A 36-page assignment (journal standard) paper for the subject 'Management and Public Policy', Master of Public Policy (mixed mode), University Malaya

1. 1
WHY THERE ARE SUCCESSES AND FAILURES IN PRIVATIZATION AND
PUBLIC-PRIVATE PARTNERSHIP (PPP)
Program : Master of Public Policy, International Centre for
Public Policy and Management (INPUMA), University
Of Malaya Kuala Lumpur
Course Title : Management and Public Policy
Course Code : ZIGP 6106
Name : Mohd Hasim Ujang
Student ID : ZGA110011
Prepared For : Abdullah Azmi Abdul Khalid (Supervisor)

2. 2
ABSTRACT
The transition from traditional public management to the New Public Management in
the 1980s was followed by gradual but massive privatization exercises that aimed to
reduce governments’ burdens and to stimulate growth in the private sector, which in
turn would spearhead major economic developments. However, the results from
various privatization projects in different countries have been a mix of successes and
failures.
To increase projects’ efficiency and to reduce risks of failures, a newer method of
burden-sharing between government and private sector, the Public-Private
Partnerships (PPP) was introduced and carried out in countries where privatization
has been afoot. Thus, this paper critically examines the root causes of successes
and failures in privatization and PPP ventures by referring to comparative examples
from a number of developed and developing countries. This is preceded first by a
preliminary chapter that explores the technical and terminological differences
between ‘privatization’ and ‘PPP’. Afterwards, examples of privatization exercises
and study reports from different countries mainly Malaysia, United States, and
Nigeria are examined and discussed to construct critical analysis and arguments.

3. 3
INTRODUCTION
What is the difference between Privatization and Public Private Partnership
(PPP)?
Filip Drapak (2009)1
offered a definition for privatization as ‘the incidence or process
of transferring ownership of a business, enterprise, agency or public service from the
public sector (government) to the private sector’ (encompassing both profit and non-
profit organizations). He further expanded the definition further by stating that ‘in a
broader sense, privatization refers to transfer of any government function to the
private sector - including governmental functions like revenue collection and law
enforcement’.
Alternatively, Jomo Kwame Sundram and Tan Wooi Syn (2009)2
defined
privatization as ‘the transfer of enterprise ownership from the public to the private
sector’ as well as ‘changing the status of a business, service or industry from state,
government or public to private ownership and control’. They further stated that
‘privatization can be strictly defined to include only cases of the sale of 100 percent,
or at least a majority share of a state-owned enterprise (SOE) or its assets to private
shareholders’.
Whereas the definition of public-private partnership (PPP) somewhat varied with
some scholars regarded it as ‘a variation of privatization’3
and some insisted that it
essentially differs from privatization as it is actually a ‘contract with a specified end
date’4
hence, it doesn’t involve full and perpetual transfer of ownership from the
government to the private beneficiary2
.
1) Filip Drapak, a Senior Specialist at World Bank. Source: Let's not go out and throw the word
privatization around… http://pppartnership.blogspot.com/2009/07/lets-not-go-out-and-throw-
word.html published on 24th July 2009, retrieved on 14th
May 2012.

4. 45) Charlie McCreevy, PPPs: ‘A solution for cash-strapped EU governments’. Source:
http://www.euractiv.com/innovation/ppps-solution-cash-strapped-eu-governments/article-
160513 published in 18th
December 2006 and 21st
June 2007, retrieved on 14th
May 2012.
2) Jomo K.S. & Tan Wooi Syn, Privatization and Re-Nationalization in Malaysia: A Survey (p10)
http://www.jomoks.org/research/pdf/IPD_Privatization_Renationalization.pdf or
http://unpan1.un.org/intradoc/groups/public/documents/un/unpan021546.pdf published in
2009, retrieved on 14th
May 2012.
3) Filip Drapak, Ibid, citing Kieran Lynch.
4) Filip Drapak, Ibid, citing Amit Mitra,
(http://www.hindu.com/thehindu/holnus/001200907121571.htm) John Prescott
(http://www.slate.com/articles/news_and_politics/slate_uk/2002/02/explainer.html and
http://www.guardian.co.uk/theguardian/2001/may/02/guardianletters) and Charlie McCreevy
(http://www.euractiv.com/innovation/ppps-solution-cash-strapped-eu-governments/article-
160513).
However, based on the abovementioned explanations and examples, it is quite clear
that there is a marked distinction between ‘privatization’ and ‘PPP’, whereby the
former is a total handover of public service functions from one party (government) to
another (private entity) while the latter is just a ‘complex form of public procurement’5
that does not involve perpetual transfer of ownership from the originator to the
beneficiary. Based on the examples and references above, further differences
between privatization and PPP are explained in the following table:
Table 1: The difference between PPP and privatization
Privatization Public-Private Partnership (PPP)
1. Characterized by complete transfer
of certain roles or responsibilities
from the government to one or
more private entities. For example,
in the case of Malaysia, the role of
main energy provider was
transferred from the government to
3 private limited companies (1 in
1. Described as the outsourcing or the
contracting out of certain large scale
public infrastructure projects or services
to one or more private contractors.
Examples of projects that are normally
carried out through PPP are the
construction of civil infrastructures such
as tolled highways, airports, large-scale

5. 5
Peninsular, 2 in Sabah and
Sarawak) while the role of
telecommunication service
provider was transferred to major
telco companies (Telekom,
Celcom, Maxis and Digi).
2. The beneficiary/ies completely
run/s the function previously held
by the government while the
authorities remain as primary
regulator through policy and
taxation instruments.
3. In such cases, government’s
reacquisition is a distant possibility
and the transfer of role is perpetual
with no specified terminal date (i.e.
the ownership of that role is
transferred indefinitely to the
private agent/s).
4. Provision of the start-up capital is
the sole responsibility of the private
beneficiary/ies. The government
simply pass over existing assets
and facilities to the beneficiary/ies.
urbanization, development of strategic
economic zones or corridors of growth
and so forth.
2. Defence, health and education services
are also primary examples of PPP
whereby the government appoints
private contractors to furnish parts of the
infrastructure, supplies and/or services to
complement government’s role. In these
instances, the government remain as the
de facto service provider with private
sector merely as assisting partners.
3. In many cases, the beneficiary/ies
provide/s major portion of the capital
needed for the project/s and allowed to
recoup the expenditure plus certain
amount of pre-negotiated profits from
public users through collection of fees
and service charges.
4. Government’s reacquisition is automatic
upon expiry of the partnership agreement
(agreement period varies somewhat
between 25 to 99 years, extendable by
negotiations).

