Professional Documents
Culture Documents
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 privatisation of the project itself. Privatisation is
the transfer of ownership of property or businesses from a government to a privately owned
entity. Privatisation is a good way to develop the research project because it is can generate very
fast development, with lower cost to be worried an more optimization on laborers. It is a lot more
cheaper because it leads to lower prices and greater supply and least corruption. Beside, the
municipal wouldnt have to worry about the cost as it is develop 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. Privatisation will give a chance to many private company to
handle more bigger project.
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But privatisation is expensive and generates a lot of income in fees for specialist adviser such as
banks and professional workers. As well as the government being motivated by short term
pressures, this is something private firms may do as well. To please shareholders they may seek
to increase short term profits and avoid investing in long term project.
e) Maintenance
This department must take safety measures to all aspect including workers, public and
environment.
BENEFITS
Increase Flexibility
Privatization gives state officials greater flexibility to meet program needs. Officials can replace
the private firm if it isn't meeting contract standards, cut back on service, add to service during
peak periods, or downsize as needed.
Improved Maintaince
Private owners are strongly motivated to keep up maintenance in order to preserve the asset
value of the investment in the facility. Public owners often defer maintenance due to political
considerations, increasing overall long-term costs.
Shareholders
It is argued that a private firm has pressure from shareholders to perform efficiently. If the firm is
inefficient then the firm could be subject to a takeover. A state owned firm doesnt have this
pressure and so it is easier for them to be inefficient.
Increased Competition.
Often privatisation of state owned monopolies occurs alongside deregulation such as policies to
allow more firms to enter the industry and increase the competitiveness of the market. It is this
increase in competition that can be the greatest spur to improvements in efficiency. For example,
there is now more competition in telecoms and distribution of gas and electricity. However,
privatisation doesnt necessarily increase competition, it depends on the nature of the market.
DISADVANTAGES
Costs goes Up
Government pay more, both as a taxpayer and directly when paying for public services. Value
for money goes down because private companies must make a profit for their shareholders and
they also pay their top executives more money. This means either we the people, or the
government, or both, end up paying more than they did before.
CONCLUSION
The primary rationale for privatisation is based on the argument that privatisation increases
efficiency. Thus, it is implied that welfare will be maximised with privatisation. Privatisation is
undertaken to reduce government involvement in business, which is done to avoid the crowdingout of private sector investments and to reduce the costs of government intervention in business.
However, the privatisation record in Malaysia shows that the government involved itself in
business in different ways: it continued to intervene, but perhaps less directly.
The Malaysian experience demonstrates the importance of soft issues, such as institutional
reform, because 'hard' outcomes are compromised when such issues are ignored. Although there
was a need for privatisation, it should have been preceded by the establishment of
appropriate institutional mechanisms.