CIVIL & STRUCTURE DEPARTMENTFACULTY OF

ENGINEERING & BUILT ENVIRONMENTTHE NATIONAL

UNIVERSITY OF MALAYSIA


KKKH4284 SUSTAINABLE URBAN PLANNING
TASK 3: PRIVATISATION




Lecturer:
PROF. IR. DR. RIZA ARIQ ABDULLAH BIN O.K
RAHMAT


Students Name:
MUHAMAD RAHMAD BIN MUSTAR A133094


PRIVATISATION
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.

1.0 SITE BACKGROUND
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 shophouses 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. Stadium
Kajang are often used for sports day and funfairs. Many football matches were held there in the
1960s and 1970s. The police, military and schools would have their sports day at the stadium as
it had an eight-lane 400m running track. It was also often rented to funfair operators. During the
pre-war era, it was just a field with grass tennis courts and a clubhouse. It was only fenced up
during the 1980s. The Kajang Stadium has persevered through many decades and seen some
important football matches.

2.0 CONCEPT OF PRIVATISATION METHOD
The term privatization refers to the process of private, usually for-profit businesses taking over
the provision of public, government provided services. This includes contracting with or selling
to private parties the functions or firms previously controlled or owned by governments.
Privatization covers a wide spectrum of government operations, management, and ownership
arrangements. Some types of privatization which may be considered.
a) 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.
b) 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.
c) 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.
d) Asset Sale means the sale of government-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 labor, 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. 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, unit 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.

3.0 RESPONSIBILITIES OF ALL PARTIES
3.1 Responsibilities of Majlis Perbandaran Kajang (MPKJ)
MPKJ should always be planned as part of an integrated public transport system, not as a
separate money-making venture.
MPKJ should make sure that the tram lines should go where the demand is (present or
planned), not where there is a disused railway line or other surplus land.
Monitor of the tram service in the city should be maintained. If a tram interchange is
necessary it should be at-grade and involve as short a walk as possible. Frequencies of all
services should be good enough that exact time keeping and connections are not
necessary.
MPKJ have to 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.
3.2 Responsibilities of Innovative Research Park Developer
The innovative research park project in the city should be maintained.
There are many possible improvements.
Promoters are the entrepreneurs who take the full risk of the concert. They can be local
(meaning they work only in one city or area), regional (several states), national or
international. If they lose, they can lose big, but as acts get more successful they squeeze
them and limit the promoter's upside. The result is a friendly game of "hide the pickle"
that promoters routinely play in rendering statements of how much has been earned.

4.0 BENEFITS OF THE PROPOSAL
Privatisation places the risk in the hands of business or Private Enterprise.
Private enterprise is more responsive to customer complaints and innovation.
The Government should not be a player and an umpire.
Privatisation provides a one off cash boost for Government.
Privatisation leads to lower prices and greater supply.
Competition in privatization increases differentiation.

5.0 PROBLEM THAT MIGHT OCCUR IN THE FUTURE
Privatisation is expensive and generates a lot of income in fees for specialist advisers
such as banks.
Public monopolies have been turned into private monopolies with too little competition,
so consumers have not benefited as much as had been hoped. This is the main reason why
it has been necessary to create regulators This is an important point. It partly depends on
how the privatisation took place. For example, the railways were privatised in bit of a
rush and there might have been other ways to do it so that more competition was created.
It partly depends on the market. Some markets are 'natural monopolies' where
competition is difficult. For example, it would be very wasteful and expensive to build
two sets of track into Liverpool Street just to create some competition. Natural
monopolies create a special justification for public ownership in the general public
interest.
The nationalised industries were sold off too quickly and too cheaply. With patience a
better price could have been had with more beneficial results on the government's
revenue. In almost all cases the share prices rose sharply as soon as dealing began after
privatisation.
The privatised businesses have sold off or closed down unprofitable parts of the business
(as businesses normally do) and so services eg transport in rural areas have got worse.
Wider share ownership did not really happen as many small investors took their profits
and didn't buy anything else.