in the economy where privatization can reduce crowding out of private sector and competitions funds To help met national targets.There are many types of privatisation method exist in the current economy policy such as By section, By choice, Trade Oriented, By Contract, By Mortgage, Sale of Equity,Build-Operate-Transfer (BOT),Build-Operate-Own (BOO),Sale Of ASSet (SOA),Corporatization (COR), Management-But-Out (MBO),Lease Of Asset(LOA),Management Contract (MC) and etc. The main idea for redevelop the stadium into an Innovative Research Park is to turn the municipality into centre for innovative, high value added industries. It must sustainable in terms of environmental friendly, suitable for society activities and cost saving, which means that this project is beneficial and profitable.

RESPONSIBILITIES OF GOVERNMENT IN PRIVATISATION

I. Government provide land

The land of stadium will be provided by the government where the land title will be transfer to developer with a reducing price. The stadium location will become property of owner.II. Quality control

Government has the dual roles in the Innovative Research Park, both as the managers of public infrastructure and also as the conferrer of the project concession. The government will facilitate, coordinate, purchase contract on market services by the private company, and give any assistance to get any necessary approval. The government will do have inspection and enforce the provision of private sector services and ensure an Innovative Research Park is friendly to users especially to students.III. Provide LoanPrivate sectors are allowed to apply soft loan from government agencies. This is because this project beneficial and the government will support private sector to give best facilities in town. In the concession agreement, the government should have to bear the corresponding responsibilities and risks, and provide a certain policy guarantee.IV. Subsidize to public provisionIn order to make the Innovative Research Park in Kajang more profitable, the government provides subsidies to private sector. However, the private sector should provide good services to consumers. Therefore, they will be an increase number of students and community to fully take advantages into this Innovative Research Park.

If the rate of return cannot be met as the requirements, the government should have to provide further support and corresponding legal measures to ensure the feasibility of the project

RESPONSIBILITIES OF PRIVATE COMPANY IN PRIVATISATION

i. Construct and redevelopment

With the land and loans provided by the government, it is the private firm responsibility to complete completely the project without violating the particulars contained in the contract that was agreed. Project Company is the project's direct contractor, or a joint venture which is built up by the project sponsor to construct and operate the whole project with self-management, self-financing.

ii. Services

Private firm has responsibilities to ensure that they have provided best services including charge, funding and marketing, with subsidiary agencies and subcontractor where appropriate. They also must meet the requirement by the government. Not only that, private firm should ensure to have public staff to monitor and manage tram line services.Private firm also have to continuously make a marketing to ensure community especially students take part in turn the municipality into centre for innovative and high value added industries

iii. Environmental Impact

Private firm must make sure that they can minimize environmental impact on site during construction or post-construction as per environmental requirement. Demolishes or redevelop work may create a pollution to the surrounding. So, EIA study needs to be done first.

ADVANTAGES AND DISADVANTAGES OF PRIVATISATION

ADVANTAGESDISADVANTAGES

i. Privatization places the risk in the hand of business or Private Enterpriseii. Private enterprise is more responsive to customer complaints and innovationiii. The government should not be a player and an umpireiv. Privatization provides a one off cash boost for governmentv. Privatization leads to lower prices and greater supplyvi. Competition in privatization increases differentiationi. Privatization is expensive and generates a lot of income in fees for specialist advisers.ii. Public monopolies have been turned into private monopolies with too little competition, so consumers have not benefited as much as had been hoped.iii. The nationalized industries were sold off too quickly and too cheaply.iv. The privatized businesses have sold off or closed down unprofitable parts of the business and services.v. Wider share ownership did not really happen as many small investors took their profits and didnt buy anything else.

FUTURE PROBLEMS IN PRIVATISATION OF THE PROJECT

i. The preparation of the project requires long process and periodii. The overall implementation of the process is relatively and complicated for the whole project.iii. Privatization of the project may lead to a direct consequence as to turn the high value added industries only depending on the profits.