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With these differences in mind, the paper proceeds into the main discussion using
explanations that are tailored along these differences.
DISCUSSION
Why are there failures in privatization and PPP ventures?
The Malaysian Case
In the case of Malaysia, prior to active privatization of public services in the early
1980s, the post-colonial government had already set up numerous state-owned
enterprises (SOE) at federal, state and regional level. These enterprises are
basically service providers and business entities that are registered under
Companies Act 1965 but exclusively owned by federal and state governments. By
the end of March 1990, there were a total of 1,158 Malaysian SOEs owned by
federal and state governments that were reported by the World Bank (refer Table 1
and Table 2 of the report by Jomo K.S. and Tan Wooi Syn)2
.
In their conclusion, Jomo K.S. and Tan Wooi Syn (2009)2
argued that the
performances of these SOEs are generally lacklustre, with 40 to 50 percent of the
enterprises are either classified as ‘sick’ or ‘weak’ by the World Bank for 9 years in a
row (1980 to 1988; see Table 5 and 6 on page 8 & 9 of the same report)2
. The
phenomena of SOEs weaknesses were mainly attributed to the absence of effective
mechanism for performance monitoring and evaluation. Despite economic
recessions due to the oil crisis in the 1970s another economic crisis in 1984 – 1985,
the SOEs continued to grow in size and clout, consuming public expenditures while
roughly half of them did not exhibit robust profits (Ibid, page 5, 7 and 9)2
.

7. 7
6) Zainal Aznam Yusof and Deepak Bhattasali, Economic Growth and Development in Malaysia: Policy
Making and Leadership, page 17. Source:
http://www.neac.gov.my/files/Economic_Growth_and_Development_in_Malaysia-
Policy_Making_and_Leadership.pdf published in 2008, retrieved on 14th
May 2012.
7) Ibid
Furthermore, the issue of incoherent fundamental objectives and operating maxims
that are not in tandem with principles of financial viability contributed further to
problems of underperformance plaguing the concerned SOEs at that time. According
to the same paper, the only thing that rescued those SOEs from bankruptcy and
closure was Malaysia’s steady income from petroleum resources which was
discovered and extracted since 1973 (Ibid, page 3 & 7)2
. Without these natural
resources, the rapid expansion of SOEs would have not been possible. In this
respect, the non-performing SOEs are viewed as a ‘net consumer of public
resources’ (Ibid p7)2
rather than a contributor to public interest as a whole.
Against these backdrops, the Mahathir administration in 1983 announced a major
policy shift via Malaysia Incorporated Policy6
, which was a cooperation framework
between the government and the private sector towards creating a corporatized
Malaysia in order to achieve progress. In February 1991, the government issued the
Privatization Master Plan (PMP)7
which among others, claimed that the privatization
exercises thus far carried out had been successful and that the pace of privatization
would be expanded and accelerated further under the master plan.
With these initiatives, the government embarked upon massive privatization of some
major SOEs government agencies covering numerous sectors such as agriculture,
plantation, property development, civil engineering and construction services,
logistics, telecommunication, utility providers and so forth (for a list of samples from
Malaysia’s privatized SOEs and public agencies, see Appendix 1).

8. 8
Although numerous reports produced by government agencies such as Economic
Planning Unit (EPU) and Performance Management and Delivery Unit (PEMANDU)
tried to paint a highly glossy image of Malaysia’s privatization policy, independent
research managed to show the policy’s outcome from a different perspective. For
example, the deeply analytical work of Jomo K.S. and Tan Wooi Syn (2009)2
is
highly critical and less than complimentary to the Malaysian privatization policy as a
whole. The authors presented numerous points with detailed elaborations to support
the aforementioned inference which could be explained as follows:
1. Privatization in Malaysian started off with a set of fundamentally flawed
assumptions. First, it seemed to assume that the inefficiencies and poor
performance of SOEs and public organizations are the results from inherent
characteristic of public ownership. The policy also seemed to assume that those
deficiencies can be corrected via privatization without changing the fundamental
ethics of how those SOEs and public agencies were being run. As a result, the
weaknesses in performance and internal management that plagued some of
these SOEs and agencies were still prevalent even after privatization. These
privatized SOEs and agencies continued to make losses and had to be bailed
out (or in some cases, reacquired) by the government when private ownership
failed to keep the companies afloat.
2. Much of the privatizations and divestitures were carried out without due
diligence, characterized among others by the blatant undervaluation of share
prices and government assets that allowed the selected beneficiaries to make
windfall profit, even before the company began operation (see the report above
on page 13 and 34). Such practices defeated the purported purpose of
privatization, which was to reduce government financial burden and to bring

9. 9
more profitability and more social benefits to the government and the country as
a whole. Thus, what actually happened was the instant transfer of corporate
wealth and benefit from the government to private beneficiaries whose main
ambition was not really to serve public interest, but to make wealth either for
themselves or their political masters to whom they are beholden to (example: the
Tajuddin Ramli’s case involving Malaysia Airlines)8
.
3. There was a glaring lack of clear conscience and transparency in the selection of
which particular service/agency to be privatized and which were not. Strong
private interests had been influencing the government to privatize the potentially
profitable services/agencies while leaving the less attractive ones to remain in
government’s hands. For example, the privatization of National Telecom
Department was actually brought about by a proposal from Sapura Holdings who
commissioned a report directly to the government in 1983 titled ‘The Advantages
and Feasibility of Privatizing Jabatan Telekom Malaysia’.
4. Such a modus operandi was believed to be repeated in numerous occasions
which resulted in the proliferation of privatization that were based on
connections, cronyism and corporate bargaining rather than merits based
selection accompanied with due diligence. Such unhealthy background renders
privatization to be ineffective in giving the best value for money for the
government and the citizens in general, because government did not impose
strict competitive bidding to select the best privatization proposal.
5. In general, privatization of Malaysian SOEs and public services focused more on
cosmetic and ownership changes without being accompanied by substantive
institutional and managerial reforms. It was also carried out mainly without
8) The Edge Malaysia: 1) ‘Tajuddin Ramli’s case to proceed’.2) ‘The Saga of Tajudin Ramli’. Sources:
http://www.theedgemalaysia.com/highlights/200346-tajudin-ramlis-case-to-proceed.html and
http://www.theedgemalaysia.com/in-the-financial-daily/200341-the-saga-of-tajudin-ramli.html,
published on 2nd
February 2012, retrieved on 22nd
May 2012.

