Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : THE PAN PACIFIC HOTEL, KUALA LUMPUR
Tarikh/Date : 14/07/88
Tajuk/Title : THE CONFERENCE ON PRIVATISATION IN
MALAYSIA: "OPPORTUNITIES
AND IMPLICATIONS"
Yang Berbahagia Tan Sri Azman Hashim,
Pengerusi Persatuan Bank-bank Saudagar
di Malaysia;
Yang Berhormat-Yang Berhormat;
Dif-dif Kehormat;
Tuan-tuan dan Puan-puan,
Saya mengucapkan terima kasih kepada Persatuan
Bank-bank Saudagar di Malaysia kerana menjemput saya untuk
berucap dan seterusnya merasmikan Persidangan Penswastaan
ini. Walaupun dasar penswastaan telah diumumkan oleh
Kerajaan semenjak beberapa lama, namun maksud, cara dan
tujuan dasar penswastaan ini masih belum difahami
sepenuhnya. Ada yang masih mengulangi tuduhan-tuduhan yang
tidak berasas yang telahpun dijelaskan. Dengan itu, proses
penswastaan telah terganggu dan menyebabkan kerugian besar
kepada negara.
2. Oleh itu, saya akan cuba menghuraikan falsafah dasar
ini daripada segi rasionalnya, skop, pelaksanaan serta
cara-cara bagaimana Kerajaan akan cuba mengatasi aspek-aspek
negatifnya. Saya berharap Persidangan ini akan dapat
menghapuskan salah anggapan mengenai dasar ini supaya ianya
dapat dilaksanakan dengan berkesan.
3. Memandangkan terdapat peserta dan pemerhati dari luar
negeri dalam Persidangan ini, saya akan meneruskan ucapan
saya dalam Bahasa Inggeris.
Ladies and Gentlemen,
4. Let me begin by reiterating the goal of the present
Government. It is this Government's wish to see that
Malaysia develops rapidly in order to give Malaysians
improved living standards and a quality of life that is
their right. I strongly believe that Malaysia has the
necessary ingredients to achieve this rapid development. We
have the resources, the skills and the basic ethics
necessary. To maximise these potentials, we need to reduce
the restraining effect of too much Government regulations,
controls and involvement. We need indeed to confine
Government as much as possible to its basic function of
keeping law and order and to leave commerce and industry to
the private sector. This is easier said than done as modern
commerce offer too many opportunities and temptation for the
unscrupulous and the crooks.
5. Upon gaining independence, the Government, inevitably
had to take the leading role in developing the country, in
view of the limited capacity of the local private sector at
that time in terms of entrepreneurial, managerial and
financial resources. The kind of egalitarian principles
which influenced many developed countries to nationalise or
even to become communist also affected Malaysia with its
many imbalances and disparities. From the provision of
utilities such as roads, water, electricity, telephone,
postal services, etc., the Malaysian Government moved
swiftly into purely economic activities. Within a very
short period hundreds of Government owned companies were
formed to do, among other things, housing development,
trade, run hotels, estates, mines, shipping, airlines,
construction and manufacturing. By the 1980's some 10
billion ringgit was directly invested in about 1,000
companies. Guarantees total 25 billion ringgit. While some
succeeded admirably, most failed. Even those which are
monopolistic are not able to pay their way, much less make a
profit. The pendulum had obviously swung too far. While we
cannot say the policy is a total failure, for much
experience had been gained from it, we cannot continue to
pay this very high price.
6. Given this scenario, the Government at the beginning of
this decade, decided upon privatisation as a way out. At
that time privatisation was not the world trend that it is
now. But the many failures and the high cost of Government
involvement left us with no choice but to try this unproven
approach. Besides, the country now has the infrastructure
in place and the private sector is better equipped with man,
money and skills to make privatisation feasible.
