Kkkh4284

Sustainable urban planning

Task 3: privatisation

NAME : Roshafizah Bt Roslan

MATRIC NUMBER : A133549

LECTURER : Prof. Ir. Dr. Riza Atiq Abdullah Bin O.K Rahmat

Dr. Muhammad Nazri Bin Borhan

Puan Norliza Bt. Mohd Akhir

Task 3:

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. SITE LOCATION

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. The stadium can accommodate up to 5,000 people

and is used throughout the year for the community soccer competitions.

The stadium is a prominent landmark as it is located in the centre of Kajang town. Its

main entrance faces Jalan Kelab while the back portion looks out to Jalan Cheras leading

to the bustling Jalan Besar. In its heyday, many important football league and club

matches, involving legendary football players like Mokhtar Dahari and M. Chandran

were played at the stadium to capacity crowds.

2. CONCEPT OF PRIVATISATION

Privatization is the incidence or process of transferring ownership of a business,

enterprise, agency, public service or property from the public sector which is the state or

government to the private sector which is businesses that operate for a private profit or to

private non-profit organizations.

The 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 include the following:

a) Outsourcing - 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) - negotiating a contract with a private firm for

design and construction services with comprehensive operating agreements

for new, expanded, or upgraded facilities. The project and implementation

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 - 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 - 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. 

3. RESPONSIBILITY OF THE PARTIES INVOLVED

a) Government

Transfer the land title to the developer

Responsibility in assist to relocate the squatters and land owners

Assist in transfer the land to the developer

Assist in getting the necessary approval

Give assistance to transfer the ownership of part of the area from land

owners to the developer

Allow the developer to construct a modern mega research center.

b) Developer

Transfer of certain floor area of completed office space to the

government

Construct low cost houses to be given free of charge to the squatters

Construct infrastructure network, including two grade separated

intersection

Construct a number of houses to be given to the land owners as offset

of their land lots.

Construct an underground pedestrian crossing

4. BENEFIT OF THE PRIVATISATION IN REDEVELOP THE STADIUM

Privatization indeed is beneficial for the growth and sustainability of the state-owned

enterprises. The advantages of privatization can be perceived from both microeconomic

and macroeconomic impacts that privatization exerts.

a) Microeconomic advantages

State owned enterprises usually are outdone by the private enterprises

competitively. When compared the latter show better results in terms of

revenues and efficiency and productivity. Hence, privatization can provide the

necessary impetus to the underperforming.

Privatization brings about radical structural changes providing momentum

in the competitive sectors.

Privatization leads to adoption of the global best practices along with

management and motivation of the best human talent to foster sustainable

competitive advantage and improvised management of resources.

b) Macroeconomic advantages

Privatization has a positive impact on the financial health of the sector

which was previously state dominated by way of reducing the deficits and

debts.

Helps in escalating the performance benchmarks of the industry in general

Can initially have an undesirable impact on the employees but gradually in

the long term, shall prove beneficial for the growth and prosperity of the

employees.

Privatized enterprises provide better and prompt services to the customers

and help in improving the overall infrastructure of the country.

5. PROBLEM THAT MIGHT OCCUR IN FUTURE

Privatization in spite of the numerous benefits it provides to the state owned enterprises,

there is the other side to it as well. Here are the prominent disadvantages of privatization:

a) Private sector focuses more on profit maximization and less on social

objectives unlike public sector that initiates socially viable adjustments in case

of emergencies and criticalities.

b) There is lack of transparency in private sector and stakeholders do not get the

complete information about the functionality of the enterprise.

c) Privatization has provided the unnecessary support to the corruption and

illegitimate ways of accomplishments of licenses and business deals amongst

the government and private bidders. Lobbying and bribery are the common

issues tarnishing the practical applicability of privatization.

d) Privatization loses the mission with which the enterprise was established and

profit maximization agenda encourages malpractices like production of lower

quality products, elevating the hidden indirect costs, and price escalation.

e) There can be a conflict of interest amongst stakeholders and the management

of the buyer private company and initial resistance to change can hamper the

performance of the enterprise.

f) Privatization escalates price inflation in general as privatized enterprises do

not enjoy government subsidies after the deal and the burden of this inflation

affects the common man.