10. 10
adhering to general principles of good governance and good management
practices. For instance, the absence of competitive bidding to select
beneficiaries, the persistent lack of government oversight to instil greater
accountability and the continued monopoly of many privatized services who have
the liberty to revise charges without much restrain, all contributed to the
perception that privatization was actually a liability to the general public rather
than a miracle cure for the economy.
As for the PPP in Malaysia, the frequently observed major issue is cost overrun or
more commonly known as cost inflation involving large scale public projects that
have been contracted out to private companies who are well connected to the
government or top political figures. There are plenty of examples for this such as:
1. The Ipoh-Rawang electrification and double track railway project which initially
costed RM4.34 billion in 2001. The project’s cost ballooned up to more than RM6
billions when DRB-HICOM, the initial contractor appointed to carry out the civil
works failed to complete the project on schedule. The delay forced the
government to appoint another contractor in 2005, UEM Construction Private
Limited to take over the project with a new cost which is much higher than the
original one. Ironically, the government also had to pay RM425 million in
compensation to the original contractor (DRB-HICOM) for early termination when
in fact, it is the contractor who should have been penalized or even charged in
court for contract breaches. The government’s action for appropriate remedy is
almost non-existent apart from the investigation and revelation by Public
Accounts Committee (PAC). So far none of the corporate managers or
shareholders involved are being charged or cited for criminal breach of trust

11. 11
involving this mismanagement. The project was scheduled to be completed in
2003, but only completed in 2008 after 5 years of delay9
.
2. The Port Klang Free Zone (PKFZ), which was built for Port Klang Authority
(PKA), Ministry of Transport by multiple contractors, mainly Kuala Dimensi
Private Limited (KDSB) and BTA Architect. The initial project cost was RM1.845
billion, however the cost later shot up to RM4.6 billion. Unofficial estimates put
the actual overrun much higher at RM12.5 billion, which is almost 7 times the
original cost. The unofficial estimate took into account extrapolated costs and
potential losses such as interest rates forgone when the money used to finance
the mismanaged project could be used in other profitable ventures. Up to July
2010, at least 5 people had been arrested and charged for various criminal
offences including criminal breach of trust. Their cases are still undergoing trial in
court10,11
.
9) ‘MORE PICS – RM4.6 (or 6.1?) billion 180Km IPOH-RAWANG High Speed Double Rail Link Starts
Early Next Year after 6-year Record Delay; A White Elephant?’ Source:
http://powerpresent.blogspot.com/2007/07/more-pics-rm46-or-61-billion-180km-ipoh.html or
http://www.zimbio.com/Kuala+Lumpur/articles/109/MORE+PICS+RM4+6+6+1+billion+180Km+IPOH
+RAWANG, published in 16th
July 2007, retrieved on 21st
May 2012.
10) ‘Ex-PKFZ Project Director Charged with graft’. Source:
http://thestar.com.my/news/story.asp?file=/2009/12/15/nation/5302079&sec=nation, published in
15th
December 2009, retrieved in 21st
May 2012.
11) ‘PKFZ case: Court sets March 26 for re-mention’. Source:
http://thestar.com.my/news/story.asp?file=/2010/2/4/nation/20100204181040&sec=nation
published in 4th
February 2010, retrieved in 21st
May 2012.
3. The Bakun Dam project in Sarawak, which initial cost estimate was RM1.8
billion, but later soared by RM1.7 billion11
, almost doubles the original estimation.
However even this cost is just taking into account the actual construction of the
dam which started some time after year 2000. It does not take into account

12. 12
previous payments made by the government between 1994 to 1997 for various
expenses to companies that were involved in the planned joint-venture to build
the dam. The total payment was estimated to be RM1.6 billion, paid mainly to
Ekran Berhad, the main contractor to which the project was awarded before it
was cancelled during the 1997 Asian Financial Crisis. This brought the total cost
overrun at RM3.3 billion. The project was revived in 2000 and awarded to
another company, Sime Engineering who completed it in 2010. It was labelled as
a ‘Monument of Corruption’ by Transparency International12
for the huge amount
of social, environmental13
and financial damages and losses that it incurred.
From the examples discussed above, it could be inferred that the reasons for failures
in Malaysia’s privatization and PPP projects are related to the lack of conscience,
transparency and good governance on the part of Malaysian government, public
administrators, corporate managers and political leaders. Such lack of responsibility
and accountability allowed vested interests to prevail over public interests at an
enormous cost to the people as a whole. This inference is reinforced more by the
secrecy and the manner by which the vested interests are trying to prevent public
scrutiny on the costs, timelines, scopes of agreements and other relevant information
regarding privatized projects.
To achieve this, the vested interests are not shy to resort to extreme measures to
protect their own interests. Among their favourite underhanded tactics includes but
not limited to coercion, manipulating legal instruments relating to confidentiality and
proprietary rights, resorting to the use of thugs or private security forces to prevent
access by agents of public scrutiny (mainly journalists and social activists) to gather
information (like in the case of Bakun Dam) and so on.

13. 13
The US Examples
Unlike the Malaysian experience, the situation of privatization the US is somewhat
dissimilar to the Malaysian context. There are no state-owned enterprises to begin
with, there are only Government-Sponsored Enterprise (GSE). The difference
between these entities and the Malaysian SOEs are that the American GSEs are not
owned by the government. Instead they are owned by private stockholders who
oversee those enterprises both for their profits and to promote selected public policy
objectives14
.
In contrast to Malaysian SOEs, the American GSEs are very few in number (only
seven initially and down to six after Sallie Mae was fully corporatized in 2004) and
they all concentrate their role ‘to improve the efficiency of capital markets’ and to
overcome ‘statutory and other market imperfections which otherwise prevent funds
from moving easily from suppliers of fund to areas of high loan demand’14
. In
practice, as the name suggests, these GSEs as listed below only serve few
particular markets and they do not encroach directly into broader businesses:
11)‘Bakun Dam cost over-run hits RM1.7b’. Source:
http://anilnetto.com/governance/accountability/bakun-cost-over-runs-govt-dishes-out-rm700m/
published in 6th
May 2010, retrieved on 21st
May 2012.
12) ‘Malaysia’s Bakun Dam: a monument to corruption?’. Source: http://www.malaysia-
today.net/mtcolumns/special-reports/34449-malaysian-dam-a-white-elephant- published in 12th
September 2010, retrieved on 21st
May 2012.
13) Bruno Manser Fund on The Borneo Project, ‘Pictures from sealed-off Bakun dam zone reveal
social and environmental disaster’. Source: http://borneoproject.org/updates/pictures-from-sealed-
off-bakun-dam-zone-reveal-social-and-environmental-disaster published in 2nd
February 2012,
retrieved on 21st
May 2012.
14) Kevin R. Kosar, ‘Government-Sponsored Enterprises (GSEs): An Institutional Overview’. Source:
http://www.fas.org/sgp/crs/misc/RS21663.pdf published in 23rd
April 2007, retrieved on 22nd
May
2012.

