TASK 3: PRIVATIZATION

Name : Nurul Nadia binti Mohamad Yamin

Matrix No : A134110
Lecterur : Prof. Ir. Dr. Riza Atiq Abdullah
Subject : Perancangan Bandar Lestari









1.0 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.
2.0 Introduction
Kajang is located in Hulu Langat District, in Selangor. The first settlement in Kajang was
established in 1709. In 1807, Kajang was founded after the Klang War. The current location
gravity of growth in Kajang would be Sungai Chua. The total population of Kajang has grown
rapidly in the past few years, with estimated population growth of 9% per annum.As of 2004, a
few townships have been developed in Kajang, such as Taman Prima Saujana (straight from
JalanCheras), Sungai Chua, Taman Kajang Perdana (Kajang Highlands).Areas surrounding these
new townships are easily accessible via the SILK Expressway.
3.0 CONCEPT OF PRIVATIZATION
The term privatization can be defined as the transfer of ownership, property or business from
the government to the private sector. The government ceases to be the owner of the entity or
business. The process in which a publicly-traded company is taken over by a few people is also
called privatization. The stock of the company is no longer traded in the stock market and the
general public is barred from holding stake in such a company. The company gives up the name
limited and starts using private limited in its last name.
Privatization covers a wide spectrum of government operations, management and ownership
arrangements. Some types of privatization which may be considered are;
-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.
d
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.
-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.
-owned assets to private companies, such as the sale
of water/wastewater and electric utility assets. Proponents of privatization often point to success
stories which demonstrate cost savings, while opponents express concerns about accountability
and undermining organized labour, which results in jobs without health, pension, and other
benefits.

The most common type of privatization is contracting out programs or services to a private
company or another governmental entity to operate. The contracting government is still
responsible for the service, but someone else actually provides the service. This is usually the
most popular method of privatization that is accomplished through a Request for Proposal (RFP)
process or an Invitation to Bid (ITB). In the RFP process, any and all qualified businesses may
submit a proposal to the government agency that describes in detail how they would perform the
particular service and for what cost. Through this competitive process, it is not necessarily the
lowest cost that wins the contract, but that which demonstrates that a service can be both
improved and operated more economically at the same time.
While an Invitation to Bid is the standard sealed competitive bid in which the lowest bidder
usually gets the job. Contracts may take a variety of forms, including fixed price contracts and
cost plan contracts. They usually are quite detailed. It is important that a contractor can be held
accountable for the performance of the service as desired by the government, and that the
expectation of such performance is clearly defined. The contract should be capable of being
terminated under pre-established conditions if necessary, and include options for the government
in such a situation. There are typically more opportunities for privatization than local officials
realize for solving problems involving government-owned assets, facility operations, services,
debt structure, and other facilities and infrastructure.
4.0 OBJECTIVES OF PRIVATIZATION
The concept of privatization has been introduced in our country as one of national policy by
government since 1983. It represents a new approach in national development policy to
developed increase role of private sector in the development of Malaysia economy. This
approach is to facilitate the economic growth of the nation, relieve the financial and
administrative burden of the government, beside reduce the governments presence in the
economy where decrease both level and scope of public spending. More than that, the
privatization is to allow a market forces govern economic activities that will improve efficiency
and increase productivity in our country.
From 1983 until 31st December 2003, there are total 474 privatized projects had been achieve by
our country in national development. Privatization is helped in another way where can solve the
problem that involve government-owned assets, facility operations, services, debt structure and
other facilities like infrastructure.
5.0 PROJECT COMPONENT
Objective of this project is strives to provide an environment where dreams become reality,
businesses are grown, and knowledge, research and resources are turned into economic
opportunities. The development of the Innovation Research Park will implementing green
building concepts and practice in terms of energy saving, higher productivity and less waste
during construction. In addition, the building will embraced the concepts of eco-friendly building
with four attributes of green design, which are increase ventilation control, enhanced temperature
control, enhanced lighting control and increased day lighting. Overall, the Innovation Research
Park proposal consists of three main buildings (see Figure 1). It is including:

-class office space



ouse space

Figure 1 Design Concept of Innovative Research Park Buildings
6.0 RESPONSIBILITIES OF PARTIES INVOLVED
Government (MPKj)
Research Park.
sistance to get necessary approval.


their support since this project will give a lot of benefits to publics.

Developer
concept of eco-
friendly building.
without crossing road.


development will not disturb the existing traffic.
be in a well condition.

ise about the research park so that the inventors, innovators, researchers and
universities students from inside and outside will attracted to go there.

7.0 BENEFIT OF PROJECT PROPOSAL
In the main, privatization give benefits to both side, government and private sector. One of the
good returns to the government is they can develop city faster with strong finance. It is because
the private sector will cover the overall budget to build the Innovative Research Park. This will
decreasing the expenses in development of Kajang. Indirectly, the governments burden can be
reduce as well as it will not be an excuse for the government to proceed project that gives
benefits to public.
Otherwise, public sector also gain greater advantages from privatization as the facilities provided
by the private sector can be used by public at lower cost. With this development, it will turn
Kajang area into a smart city. Also, the competition between private company will give more
efficient service, higher quality of materials used, multiple choice and less corruption as they
need to convince the client and compete to get the project. For the private sector side, they will
get their benefits such as when the project succeed, it will boost up their company name. Thus, it
will be easier for them to get another big project as people had acknowledge their successful
project.
8.0 POSSIBLE PROBLEMS
However, there are some drawbacks from privatization method for this project. For instance,
there might be an upcoming issue on people will thought about government sell the city to the
private sector as the private sector receive free land to develop. From the other side, private
company needs to stand with risk like technical risk and financial risk. They also might need to
buy technology from outside for research purpose. Less advertisement will make the existence of
Innovative Research Park being invisible for citizens.
9.0 CONCLUSION
As a conclusion, to ensure the successful of this project through privatization method,
government need to pick a private company with strong finance background so that they will not
having finance problems during the construction and also for the maintenance. Besides,
government sector needs to give a hand to advertise the existence of research park to public and
good collaboration from both side will ensure the privatization method achieve their objectives.