The Kajang Municipality intends to redevelop a stadium into an innovative research park but lacks funding. Privatizing the project is proposed as a solution. Privatization would allow a private company to fully fund, operate, and maintain the research park at lower cost to the municipality. The municipality would still monitor the project. Privatization improves performance and accountability compared to state-run projects and increases competition. However, the government would lose potential dividend income and private monopolies may form requiring regulation. The proposal requires cooperation between the developer, government, and local community.

1. 1PRIVATISATION – MOHAMAD AFFENDI BIN ISMAIL
PRIVATISATION
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 centre 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, 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 to be worried.It is a lot more 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.Privatisation will give a chance
to many private company to handle more bigger project.
ADVANTAGES
Performance
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.
Improvements
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.

2. 2PRIVATISATION – MOHAMAD AFFENDI BIN ISMAIL
Accountability
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
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.
Increased Competition
Often privatisation 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,
privatisation doesn’t necessarily increase competition, it depends on the nature of the market.
DISADVANTAGES
Government loses out on potential dividends.
Many of the privatisedcompanies are quite profitable. This means the government misses out on
their dividends, instead going to wealthy shareholders.
Lack of market discipline
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.

3. 3PRIVATISATION – MOHAMAD AFFENDI BIN ISMAIL
Private companies are also able to take greater risks and then seek bankruptcy protection against
creditors if those risks turn sour
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
• Assist in transferring the land the developer
• Give assistance to get necessary approval
• Transfer of the land title to the developer
• Give assistance to relocate the squatters and land owners
• Give assistance to transfer the ownership of part of the area from land owners to the
developer
• Allow the developer to construct a modern mega research centre.
Developer
• Transfer of certain floor area of completed office space to the government
• Construct low cost houses to be given free of charge to the squatters
• Construct infrastructure network, including two grade separated intersection
• Construct a number of houses to be given to the land owners as offset of their land lots.
• Construct an underground pedestrian crossing

4. 4PRIVATISATION – MOHAMAD AFFENDI BIN ISMAIL
• Upgrade existing road infrastructure surrounding the development
• Construct and maintain a public garden