14. 14
1. Federal National Mortgage Association (Fanne Mae);
2. Federal Home Loan Mortgage Corporation (Freddie Mac);
3. Federal Agricultural Mortgage Corporation (Farmer Mac);
4. Federal Home Loan Bank System;
5. Farm Credit System;
6. Financing Corporation; and
7. Resolution Funding Corporation.
These GSEs remained as they are and there was no plan to privatize them nor there
was any pressure to privatize them unlike what happened to profitable Malaysian
SOEs, as far as academic studies have shown. Privatization in US carried out unto
specific facilities rather than whole services or whole agencies per se. For example,
prison privatizations are not done in a blanket manner (i.e. the whole Prison
Department is not privatized). Instead only selected prisons are privatized based on
need and viability.
Same principles applied for other government services and agencies such as
security, law enforcement, transportation, banking, etcetera. In these areas, only
facilities in specific districts or states that were privatized and specific companies are
incorporated separately as a substitute service provider (rather than entirely taking
over a service previously provided by the government). Nationally, the government
still hold major part of the responsibility to provide the aforementioned services.
Herein lies the main difference between Malaysian and American privatization. The
Malaysian privatizations somehow were ill-conceived and hastily implemented in a
wholesale manner (i.e: whole service or an entire agency is privatized to a singular
beneficiary) while the US examples seem to show that selective privatizations were

15. 15
carried out after a reasonably well-conceived justifications at national level. However,
even such precautionary measures also failed to prevent failures in American
privatization. To illustrate this point, two examples are discussed as follows; 1)
privatization of prison and corrective facilities and 2) privatization of water supply
service in Atlanta, which was actually a PPP project.
Judith Greene (2000)15
conducted a study upon prison privatization in the United
States where two major companies were awarded contracts of prison privatization in
various state and municipalities. These two companies were the largest and the
most experienced corporations in America’s prison industry and they control about
three quarter of the market share in private prison industry. The main method of
privatization used was to build, own and operate (BOO).
The Correction Corporation of America (CCA) operated prisons in numerous parts of
American municipalities including one in Youngstown, Ohio. The other company,
Wackenhut Correction Corporation (WCC) operated prisons in few other
municipalities including Coke County Juvenile Justice Centre in Bronte, adult prisons
in Austin, New Mexico, Santa Rosa, Allen Parish and Jena Juvenile Justice Facility
in New Orleans. The main responsibilities of these two contractors are to provide a
complete package consisted of rehabilitation and detention facility for convicted
inmates. Amongst failures noted in dispensing these responsibilities by both
contractors are:
15) Judith Greene, a Senior Justice Fellow at Centre on Crime, Communities and Culture. Work title:
‘Prison Privatization: Recent Developments in the United States’. Source:
http://archive.epinet.org/real_media/010111/materials/greene2.pdf published in 12th
May 2000,
retrieved on 22nd
May 2012.

16. 16
1. Failure to provide adequate staffing, resulting in deficiency in the monitoring and
surveillance of prison situation that ultimately led to riots, violence, stabbings and
even murder of inmates in a number of prison facilities. In one occasion, the ratio
between staff on duty to inmates was 18 to 418. Such staffing inadequacy also
resulted in a major prison breakaway in 1998 when six inmates (five of them were
convicted murderers) managed to escape from the Washington D.C. prison.
2. Failure to ensure good conduct amongst prison wardens and security personnel
which were manifested in the incidences of rape, abuse, assault, harass and
humiliation that were inflicted by prison staffs against inmates.
3. Failure to provide comprehensive education and rehabilitation program for
inmates, specifically troubled young girls in juvenile detention centres and also for
adult inmates in certain prisons. The situation was most severe in Coke County
Juvenile Justice Centre where there was no rehabilitation or education
whatsoever and troubled young girls were raped and abused before the situation
gained media prominence.
4. Failure to provide competent medical care, counselling and vocational training
that should have been part of the contractor’s obligation to provide for. Such was
the case in Coke County Juvenile Justice Centre in Bronte, New Mexico.
5. Use of inappropriate behaviour restrain policy for juveniles which was exemplified
by the use of tear gas by a special tactical squad just to quell some commotion
involving teenagers at Jena Juvenile Justice Facility in New Orleans. A thorough
review by Department of Justice also found that the facility operations were
chaotic, dangerous and abusive. The reviewing experts reported further that

17. 17
youths confined therein were not issued adequate clothing or linens, were lacking
in education programme, received inferior medical and mental health services,
subjected to physical and verbal abuses by staffs, denied access to showers,
recreations, telephone, and they were excessively segregated and isolated via
improper administrative policies.
6. Another report by an independent board of corrections further revealed that
prison facilities operated by WCC had alarming defects that includes poor design
and construction, inexperienced correctional staffs, failure to deal effectively with
inmate misconduct and the lack of monitoring by state authorities. One example
of poor prison management by WCC was the severe crowding in Jena Juvenile
Justice Facility where youths were made to live in 48 bed dormitories when in fact
such dormitories should only house not more than 25 occupants at a time.
Overall, the concessionaires of private prison facilities failed to fulfil their contractual
obligations at a satisfying level which resulted in severe problems. Counteractions
imposed upon the firms included contract cancellation (such as the one involving
WCC in Texas), lawsuits and criminal charges levied against misbehaving staffs. A
court order was also issued for CCA to pay monetary damages, undertake total
revamp of prison policies and practices related to staffing, classification, medical
care and monitoring of prison conditions. A number of prison wardens were also
forced to resign after they had been found to be misbehaving.
Judith Greene (2000)15
presented some reasons why the privatization of prison
facilities in America were plagued with critical failures. Among others, she argued
that some decisions to privatize prison facilities were politically driven rather than for
public interests. An example cited whereby Gary Johnson, the Governor of New

