PRIVATIZATION Privatization in Malaysia, Regulation, rent-seeking and policy failure

198 Noteshuge losses and Chia was arrested and charged with dishonestly authorizing thepayment of RM76.4 million to another company after Mahathir stepped down asPrime Minister.24 It is unclear whether savings in capital expenditure includes RM8.2 billion ofinfrastructural development from 1983 to February 1991 through BOT and BOcontracts (Malaysia 1991b).25 An estimated RM362 million was foregone from the sale of MAS (RM68.25million), MISC (RM221 million), Tradewind (RM33.73 million) and Sports Toto(RM39.26 million) (Ismail and Lee 1990; Ismail 1991).26 This was mainly in construction and real estate, where NPLs increased from16.8 and 8.3 per cent respectively by the end of 1998 to 29.7 per cent for bothsectors by the end of 1999 (Chin and Jomo 2001: 125–126).27 The breakdown is as follows: 53,718 (1983–90); 43,038 (1991–95); 17,442 (1996–2000).28 Powertek, Lingkaran Transkota, YTL Power International, Puncak Niaga andDigi.com.29 By 12.6 per cent from RM37 billion (1995) to RM59 billion (1999) (Malaysia2001b).30 From 26 per cent (1995) to 26.7 per cent (1999) (Malaysia 2001b).31 From RM4.15 billion (21.7 per cent) in 1983 to RM8.58 billion (25.6 per cent) asat December 2000 (Malaysia 2001b).32 The NEP widened intra-ethnic inequality among Malays, concentrating wealthand control of corporations in the hands of a very small number of Malay individuals(Tan T.W. 1982; Schlossstein 1991). Of the two million Malay investors inthe National Unit Trust Scheme (ASN), less than 2 per cent managed to acquireshares above RM5,000 in 1990 (Ismail and Osman 1991).33 According to Mahathir, ‘They must not be the kind of people who would sell theirshares for quick gains’ (Mahathir 1998a: 29).34 It closed down two subsidiaries of the Lembaga Kemajuan Johor Tenggara (SouthEast Johor Development Authority) (KEJORA) in 1981 following huge losses forseveral years; served notices to other SOEs to perform; and later ordered forty-onesubsidiaries of various SEDCs to shut down (Tan C.K. 1984).35 HICOM was also arguably driven by the personal preferences of Mahathir (thenMinister of Trade and Industry) for large-scale, often prestige projects, and hisdesire to promote Malay industry. This may explain why the government optedfor South Korea’s heavy industrialization model rather than Taiwan’s focus onsmall- and medium-scale industries (SMIs) which were dominated by Chinesefirms in Malaysia.4 Universal access and private provision: Malaysia’s national seweragesystem1 JKR was responsible for the planning, design and construction of infrastructureprojects; operation and maintenance of water supplies and specific governmentbuildings; and offered technical expertise to the various levels of government.2 DOE monitored and enforced environmental standards such as pollution.3 United Utilities, NWW’s parent company, had previously secured a contract in1989 to upgrade a water treatment plant in Ipoh.4 Berjaya Group was owned by Vincent Tan, a beneficiary of several privatizationprojects, including Sports Toto (the state lottery) and the Kuala Lumpur monorailsystem.5 According to a former IWK director, as the project was an unsolicited proposal tothe government, there was no guarantee it would be accepted and it depended ongovernment legislation (personal interview, 2003).