Privatisation Master Plan

According to the respondents, the UKAS PPP programme is a continuation of a privatisation programme mooted by the Government of Malaysia in the 1980’s. Although decades earlier, and the details of PPP implementation not necessarily being the same, respondents stressed that the Privatisation Master Planis an important document and is still considered relevant to the current PPP programme. The Master Plan was authored by the Malaysian Economic Planning Unit, aiming to educate the public regarding the privatisation programme and to serve as a guideline for interested parties to participate and take hold of the opportunity offered by the programme (Economic Planning Unit, 1994).

The Privatisation Master Plancomprises a general privatisation framework, procedures, and other information on the privatisation programme such as the background, progress,

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achievements and its future direction. The research focuses on information that is relevant in addressing the research objectives and understanding the link between conventional privatisation programmes and the current PPP programme. The Privatisation Master Plan defines the programme’s drivers clearly. There were five drivers: to facilitate the nation’s economic growth; to relieve financial and administrative pressure on the government; to enhance efficiency and production; to downsize the public sector in the economy; and as a tool to achieve the National Economic Policy objectives. 246 projects were identified as suitable for privatisation (infrastructure and non-infrastructure). They were all government- initiated proposals, subjected to competitive bidding, either from the public at large or specific target players. The plan also stressed that any private proposals attempting to hijack any of the 246 projects before the competitive bidding process would not be entertained. No regulatory framework was linked to implementation of any of the listed projects, although centralised planning for government-initiated projects was to be steered by the Economic Planning Unit. Identified potential privatisation exercises were executed by relevant ministries or agencies.

5.2.3.1 Private-Initiated Proposals

Besides the government-initiated proposals, the Privatisation Master Plan acknowledged proposals from the private sector, but only if the proposal was considered unique. According to paragraph 89 in the Privatisation Master Plan, unique is characterised as follows:

a. A feasible proposal comprising a cost-effective solution to save cost for the government.

b. A private proposer in an advantageous position if holding exclusive patent rights or sole technical capabilities; this is the key to a privatisation proposal; c. In the event that a proposer is reliant on another proficient party, the

privatisation would be granted to the proficient party.

If the private proposal did not meet this definition of uniqueness, the proposal had to go through a competitive bidding process. Private-initiated proposals were considered on a first- come-first-served-basis to reward the private sector for innovation and ingenuity. If any proposal was deemed unique and viable for execution through privatisation, it was promoted and further scrutinised by the Malaysian Economic Planning Unit. If the proposal suited the government’s requirements, negotiation was conducted with the original proposer. The government conducted an open bidding exercise for the proposal if the negotiation failed to be

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finalised between both parties. Nevertheless, the original proposer was to be compensated by the successful bidder for the cost of the study incurred. The amount of this compensation was to be agreed between the government and the original proposer and specified in the bidding documents.

5.2.3.2 Evaluation of Bidders

Both private- and government-initiated proposals were scrutinised to ensure compliance with government policies and achieving positive implementation. Proposals from both routes were assessed for technical and financial capability. The Privatisation Master Plan did not describe how a proposal was to be assessed. Nonetheless, a form requesting important information regarding the proposer and the proposal was attached to the Plan, to be filled in by the proposer; it is assumed to be used as part of the evaluation. The information requested is shown in Table 5.21.

Table 5.21- Information Requested from Proposer as in Privatisation Master Plan Information

Requested

Detail

Proposer Company profile (including paid up capital, authorised capital, particulars of shareholders, information on insolvencies, type of activity and business performance in past 3 years, information on new entity set for the privatisation, detail of employees)

Proposal Particulars on the privatisation proposal, proposed model of privatisation, price offered, future investment plan,

Finance Detail on source of finance, projected cash flow, profit projections for first 5 years

Source: Economic Planning Unit (1994)

The information required as per Table 5.21 suggest that the bidders might be assessed base on their company background, particulars on the proposal and the financial aspects.

5.2.3.3 New Economic Policy

Privatisation programme was one government vehicle to achieve the national agenda, including the New Economic Policy. The Privatisation Master Plan stated that a majority of the privatisation projects had to have 30 percent Bumiputera participation. Privatisation was anticipated to create more business opportunities for the Bumiputera, thus motivating

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(1996), to safeguard this Bumiputera participation, a condition was imposed in the concession agreement for 30 percent of the work contracts to be reserved to Bumiputera companies. This was an attempt by the government to ensure the privatisation benefited society by balancing the socio-economy.

Foreign company participation was also accepted to assist implementation of the privatisation programme. However, foreign companies’ participation was subjected to:

i. non-availability of local experts;

ii. foreign participation was needed to promote export industry;

iii. the domestic market was insufficient to captivate shares offered and to distinguish international partnership.

Foreign companies’ participation, however, was capped at 25 percent of its share capital in a privatised entity.

This ends the review of relevant documents used in the UKAS procurement process. Overall, the documents provided for members of the public and interested parties are too broad. The lack of information on the procurement process and other UKAS practices reflects a lack of transparency in UKAS practice. Nonetheless, the findings from the document review will in the chapters be compared and contrasted with actual UKAS practice, as obtained through the interviews. The next sections will present the analysis of the interview findings regarding the procurement process adopted by UKAS and the competition policy incorporated within the procurement process. Figure 5.14 illustrates the cognitive mapping of UKAS implementation in relation to understanding the UKAS procurement process.

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