18. 18
Mexico aggressively campaigned not only for prison to be privatized, but also to be
deprived of minimal comforts such as electrical sockets, television and radio. The
result was the miserable state of affairs in Jena Juvenile Justice Facility as
elaborated in paragraph 5 in the previous page.
Ahmed M. Riaz (2007)16
on the other hand presented a more fundamental argument
that ‘asking profit-oriented organizations to run what should be a non-profit operation
in the first place is a sure recipe for problematic outcomes in prison industry’. He
used the phrase ‘Catch-22 Situation’ to describe the application of privatization to
solve prison overcrowding problem. This argument has always been put forward by
critics of privatization in all industry, not just prison management. The similar
argument was also used by Judith Greene17
when she stated that “it seems unlikely
that firm demands from the government such as these (punitive and preventive
measures to ensure greater accountability by private prison contractors) can be met
without hampering private sector opportunities for growth and profit-taking”.
With regards to the Atlanta case study, Geoffrey F. Segal (2003)18
described that
main reasons for the government to outsource the water supply project were to
reduce financial burden, to upgrade the overall standard of service and to improve
compliance with environmental standards. Moreover, the decision to outsource was
made after reports from Environmental Protection Agency (EPA) and General
Accounting Office (GAO) indicated that water privatizations elsewhere provided
positive examples of ‘how Public-Private Partnerships can yield substantial benefits
for both the public and private sectors, creating the classic win-win situation’18
.
16) Ahmed M. Riaz, ‘The Catch-22 in Prison Privatization: The Problem with the Solution’. Source:
http://law.bepress.com/cgi/viewcontent.cgi?article=9435&context=expresso published in 2007,
retrieved on 22nd
May 2012.
17) Judith Greene (2000), page 9.
18) Geoffrey F. Segal, ‘The Atlanta Water Privatization: What Can We Learn?’. Source:
http://www.gppf.org/article.asp?RT=20&p=pub/Water/atlanta_water.htm, published on 24th
January
2003, retrieved on 22nd
May 2012.

19. 19
Just before the outsourcing, the operating cost for Atlanta water supply service ran
about USD 50 million per annum with ‘poor service and a major need for
modernization’ that was characterized by aging infrastructure and huge repair costs
(see the report on page 1 & 2). The Atlanta water supply PPP contract was awarded
to United Waters (UW) who offered a winning bid of USD 22 million per annum, a
reduction of over 50% from the original cost. The operation commenced on 1st
January 1999 under a 20-year agreement with total cost of USD440 million.
However just 3 years into operation, the company already received a formal notice
from the Mayor of Atlanta, which stated that the company ‘were not in full compliance
with terms of agreement’. Among the problems cited were unsatisfactory staffing
level, inadequate bill collections and slow pace of meter installations and repairs. At
the same time, UW was seeking an additional USD 80 million in extra payment for
services they claimed to provide beyond the scope of agreement.
This was followed by exchanges of counter claims and allegations between both
sides. The municipal authority claimed that they have very little money compared to
the amount of extra claim, while the concessionaire alleged that if there is not
enough money, it means that the supposed savings of USD28 million per annum
(amounting to USD84 million over 3 years) either went into other areas or ‘swallowed
by the bureaucracy’. Quite fortunately, the tug of war between both sides ended
when the concessionaire finally dropped their claims for extra payment. However,
the municipal authority later decided to terminate the concession on 24th
January
2003, just 4 years after the PPP agreement was signed.

20. 20
Both studies conducted by Geoffrey F. Segal (2003)18
of The Georgia Public Policy
Foundation and Adrian Moore (circa 2003)19
of Reason Foundation revealed two
important reasons why the Atlanta PPP project turned into such a fiasco. First, the
municipal authority that was responsible to provide the scope of works based on
accurate data, did not do its job properly. For instance, the authority severely
underestimated the volume of basic repairs and maintenance works that needed to
be done, with a variation of up to 89.44% lower than the actual volume. The
expected replacements of water meters, main breaks and fire hydrants were grossly
under-calculated, causing huge cost overrun above the initial contract price.
Reasons for miscalculations were attributed to the municipal’s administrative
weaknesses prior to the PPP handover such as poor record keeping, understated
facts and in some cases, no record keeping at all20
.
Second they also revealed that the concessionaire did not carefully plan its proposal
which later became the PPP agreement after their proposal was accepted. Instead of
incorporating their long standing expertise in water industry to come out with a sound
proposal, they instead relied heavily on the Request for Proposal (RFP) document
provided by the municipal authority. Such lack of careful planning resulted in them
unable to fulfil contractual obligations and eventually led to early termination of their
contract.
Nevertheless, Adrian Moore (2003) noted that there were some improvements
brought about during the 4 years of the Atlanta PPP operation such as greater
compliance with environmental standards (which was severely deteriorating before
PPP), a reduction in operating cost amounting to USD 10 million per year and overall
improvement of service level at only 10% charge rate increase.
19) Adrian Moore, ‘Atlanta dissolves water privatization’. Source: http://waterindustry.org/Water-
Facts/atlanta-1.htm, published circa 2003, retrieved on 22nd
May 2012.
20) Geoffrey F. Segal, p3.

21. 21
This was in contrast with the situation when Atlanta water supply was still operated
by the municipal authority. At that time, annual operating costs were USD10 million
higher, overall service and infrastructure was very poor with non-compliance to EPA
guidelines and problems of overstaffing that inefficiently ate up into the operational
budget, which should had been otherwise spent for overall service improvements.
Based on the above discussions, the reasons for failures of those American (and
Malaysian) privatization and PPP projects can be summarized as follows:
1. Maligned political interferences and vested interests have time and time again
corrupted government and private initiatives whose aims and intentions were
originally benign (more so in America, less so in Malaysia where even the original
intention was really doubtful). The political, corporate and bureaucratic interest
groups (or individuals) have managed to hijack public causes and concessions of
public projects for personal gains. They do this via rent seeking, log rolling or vote
trading, and sometimes through outright bribery, especially in the case of
Malaysia.
2. Administrative and managerial weaknesses resulted in poor conceptualization,
inaccurate cost projections, poor performance monitoring and evaluation, as well
as lack of due diligence that caused losses of potential profits (or potential
service upgrades) that should have been reaped from privatized services and
projects.

