5 - Reforming the Malaysian Telecommunications Sector

Summary

This chapter examines the first phase of Malaysian telecommunications reform. Three main arguments are presented. First, Prime Minister Mahathir played a central role in the adoption of privatisation in Malaysia. Second, while the Malaysian state is strong and determinedly adopted privatisation as an economic policy, its implementation was greatly influenced by the active lobbying of Malay businessmen. This points to the fact that, a strong state that is able to formulate policies independently is not necessarily insulated from lobbying that shapes implementation. Third, the implementation of telecommunications privatisation mainly benefited politicians, their political allies, and those within the Barisan Nasional patronage network.

The discussion is divided into three parts. The first looks into how and why privatisation was adopted as a state policy. The second focuses on the privatisation of the telecommunications sector by analysing its stages, its implementation, and the roles of major actors. A final section synthesises the chapter's evidence and main arguments.

PRIVATISATION IN MALAYSIA

Malaysia was one of the first among developing countries to adopt privatisation as part of its economic reform program. In the early 1980s, the total or partial sale of state enterprises to the private sector was viewed as the solution to numerous problems confronting the state including inefficient state enterprises, high levels of public debt, and poor economic performance. In March 1983, Prime Minister Mahathir Mohamed spoke of privatisation as a cornerstone of his economic policy. He said:

Privatisation means the opposite of nationalisation. The objectives of nationalisation is for government to take over the ownership of private enterprises while privatisation means the transfer of government services and enterprises to the private sector. Normally, the companies and services owned and managed by the government have been less successful or have run at a loss because the government's management methods differ greatly from those of the private sector. On the other hand, private businesses and enterprises are usually profitable … In view of this possibility, there is a need to transfer several public services and government-owned businesses to the private sector.