Advantages Of Privatization In Malaysia

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Malaysia’s economy made a major transformation since Malaysia achieved its independence in 1957, from a heavy reliance on tin mining and rubber plantation to an industrial based economy (Mun, 2007). Most of the industrialization efforts, especially the development of heavy industries in Malaysia by HICOM, a government funded agency have been approached. The approach has caused high financial and administrative burden to the government. Hence, in 1983, Malaysian then Prime Minister, Mahathir Mohamad announced the government’s intention to embark on a privatization policy to ease public sector involvement in the economy. However, the privatization in Malaysia has resulted in both success and failure.

The progress of Malaysian economy is highly influenced by three critical factors namely public delivery system, foreign direct investments and financial markets (Mun, 2007). It is believed that the poor public delivery system has caused the slowdowns of the Malaysian’s economy progress. As a result, Prime Minister, Abdullah Badawi, in year 2007, has instructed the public services and government-link companies to increase their efficiency level (Mun, 2007). In addition, foreign direct investments are important as they can contribute both financial and human capitals to the economy in Malaysia. For example, Iskandar Development Region (IDR) and the Northern Corridor Economic Region (NCER) as the special investment were developed and in order to attract foreign direct investment.

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