22. 22
3. In Malaysian case, the over-emphasis on superficial ideals behind privatization
that entails cosmetic and ownership changes devoid of holistic transformation,
has led to indiscriminate privatization that were easy to manipulate by vested
interests. Moreover, the false notion that privatization, not substantive reforms as
the cure for public deficiencies has fundamentally contributed to failures in
privatized SOEs whose institutional weaknesses were not revamped upon
privatization. In American case, careless extrapolation of privatization benefits
has caused some public agencies to privatize/outsource essential services that
could have otherwise be much better improved by administrative reforms rather
than privatization per se.
4. On a more theoretical note, Judith Greene’s and Ahmed M. Riaz’s postulation
that ‘profit and non-profit interests can never be made compatible because both
are fundamentally conflicting towards each other’ merits further research and
consideration. Empirical examples discussed above seem to support this maxim;
however, despite the clarity of it, many governments still and will continue to
embark upon privatization and PPP exercises that would essentially put profit and
non-profit interests in an increasingly intertwined position. The accurate answer
as to why this is happening is not easy to deduce; but the fact that both public
agencies and private corporations are going to share their market forever points
to the conclusion that they must coexist and work together to continuously
produce net public benefits no matter how difficult or how inefficient it is going to
be.

23. 23
What drives the successes behind privatizations and PPP?
The success of privatization and PPP can be measured quantitatively either through
technical methods such as Cost-Benefit Analysis (CBA) or Cost-Efficiency Analysis
(CEA). Empirical observation and qualitatively explanation is also feasible, although
it might not yield the most accurate findings. However it is still useful to provide
general insight on what are the benefits and reasons behind the successes of
privatization as a whole.
The Case of Telecom Malaysia and the rapid growth of Malaysian ICT Industry
The privatization of Malaysian Telecom Department (Jabatan Telekom) was initially
brought about after a report commissioned by Sapura Holdings 1983 was presented
to the government, a company founded by Tan Sri Shamsudin Kadir who was a
personal friend of Dr. Mahathir Mohamad, Malaysian Prime Minister at that time21
.
Initially, Sapura Holdings was the main beneficiary when Telecom Department
became Malaysian Telecom Company (STM) in 1984. However in 1990, portions of
the company’s share were listed KLSE and in 1993, the company’s monopoly
formally ended with the licensing of Time Telecommunications, a subsidiary of Time
Engineering Group, which was in turn part of the Renong Group, an industrial arm
owned by the ruling party, United Malays National Organization (UMNO)22
. The
regulatory functions of Telecom Department was taken over by Malaysian
Communication and Multimedia Commission (MCMC) since 1st
April 199923
.
21) The Malaysian Insider: ‘Sapura patriarch sues sons for shares, property’. Source:
http://www.themalaysianinsider.com/malaysia/article/sapura-patriarch-sues-sons-for-shares-
property published on 5th
April 2012, retrieved on 23rd
May 2012.
22) Zen Kita: ‘Malaysia Telecom Brief’ page 5. Source:
http://www.ndaventures.com/Malaysia_Telecom_Brief.pdf. Publication date unknown, retrieved
on 23rd
May 2012.
23) ‘Overview and History of MCMC’. Source:
http://www.skmm.gov.my/index.php?c=public&v=art_view&art_id=13 retrieved on 23rd
May 2012.

24. 24
The licensing of Time Telecommunications marked the end of monopoly and the
beginning of intense competition, more so after 1993 when another six
telecommunication companies (telcos) joined in the fray through government’s
licensing for paging service, cellular mobile, telephone call boxes, satellite
communications, value added services and fixed line networks. The six companies
were24
:
1. Mobikom – a cellular service provider that was a joint venture between STM and
Sapura;
2. Celcom – a cellular service provider owner by Technology Resources
Incorporated (TRI) which was then owned by Tajudin Ramli, a crony of Mahathir;
3. Maxis – a cellular service provider and satellite communication operator, which
was a subsidiary of Binariang, the Malaysian company that received licenses to
launch Malaysia’s first satellite, the MEASAT and to offer broadcasting and
internet services. Binariang was owned by Ananda Krishnan, another Mahathir’s
crony.
4. Mutiara Swisscom (later on Digi Telecommunitions Private Limited) – a cellular
service provider backed by Vincent Tan, another Mahathir’s crony.
5. Sapura Digital; and
6. TimeWireless, a wireless technology provider.
In each case, the requests for licenses frequently bypassed the Ministry of Energy,
Posts and Telecommunications (MEPT) going directly to the Prime Minister’s Office
and the ministry was only informed after those applications were approved.
However, as a result of stiff competition, out of these 8 companies including Sapura
Holdings and Time Telecommunications, only four remained as dominant players in
today’s ICT industry. Mobikom suffered heavy losses and had to be acquired by
24) Malaysia Telecom Brief, page 6.

25. 25
STM while Sapura Digital shifted their focus to secured networking services (no
longer a major telecommunication service provider). TimeWireless and Time
Telecommunications merged and became TIME dotCom Limited and the company’s
dominance in ICT industry had been overshadowed by the four major players (STM,
Celcom, Maxis and Digi).
The rapid advancement in Malaysia’s ICT industry after the privatization of
telecommunication services is characterized by the following phenomena:
1. New employments were created in the industry for telecommunications and ICT
professionals, thus creating a new segment of labour market that would have
been otherwise non-existent without the privatization.
2. Dramatic escalation in the penetration rate of telecommunication and internet
services25
(from 15% in 2000 multiplied 4 times to 64.6% in 2010)26
that brought
about information age has greatly facilitated the banking, commercial and
education sector27
. The efficiency of bureaucracy has also improved to a certain
extent with the introduction of e-Government and No Wrong Door Policy that
relied heavily on secured networking and secured telecommunication lines for
communications and transactions. In this respect, the major providers for
government ICT needs were STM and Sapura Holdings through its subsidiaries.
25) Vikash Daga, Nal Gollagunta, Nimal Manuel, Laxman Narasimhan: ‘Explosive growth: Digital
Consumers in Emerging Markets’. Source:
http://telecoms.mckinsey.com/html/downloads/recall/recall_15/Recall_No15_4_Digital_consumers.pd
f retrieved on 23rd
May 2012.
26) ‘Malaysia Internet Usage Stats and Marketing Report’. Source:
http://www.internetworldstats.com/asia/my.htm retrieved on 23rd May 2012.
27) ‘Press Release: Telekom Malaysia High Speed Broadband (HSBB) Public-Private Partnership’. Source:
http://www.malaysianwireless.com/2008/09/press-release-tm-hsbb-public-private/ published on 16th
September 2008, retrieved on 23rd
May 2012.

