In other words, government through its various branches, should be
playing the role of the regulator and enforcer in cases of
non-compliance, and most important of all, protector of the consuming
public.The interests of the consumers in every sense of the word must be firstly protected by the government at the highest level, not by the consumers associations alone. If the government’s role is defined as the regulator of business enterprise and protector of the consuming public, then business operation, logically, should be left entirely in the hands of the private sector. Government, therefore, has no business to engage in business.
Over the years, the unclear roles between regulator (i.e., government as the public sector) and business operators (private sector) have manifested in the form of a privatization policy. This policy, firstly introduced in the UK during the Thatcher era and then the US, clarifies the roles in business operations between the public and the private sectors. It confirms the idea that the public sector should be governing the country while the private sector should be running businesses.
Malaysia, under the dictatorship of former prime minister Dr Mahathir Mohamad, seized this policy instrument and adopted it throughout his long tenure in office. Whilst the first of such privatization, the Klang North Port, privatized to Permodalan Nasional Berhad (PNB), a bumiputra trust fund management company, was considered a reasonable curtain raiser for this new policy at that time, it was also the last of a genuine and legitimate government asset sale in Malaysia.
Privatization
Privatization took over the entire nerves and functions of the government under Mahathir. It became the buzz word in the country. This newfound method was quickly followed by many privatization exercises in Malaysia, the notable one being the privatization of the construction and management of the North South Highway or PLUS. A private concession was given by the government to construct, operate and manage the 800-km dual expressway from the Thai border all the way to Johor Baharu.
This was the start of the great money politics of a grand design. It further accelerated UMNO’s tendency towards nepotism and cronyism practices, and high level corruption era. The face of Malaysian politics has completely transformed by this policy into multi-billion ringgit business. And Mahathir’s leadership was clearly responsible for that. Many a highway concession had been given to party cronies or nominees of politicians in power, one after another. Suddenly, Klang Valley was proliferated with tolled highways.
The 33-year concession for the first major highway was literally handed on a silver platter to an UMNO owned company, Renong, in 1988, amid strong protests from the members of the opposition. The protest was not so much on the necessity of the project - which Malaysia badly needed in order to spur its economic growth - but rather the manner in which the government fabricated the business and the contract.
Renong, similar to Emrail and Zapima Engineering, the two companies which were given Kidex highway concession recently, did not have any business track records to begin with. Nevertheless, it was favoured and given all the favorable terms and conditions including government soft loan at a very low interest rate to kick start the works. The toll agreement which clearly favors the concession holder also allows an increase in toll rates every two years despite the expected increase in traffic volume.
Malaysian motorists were equally angered by the fact that they still have to pay road tax annually to the government, who now skips its responsibility to build roads, on top of the costly toll charges.
Perhaps, the protests from the public went unheeded as they were not vocal enough. Or that UMNO, as the ruling party in government, was too powerful. Or it might be, that the government through its huge machinery painted a different picture altogether to the voting public.
In any case, the policy has presented Mahathir with a massive opportunity to exert control and use it as a method to reward not only his party leaders and members, but also those from the other BN component parties. This method was shrewdly exploited to the hilt. Thus, the start of politics for business, favoritism, cronyism, that became synonymous with Mahathir and UMNO.
PKFZ scandal
This was the start of the great money politics of a grand design. It further accelerated UMNO’s tendency towards nepotism and cronyism practices, and high level corruption era. The face of Malaysian politics has completely transformed by this policy into multi-billion ringgit business. And Mahathir’s leadership was clearly responsible for that.
Mahathir’s administration allowed the abuses of the privatization policy and facilitated the absence of its due process. Many a highway concession had been given to party cronies or nominees of politicians in power, one after another.
Suddenly, Klang Valley was proliferated with tolled highways. Ports were also given away at fractions of their original price or their original worth. Examples include Johor and Kuantan ports, the concessions for Westport and the port of Tanjung Pelepas. The scandal involving Port Klang Free Trade Zone also started during this period.