Ladies and Gentlemen,
7. The rational for privatisation is extremely simple.
When the Government runs a service and loses money where it
should be making profits, or where it is making a profit the
quantum of which is below what is expected, then by
transferring to the private sector the Government
immediately gains from the proceeds of the sale and from
being relieved of the overheads involved in running the
service. If as expected, the private sector taking over the
public service makes a profit, the Government would gain
from the company tax of 40%. Government revenue should
therefore improve with privatisation and Government
expenditure would decrease because it is relieved of the
overheads incurred in running the service.
8. But what of the employees? There are some who believe
that the Government should run services regardless of losses
merely to give jobs to the people. This is wasteful when we
know full well that the job opportunities can be had without
the inefficiency and the losses. The Government's policy is
that those Government employees involved in the privatised
service should not lose any benefit that they have a right
to expect in the Government service. They can however opt
for a private sector scheme which would entitle them to
share ownership and bonus and other perks not normally given
to Government employees. If they opt for the private sector
scheme they should not be entitled to Government scheme.
9. This double scheme will impose a strain on the
privatised service. However, this can be offset by the
Government pricing the assets of the services offered for
privatisation so as to give a reasonable return. The assets
cannot be priced at market value because they are usually
huge. The land belonging to the railway or telecoms or
airports are so high priced now compared to when they were
acquired by the Government that no return on investment will
be possible. Thus even though the employees are put on
Government payscale it would be possible to make reasonable
returns by the private company taking over. Over the years
normal attrition would reduce the employees on Government
pay scheme. New employees should be on the companies normal
pay.
10. Since the assets are to be turned over to the private
sector at below market value, the disposal of these assets
cannot be done freely. If this is allowed then the service
could be terminated after the company had made a 'killing'
disposing the assets. Some kind of an undertaking must be
obtained from the private company to continue providing the
service and to continuously upgrade it.
11. In the meantime the Government establishment strength
should decrease. As Government revenue would be expected to
increase, improvement in Government finances should enable
greater Government contribution towards development and the
improvement of service conditions of the remaining
employees.
12. Ideally privatisation should result in improved income
for everyone. At the very least no one should lose. But
much depends on the vaunted efficiency of the private
sector. In other words privatisation must lead to greater
productivity.
13. The Government feels that the private sector has come a
long way since independance 30 years ago. They are now
bigger, better organised and sophisticated enough to run
huge and complex public services. The early fears that the
bumiputeras will be completely left out if there are no
Government bumiputera interest institutions to take up their
shares have diminished somewhat. There are now a fair
number of bumiputeras capable of participation in the
privatised services. Where they are not adequate we still
have institutions like the PNB, PERNAS, Tabung Haji and
others which can take up the shares due to the bumiputeras.
We would therefore cease to worry overly on that score.
Ladies and Gentlemen,
14. Opposition to privatisation come largely from the
employees and their unions. This is understandable.
Working in a private sector organisation with its stress on
efficiency and profits cannot be the same as working in a
Government department where public revenue guarantees the
financial capability. Even when the salary is the same, the
feeling differs.
15. It is difficult to convince employees that a faster
rate of development of the country would have many eventual
direct and indirect benefits for them. Direct and immediate
benefits are more easily understood and appreciated by
everyone. Still employees in those Government bodies which
have been privatised have realised that privatisation can be
beneficial. In fact, as a result of the privatisation of
the Container Terminal in Port Klang, the workers of the
whole port are keen to have the Port completely privatised.
The Government is presently looking into this.
16. Privatisation is the converse of Nationalisation. Just
as nationalisation was supposed to remedy the inequities of
the capitalist private enterprise system, privatisation is
expected to remedy the failures of nationalisation. Whether
in fact reversing the process of nationalisation can achieve
the vaunted efficiency of the free enterprise system without
the inequities that had accompanied it in the past remains
to be seen. We know that systems have been blamed for the
inadequacies of man. Privatisation will not by itself
overcome the inadequacies. We should not therefore be too
optimistic.
17. The trend towards privatisation is universal now. Even
the Communists now talk of glasnost and perestroika which in
practical terms means privatisation. Even if we want to, it
is doubtful that Malaysia can resist this trend. We have to
go along with it and hope we can correct mistakes as they
crop up. What will determine whether privatisation will be
beneficial or not will be the honesty, the skill and the
diligence of our managers and workers. A system is only as
good as the people who man it.