26. 26
3. The advent of information age has transformed the Malaysian society to become
more politically aware and more participative in public discourses through ICT-
based channels28
. Through blogs, social media, emails, sms and youtube
videos, ideas regarding issues of public concerns are shared and public
discourses that took place are shared openly. The availability of these ICT
instruments can be largely credited to the proliferation of digital information and
telecommunication services which happened after competitive privatization in the
industry. In these respect, competitive privatization has allowed for the growth of
innovation, diversification, price competition and overall improvement of the
telecommunication industry.
4. Competitive privatization of Malaysian telecommunication services has pushed
access prices and consumer charges on a downward trend25,29
. This helped a lot
to dramatically increase the penetration rate of telecommunication and internet
services through creation of broader consumer base and an overall healthy ICT
industry with huge spill-over effects in terms of political awareness and social
activism. Thus, although Malaysian privatization of the telecommunication
service was mired with controversies in its initial stage, the subsequent de-
monopolization and the resulting competition has resulted in net public benefits.
28) Dr. Syed Arabi Idid and Khaizuran Abdul Jalil: ‘The Role of Blogs in an emerging society: A study of
a Malaysian by-election’. Source: http://irep.iium.edu.my/id/eprint/10331 published and presented
for the 19th
Asian Media Information and Communication Centre (AMIC) Annual Conference dated
21st
– 23rd
June 2010, retrieved on 23rd
May 2012.
29) ‘Explosive growth: Digital Consumers in Emerging Markets’, page 28.

27. 27
Examples from Nigeria
Onjefu Adoga (2008)30
explained that at the time of Nigeria’s independence in 1960,
the country inherited an economy characterized by colonial capitalism where the
private sector was still in infancy. The 1966 military coup transformed the state’s
economy into a new form of political economy which was a hybrid of state capitalism
and socialism. Over 1000 state owned corporations was created after the
Indigenization Decree of 1973 which were all monopolies with not competition from
private sector. Their scope of operation covered oil and gas, agriculture, steel plants,
banks, defence, leisure, mass transit, housing, medical care, power, security,
education, manufacturing, local and international trade.
The crash of international oil price in the 1980s resulted in the inability of the central
government to sustain the capital injection amounting to billions of Naira to these
state-owned corporations. There were also operational problems of excessive
bureaucracy, defective ownership structures, gross incompetence in management,
complacency, defective capital structures, lack of effective control and supervision by
the government, outdated technology, nepotism, international competition, and a
host of other administrative and institutional problems. Most of the state-owned
corporations were also deeply embroiled in debt problems. These predicaments
forced the central government to reform the country’s economic structure by building
a private sector driven market to revitalize the economy and to achieve robust
growth.
30) Onjefu Andoga (Brooke Chambers): ‘A Critical Appraisal of Privatization in Nigeria’. Source:
http://www.hg.org/article.asp?id=5491 published on 8th
October 2008, retrieved on 24th
May 2012.

28. 28
Consequently, a number of critical appraisals have shown that the country’s
privatization policy has managed to achieved the stated objectives, although with a
varying degree of assessments31,32
. Among the improvements noted through those
appraisals were:
1. The expansion of Nigerian capital market size from 8.9 billion Naira in 1987 to
65.5 billion Naira in 1994 (phase 1 of Nigeria’s privatization) has created 800,000
new shareholders and additional sources of revenue through a significant
increase in corporate taxes accruing to the Federation Account (FA). Over 3.3
billion Naira of privatization proceeds was earned by the central government
during phase 1 of the privatization31
. Another study32
quoted that around 20
billion Naira were remitted to the Treasury following privatization of numerous
state enterprises that included NAL Merchant Bank, International Merchant Bank
(IMB), FSB International Bank, UNIPETROL, African Petroleum (AP), Assurance
Bank, National Oil and Chemical Company Plc (NOLCHEM), West African
Portland Cement Co (WAPCO), ASHAKA Cement Co. Plc (ASHAKACEM),
Northern Nigerian Cement Company Plc (CCNN) and Nigeria Cement Company
(NIGERCEM) Plc.
2. The scope of political patronage in the form of unnecessary enlargement of board
appointments to accommodate supporters was also reduced with a
corresponding trim in the government’s administrative and financial burdens.
However, this also came with a price when 280 directors had to relinquish their
positions after phase 1 of the privatization.
31) A.M. Agba, Agba Ogaboh Agba, E.M. Ushie, Festus Nkpoyen: ‘Privatization, Job Security and
Performance Efficiency of Privatized Enterprises in Nigeria: A Critical Reassessment’. Source:
http://www.researchersworld.com/vol1/Paper_9.pdf published on 1st
October 2010, retrieved on 24th
May 2012.
32) Amakom Uzochukwu S: ‘Productivity and Efficiency of some Privatized Public Enterprises in
Nigeria’. Source: http://ideas.repec.org/p/wpa/wuwppe/0508018.html published in May 2003,
retrieved on 24th
May 2012.

29. 29
3. A number of privatized corporations recorded a significant rise in output as
exemplified in by the achievements of Okomu Oil, Aba Textiles, Flour Mills and
NAICOM. The overall turnover was reported to increase by 221 percents. The
growth of these companies’ operation and productivity came with a net increase
in employment and job creation. Although some companies were forced to trim
their number of workforces (Okomu Oil, UNIC Insurance, Roral Exchange, and
Naycom) to address overstaffing problems prior to privatization, other companies’
growth after privatization (NAICOM, Flour Mills, Aba Textiles and UNICEM) had
offset this trend and prevented a net decrease in job opportunities.
4. As a result of overall increase in productivity, performance and companies’
turnover, the dividend payout to shareholders of privatized enterprises also
increased correspondingly.
5. Productive and technical efficiency were also shown to be improved after
privatization as exemplified by three surveyed companies (Aba Textile, Ashaka
Cement and FSB International Bank). The increase in efficiency can be attributed
to the massive restructuring of workforces, shareholders and business operations
of the privatized enterprises. Thus, it was shown that the objectives to reduce
government burdens, to turnaround the problematic situation in national economy
and to achieve a robust economic growth through a revenue increase have been
achieved successfully.
In contrast to the privatization policy and implementation in Malaysia, academic
studies showed that privatization in Nigeria was not characterized by lack of due
diligence. There was no evidence of deliberate undervaluation of government shares

30. 30
and assets to specially selected beneficiaries plus the deficiencies in administration
and operation were corrected through sound institutional reforms in the course of
privatization.
The Nigerian examples also showed no evidence pointing to outrageous and
destructive interferences from maligned political and interest groups, except for the
documented cases of Mallam Nasir Ahmad El-Rufai, Ulusegun Obasanjo and Atiku
Abu Bakar33
. The net benefits from Nigerian privatization exercises lend further
support to this argument.
Therefore, important lessons from the Nigerian experience to ensure success in
privatization can be summarized as the need for due diligence to save privatization
cost and increase government revenue, the will to carry out painful but necessary
institutional reforms to improve efficiency and productivity and the need to contain or
eliminate all together the malign interferences from vested interests by means of
transparency and accountability.
Whereas the case of Telecom Malaysia privatization and rapid growth in ICT industry
showed that although privatization could be mired with controversies at initial stages,
de-monopolization and healthy competition will gradually nullify the negative effects
and bring about net improvements. This is because market forces have a natural
tendency to readjust economic imbalances and correct socioeconomic inequalities
via pricing mechanism and honing of entrepreneurial skills.
33) Daniel Elombah: ‘PRIVATIZATION: How Politicians and Wealthy Businessmen Looted Nigeria
Public Companies’. Source:
http://www.elombah.com/index.php?option=com_content&view=article&id=7777:privatisation-
how-politicians-and-wealthy-businessmen-looted-nigeria-public-companies&catid=52:daniel-
elombah&Itemid=73 published on 15th
August 2011, retrieved on 24th
May 2012.