On
the excuse of the privatization policy, power generation and water
supplies - two basic commodities that provide the needs for all the
consuming public - were also turned into monopolistic companies. These
crony companies obviously are owned by people who are close to the
ruling parties, running them on commercial basis where profit is a sole
motive. The recent sale of tycoon Ananda Krishnan’s power plant to 1MDB
is simply the reverse of this process where public funds are again
perceived to be abused.Privatization also gave birth to private Telco companies like Celcom (given to Tajudin Ramli), Maxis (given to Ananda, right) and cable television. New licenses were controlled and issued (or deemed privatized) to these close friends of the prime minister.
However, it was recently discovered that Mahathir’s son actually holds the controlling stake in Maxis. How is this possible, only Mahathir can offer the explanation. In the mid 90s, another government owned shipping firm, Perbadanan Nasional Shipping Lines (PNSL) was also sold to Mahathir’s son without the due process of bidding or tender. The company went bust not long after and was later rescued or bought over by Petronas at a hefty price.
Similarly, Malaysia Airlines was handed over to Tajuddin (left)
without any form of tender or transparent bidding process. Why? What
airlines experience did he have? It was a privatization exercise doomed
from the start with predictable result almost similar to PNSL.Upon privatization, assets were stripped, functional organisation was broken up in the name of restructuring, costs increased and profits plummeted. Eventually, it had to be rescued by the government, again using public funds.
Privatizing government owned assets or services in order to increase productivity and efficiency of service delivery, at a low and competitive rate, is the hallmark of the policy objective. At least, that is how the theory goes. This form of public-private partnership was formulated to bring benefit to the consuming public in mind. Otherwise, the role of the government, as the regulator that ensures fair play, service quality and competitive rate, would be completely redundant.
Such a policy must also be supported by strong economic or financial arguments. The consuming public must benefit from a policy shift especially when it involves public utilities and infrastructure facilities such as roads, highways, electricity, and water supply and in some cases, ports and domestic airlines. A new policy should not become a ploy to benefit a few party members at the expense of the majority.
Millionaires, billionaires
However, unashamedly, Mahathir was of the opinion that if the business or assets of the government were given to his party members, some form of control could still be exerted through the party’s channel, as he was also the ruling party’s president. There was no secret that he believed in creating millionaires among his party members out of this new business policy. Mahathir truly believed that the riches and new found wealth of these party leaders would ‘trickle’ down to the rest of the party members especially at the grassroots level.
In truth, it was unclear whether this flawed thinking came from a simple mind or camouflaged corruption was indeed at the forefront. Several instant millionaires did surface in Malaysia while Mahathir was in power, albeit massive collapse of them and their businesses during the 1998 financial crisis.
Despite
financial rescue or obvious bail out by Mahathir, again using public
funds on some of his crony companies, many of them did not make it and
eventually went under. Even Renong, despite all the government financial
supports, could not sustain and went belly up. Other politically linked
companies (or PLCs) are still nursing their financial bruise more than a
decade later while ruling party members like UMNO at grassroots level
continue to remain poor and economically deprived.Without a doubt, Mahathir’s approach in carrying out the public and very private partnership policy has failed miserably and was an expensive exercise for the Malaysian public. It has benefited only a few people. Creating PLCs to take over government owned assets on the pretext of implementing a privatization policy is camouflaged corruption by design.
It was not an intellectual economic policy that could and would transform the economic activities of Malaysia. Moreover, the policy should not become a tool by which party members, regardless of whether they can deliver or not, could use to enrich themselves.
What was there for the consuming public, the very voters who gave their votes to the government of the day? Shouldn’t they benefit and be given the highest priority in terms of lowest possible price for the services needed? Why should they pay high toll charges when they have already pay their dues in the form of road tax? Why should they pay high tariff for electricity and water and allow private companies to reap the profits?
As a regulator, the government is supposed to create a level playing field for private sector companies to compete and operate. The market or the consuming public would benefit from such a level playing field environment.
Malaysia under Mahathir’s dictatorship had other ideas. Not only this camouflaged corruption policy appears unjust and biased the majority of the consuming public were made to suffer and had to pay expensively for the benefits of a few of Mahathir’s cronies. Camouflaged corruption is obviously one of the ugly results of Mahathir’s dictatorship for over 22 years which is now being copied again by Najib Razak.
| Dr Rosli Khan, | 14 March 2012 via HarakahDaily |
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