By Jeff Tan
Lately, privatisation has fallen out of favour in lots of international locations as the underlying political components haven't been good understood. This booklet examines Malaysia’s privatisation programme, concentrating on how political constraints ended in the failure of 4 significant privatisations: the nationwide sewerage corporation (IWK), Kuala Lumpur gentle Rail Transit (LRT), nationwide airline (MAS), and nationwide motor vehicle corporation (Proton). It considers why constructing international locations resembling Malaysia will need to embark on privatisation, the criteria that bring about coverage failure, and what's had to make it paintings. It exhibits essentially that political explanations riding privatisation frequently dominate in simple terms monetary issues, and hence it will be significant to examine privatisation in the particular state context. It argues that failure within the Malaysian case was once as a result of political concerns that compromised institutional layout and regulatory enforcement, resulting in difficulties linked to corruption. It concludes that privatisation doesn't inevitably enhance incentives for potency or increase the finance on hand for capital funding, and that winning privatisation depends upon the state’s institutional and political means to layout and deal with a suitable set of subsidies. total, this ebook is a entire exam of privatisation in Malaysia, offering very important insights for realizing the political economic climate of this approach in different constructing nations.
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Extra info for Privatization in Malaysia: Regulation, Rent-Seeking and Policy Failure (Routledge Malaysian Studies)
Example text
On the one hand, this positive state–capital relationship is seen to allow the state to implement policies in favour of Privatization, rents and rent-seeking 31 business (Koo and Kim 1992). South Korea’s developmental policies in the 1960s and 1970s are said to derive largely from the consistency of its policy implementation in favour of large capital which in turn ensured business confidence and a favourable investment climate, with both business cartels and state economic bodies ‘committed to high growth, realising that they would have to swim or sink together’ (Pempel 1999: 164).
The ability of the state to enforce contracts then becomes more important than actual contract design as ‘(e)ven the best contracts – those that clearly specify terms of fulfilment and breach – must be enforceable in order to be effective in practice’ (Weber 2002: 48). This is especially important as contracts are not only limited by incomplete information but also by the limits of liability and enforcement. g. due to bankruptcy laws or political considerations), the contractor may renege on the contract rather than deliver.
The failure to correctly identify these sources of state failure has partly accounted for the mixed performance of privatization in developing countries. Many aspects of state failure particularly in the context of privatization can usually be traced to political constraints posed by the balance of power in society. Even when regulatory institutions appear to be appropriate, they may fail because of an incompatibility of the institutions with the existing balance of power that prevents effective implementation (also see Levy and Spiller 1993: 249).