31. 31
This inference is supported by the fact that monopolistic privatization in Malaysia
continued to incur losses (Malaysia Airlines, Proton Holdings, Indah Water
Consortium) while the competitive ones are able to survive by continuously adjusting
to market forces to stay afloat. For example, Sapura Holdings incurred great losses
through its subsidiary, Mobikom in the late 1990s. However after adjusting to market
competition by embarking on business diversification strategy, they are able to
remain robust and profitable.
Apart from ICT industry, the consortium now is a prominent player in oil and gas (via
SapuraKencana Petroleum Limited), industrial and automotive manufacturing (via
Sapura Industrial Limited, SAPIND) as well as knowledge and education sector (via
Asia Pacific University College of Technology & Innovation, UCTI)34
. The consortium
is also known to have successfully undertaken PPP projects under Electronic
Government initiatives such as Putrajaya Campus Network (PCN)35
.
Another key success factor in privatization is innovation. Technological innovations
in Malaysian ICT industry has propelled main players into robust business
profitability while the lack of innovation in Malaysian automotive industry (Proton is
still supplying cars with outdated technology to consumers) caused great losses to
the company in actual and potential revenues. In this respect, innovation does not
need to be 100 percent home grown. If importation proves to be more cost effective,
private corporations can easily opt to buy new technologies from outside rather than
risk consumer exclusion by holding on the false notion of ‘indigenous innovation’.
34) Sapura Holdings Group overview. Source: http://www.sapura.com.my/overview.html retrieved
on 24th
May 2012.
35) PCN Project Briefing, slide 12. Source:
http://www.mampu.gov.my/pdf/arkib/sesi3/8.PerkhidmatanGunasamaICT.pdf presented on 19th
April 2010, retrieved on 24th
May 2012.

32. 32
CONCLUSION
Although there are serious problems associated with privatization and PPP, there
are ways to weed out negative elements that could cause similar failures from
recurring. As elaborated in the previous section, consistent adherence to the values
and ideals of good governance plus accountable managerial practices coupled with
principles of free market and business entrepreneurship are the only keys to ensure
success in privatization and PPP.
Another important lesson is competition, transparency and due diligence must be
practiced and integrated into privatization policies to ensure early success. The
importance of competition as a catalyst for innovation has been proven when even
cronies of government leaders needed to compete amongst each other to survive
and remain relevant. Competition in any form, whether it is the broad-based
industrial competition or narrow based ‘crony competition’ (a self-coined term to
describe competition among major Malaysian tycoons with close political
connections) has proven to be successful as a catalyst for innovation, business
diversification and competitive pricing strategy.
On the other hand, monopolies did not produce pressures for price escalation only
when they are owned by strict socialist regimes whose ideals are essentially anti-
capitalist (such as in the case of Socialist Soviet industry). The moment monopolies
are given to profit-oriented capitalists, problems started to develop and people
started to shoulder the burden of overpricing, leakages and losses and eventually
government reacquisition or even foreign acquisition (Proton’s fire sale of MV Agusta
is one example).

33. 33
Finally, latest developments seem to indicate that privatization and PPP have
become more of a survival necessity than just a possible option to reduce
government burdens and to invigorate the economy through industrialization. History
has shown that countries that did not expand their economies through privatization
and entrepreneurial developments were eventually plagued with either problems of
unemployment due to minuscule growth (or sometimes contraction) of job
opportunities or emigration of its population in search of jobs.
As pointed out in page 22 of this study, government and private sector will forever
share their market and thus, the only way to accommodate profit and non-profit
interests is for the government and private sector to work together and produce net
public benefits via privatization and smart partnerships.

34. 34
APPENDIX 1
SOME EXAMPLES OF MALAYSIAN STATE-OWNED ENTERPRISES (SOE) AND PUBLIC AGENCIES
THAT WERE PRIVATIZED FROM 1983 ONWARDS
Name of Agency/Enterprise Before
Privatization
Status Before
Privatization
Name and Status After Privatization
1. National Electricity Board (LLN) SOE Tenaga Nasional Berhad (TNB), fully privatized and listed at Kuala
Lumpur Stock Exchange.
2. Sabah Electricity Board (SEB) SOE Sabah Electricity Private Limited (SESB), Fully Privatized
3. Jabatan Telekom (Department of
Telecommunication)
Public Agency Malaysian Telecommunication Company (TM), partially privatized
with 26% of government holding. Listed at Kuala Lumpur Stock
Exchange.
4. National Rice and Paddy Board SOE Padiberas Nasional, fully privatized
5. Department of Postal Service Public Agency Pos Malaysia Berhad, partially privatized
6. Malaysia Airline System (MAS) SOE MAS (old name retained), partially privatized in 1994, however
government reacquired the divested shares in year 2000 due to
losses.
7. Malaysian International Shipping
Corporation (MISC)
SOE MISC (old name retained), partially privatized in 1998 during Asian
Financial Crisis. Privatized shares were bought by Petronas,
another SOE.
8. Heavy Industries Corporation of Malaysia
(HICOM)
SOE DRB-HICOM, partially privatized in 2000. Privatized shares were
bought by Diversified Resources Berhad (DRB).
9. Sport Toto SOE Sports Toto Private Limited, fully privatized
10. National Automobile Enterprise SOE PROTON (old name retained), partially privatized. However the

35. 35
(PROTON) company went through a series of re-acquisition and re-divestiture
after the first privatization
11. National Automobile Dealership (EON) SOE EON (old name retained), partially privatized
12. Royal Malaysia Naval Dockyard Public Agency PSC Naval Dockyard (1995), currently Boustead Naval Shipyard
Private Limited, fully privatized

36. 36