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Should we re-consider our privatisation policy?

Considering the compelling evidence to the contrary, it is time to re-examine the privatisation policy that has been in place for 40 years since its inception.

Should we re-consider our privatisation policy?

Malaysia began an ambitious programme of privatisation in the 1980s. It aimed to transfer assets into private hands to enhance its efficiency resulting in increased profits and better-quality products.

Considering the compelling evidence to the contrary, it is time to re-examine the privatisation policy that has been in place for 40 years since its inception.

A cursory examination of Malaysia's privatisation policy suggests that many entities that were privatised were in the provision of essential and critical services such as water, electricity, and education.

While before privatisation, these statutory bodies were able to provide essential services at relatively lower costs, the costs to consumers after the privatisation has escalated many folds, which begs the question of what the real advantage was to the consumers of these bodies being privatised.

A case in point is utility giant, Tenaga Nasional Bhd that have been privatised and is involved in the provision of essential services that have no substitutes, making huge profits and declaring hefty dividends to their shareholders while consumers are left with paying higher bills.

There is little incentive for monopolies that have been privatised to bring down prices as they can pass it on to the consumers in the absence of competitors.

Many of these newly privatised entities, which are monopolists and were previously public entities, continued to carry the legacy of the public sector, such as a bloated workforce and sluggish productivity coupled with the absence of competition, which would only mean increased prices for consumers.

It could also be argued that that greater accountability and more public control over these previous public entities such as TNB could have led to greater efficiency and public interest as opposed to transferring these entities into private hands that carry the same legacy previously, leaving consumers to eventually pick up the tabs.

It can also be said that if these privatised entities that were monopolies had not been privatised, would have added substantially to the government coffers and indirectly to the people as opposed to shareholders.

There is an urgent need now to have a formal establishment of an independent and transparent institution that oversees the privatisation process in Malaysia to avert connected elites and cronies jostling to secure a profitable slice of the privatised entity, often at the detriment of consumers.

The newly-privatised entities must be manned by individuals who secure their contracts through a competitive bidding process, which allows them to provide quality products to consumers at an affordable price.

Another notable feature of the privatised entities is the lack of qualified professionals, which led them to secure consultants and often experts that don't come cheap. Home-grown talent must be nurtured, with foreign talent to be used to kick-start the process of training our workforce.

The government needs to take a serious look at the privatisation policy of the past, as it is only natural for the private sector to be interested in the profitable aspects of the public enterprise, leaving the public sector with unprofitable entities.

Having acquired these public entities, the private sector would continue their profit maximization objectives, which would be at the detriment of social welfare, as is clear in the education and healthcare sectors.

In the area of education, the privatisation of education in Malaysia has led to the sprouting of educational establishments that were supposed to develop human capital to help Malaysia become a high-income nation, but again, there is evidence that graduates from private universities are not meeting the expectations in the marketplace.

Private colleges are commercially driven, and profit motive is the main consideration, with students being treated as customers that must be pleased like consumers of other industries. The need to appease students becomes more pronounced with the increasing availability of educational establishments that are competing for the same pool of students.

Evidence of serious compromise in academic standards in this institution can be quite telling, as

some of the students are not acquiring the requisite skills that meet the requirements of both the public and private sectors allowed to graduate. This has prompted employers to hire graduates from overseas universities and shun graduates from both public and private institutions.

Perhaps the time has come for Malaysia to consolidate these institutions and ensure industry-driven graduates are produced. This can be achieved if Malaysia takes a leaf from other countries, where, while many colleges offerdifferent courses, the examinations are set by a governing university with high standards. This does not allow the private colleges to lower their standards to appease the students, as they are required to meet the requirements of the governing body.

Malaysia needs to look at the privatisation policy that it introduced in the 1980s in order to ensure that people can enjoy the full benefits of going private. Increased costs to the public with reduced, inferior, or costlier services are evident from the privatisation policy, especially in the education and healthcare sectors, which are deemed public goods.

The government must consider the re-nationalisation of some of the public entities that have gone private and step up its role in ensuring the well-being of the people is preserved. A case in point is the Berlin water services that were privatized in the late 1990s, but due to public discontent over rising prices and service quality, there was a 2011 referendum to bring the water services back into public hands.

The referendum was successful, leading to the re-municipalisation of Berlin's water services. It's time for Malaysians, especially policymakers, to ask if it is time to re-nationalise some of the entities that have gone private.

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