Ladies and gentlemen,
18. A great deal has been said about bureaucratic
inefficiency. Government employees are no different from
their private sector counterpart. If they are different in
their attitude towards their work, it is because of their
management environment. Profits do not motivate them. The
private sector employees will act in exactly the same way if
the enterprises they are in create the same management
environment.
19. In Japan, while the private railways make profits, the
Japan National Railways (JNR) when it was owned by the
Government, lost money constantly. Now the JNR has been
privatised and in its first year of operation the companies
have made profits. Apart from the new owners and probably
some key executives the people manning the JNR are the same.
Yet the performance is different. The assumption must be
that the management input is different.
20. Management is not one of Malaysia's strong points. In
the first instant we do not have enough managers. Of the
ones that we have, a good number are unfortunately mediocre.
Some we have seen are downright dishonest. If privatisation
is going to remedy the ills of nationalisation then we must
have good managers.
21. The Government cannot afford to have too many failures
in the privatised companies. We do not want to be forced to
take them back. We do not want to involve ourselves in
business again.
22. While the Government will exercise every care to ensure
that Government enterprises will not fall into the wrong
hands, we hope that responsible institutions in the private
sector such as merchant banks, business consultants and
intending entrepreneurs will study very carefully the
ability of the companies taking over Government services or
enterprises. There are many good examples in other
countries. We must learn from them. If necessary, we
should use their expertise, their direct involvement even.
Let us admit that we do not know everything. There is so
much we can learn from others with their experience.
23. If the Government happens to award the enterprise to
companies that are partly owned by foreigners, it is not
because the Government is not patriotic or un-Malaysian. We
want to save the nation from disasterous mistakes. But that
does not mean that capable locals cannot on their own
succeed in taking over the services we wish to privatise.
24. The fear of price increases is greatly felt with
privatisation of monopolies where prices may be determined
by the need to earn super normal profits. It is the
function of the Government therefore to prevent such a move
by the private sector through the establishment and
enforcement of an effective regulatory mechanism. Such a
mechanism will not only have to regulate prices of services
but also its quality and geographical coverage. In the
licence to Syarikat Telekom Malaysia for example, the
company is bound to continue with the unprofitable services
to the rural areas. But we would like to assure interested
parties that the Government does not wish to regulate unless
the situation compels it to do so.
25. Fears of strategic industries falling into the hands of
foreigners can be easily circumvented through specific
provisions in the instruments enabling the industry to be
privatised. Fears of the privatised entity undertaking
actions which are injurious to national interests can also
be overcome through this means. Hence, although it is
admitted that there are dangers attached to the policy,
safeguards can be built-in to circumvent such dangers.
26. As you can see, privatisation does not mean that the
Government will be absolved of its social responsibilities.
The Government will still maintain its role as the guardian
of public welfare. This will be done through minimal
regulatory measures rather than through direct participation
in the production of goods and services. Where subsidies
are unavoidable these will continue to be provided but on a
more selective basis and to deserving cases. The Government
will remain accountable to the public and must therefore be
responsible for ensuring that privatisation will be
beneficial to all concerned.
Ladies and Gentlemen,
27. The Government truly believes that privatisation will
on the whole be beneficial to the nation and hence it is
fully committed to it. I sincerely hope that this
Conference will remove the misgivings and apprehensions that
surround this policy, so that we can get on with developing
this country.
Tuan-tuan dan puan-puan,
28. Akhirnya saya mengucapkan terima kasih kepada Persatuan
Bank-bank Saudagar di Malaysia yang menganjurkan Persidangan
ini. Saya berharap Persidangan ini akan berjaya mencapai
matlamatnya bagi mengkaji peluang-peluang dan
implikasi-implikasi penswastaan di Malaysia pada
keseluruhannya.
29. Dengan ini, saya dengan sukacitanya membuka 'Conference
on Privatisation In Malaysia: Opportunities And
Implications' dengan rasminya.
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