1.

0 INTRODUCTION

Privatisation, also spelled 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, e.g. 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.

2.0 PROBLEM STATEMENT

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.


3.0 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 dish satay Kajang. People come from all over Malaysia to taste the satay here. The
stadium can accommodate up to 5,000 people and is used throughout the year for the
community soccer competitions.




4.0 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.


5.0 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 Loan

Private 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 provision

In 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




6.0 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 need to be done
first.


7.0 ADVANTAGES AND DISADVANTAGES OF PRIVATISATION

ADVANTAGES DISADVANTAGES
i. Privatization places the risk in the
hand of business or Private
Enterprise
ii. Private enterprise is more
responsive to customer
complaints and innovation
iii. The government should not be a
player and an umpire
iv. Privatization provides a one off
cash boost for government
v. Privatization leads to lower prices
i. 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.
and greater supply
vi. Competition in privatization
increases differentiation
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.



8.0 FUTURE PROBLEMS IN PRIVATISATION OF THE PROJECT

i. The preparation of the project requires long process and period
ii. 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.