1) Kajang Municipality intends to redevelop a stadium into an innovative research park but lacks funds. Privatization is proposed as a solution. 2) Privatization involves transferring a public project to private ownership, bringing faster development at lower cost through competition. 3) The proposal suggests public-private partnership models where both sectors share responsibility and benefits, such as the private sector funding, building, and operating the research park while the municipality monitors the project.

1. CIVIL & STRUCTURE DEPARTMENT
FACULTY OF ENGINEERING & BUILT ENVIRONMENT
THE NATIONAL UNIVERSITY OF MALAYSIA
KKKH4284 PERANCANGAN BANDAR LESTARI
Assignment Title:
TASK 3
PRIVATISATION
Lecturer:
PROF. IR. DR. RIZA ARIQ ABDULLAH BIN O.K RAHMAT
Dr. MUHAMAD NAZRI BIN BORHAN
Puan NORLIZA BINTI MOHD AKHIR
TANSHONG LIANG A133006

2. Problem
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 centres 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, project component, the benefit of your proposal and the problem that might occur in
the future.
Solution
This problem can be solved by the method of privatization project. Privatization may have
several meanings. Primarily, it is the process of transferring ownership of a business, enterprise,
agency, public service, or public property from the public sector (a government) to the private
sector, either to a business that operates for a profit or to a nonprofit organization. It may also
mean government outsourcing of services or functions to private firms, for example revenue
collection, law enforcement, and prison management. Privatization has also been used to describe
two unrelated transactions. The first is the buying of all outstanding shares of a publicly traded
company by a single entity, making the company privately owned. This is often described as
private equity. The second is a demutualization of a mutual organization or cooperative to form a
joint-stock company.
Thus, privatization is one of the best ways to develop the research project because it is can
bring a very fast development, with a lower cost. Other than that, it leads to lower prices and
greater supply and least corruption. The municipal wouldn’t have to worry about the cost as it is
developed 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. Below is some methods to
conduct this project:

3. a. “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. Each party brings something to the arrangement that
contributes to the operation of that particular service.
b. “Outsourcing” means that a government agency delegates some of its in-house operations
or processes to a third party. It is a contracting transaction where the government agency
purchases services from a private firm while keeping ownership and ultimate
responsibility for the underlying processes. They inform the private firm of what they
want and how they want the work performed. The private firm can be authorized to
operate as well as redesign basic processes in order to ensure even greater cost and
efficiency benefits.
c. “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. The project components are procured from the private
sector in a single contract with financing secured by the public sector. From design
through operation, these contracts can extend for periods of up to 20 years or more.
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.
 Increased efficiency. Private companies and firms have a greater incentive to produce
more goods and services for the sake of reaching a customer base and hence increasing
profits. A public organization would not be as productive due to the lack of financing
allocated by the entire government's budget that must consider other areas of the economy.
 Specialization. A private business has the ability to focus all relevant human and financial
resources onto specific functions. A state-owned firm does not have the necessary
resources to specialize its goods and services as a result of the general products provided
to the greatest number of people in the population.

4.  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.
 Corruption. A state-monopolized function is prone to corruption; decisions are made
primarily for political reasons, personal gain of the decision-maker, rather than economic
ones. Corruption in a state-run corporation affects the ongoing asset stream and company
performance, whereas any corruption that may occur during the privatization process is a
one-time event and does not affect ongoing cash flow or performance of the company.
 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.
Disadvantages
 Civil-liberty concerns. A democratically elected government is accountable to the people
through a parliament, and can intervene when civil liberties are threatened.
 Goals. The government may seek to use state companies as instruments to further social
goals for the benefit of the nation as a whole.
 Capital. Governments can raise money in the financial markets most cheaply to re-lend to
state-owned enterprises.
 Strategic and Sensitive areas. Governments have chosen to keep certain
companies/industries under public control because of their strategic importance or
sensitive nature.
 Natural monopolies. Privatization will not result in true competition if a natural monopoly
exists.
 Concentration of wealth. Profits from successful enterprises end up in private, often
foreign, hands instead of being available for the common good.

5.  Political influence. Governments may more easily exert pressure on state-owned firms to
help implementing government policy.
 Job Loss. Due to the additional financial burden placed on privatized companies to
succeed without any government help, unlike the public companies, jobs could be lost to
keep more money in the company.
Responsibility
MPKJ
 Integrated public transport system.
 Monitor of the tram service in the city should be maintained..
 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.
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