Tuesday 21 August 2012

Federal government should review all privatisation projects — Proham

AUG 21 — Proham expresses shock and disbelief that Puncak Niaga Holdings Bhd (PNHB) paid out RM17.2 million as directors’ fees in 2011. This revelation comes in the context of the company making pre-tax loses of RM75.2 million in 2011 and in the midst of numerous complains of water shortage and disruption to water supply in Selangor.

Reflecting on this incident, Proham remembers that when the Federal government introduced the EPU Guidelines on Privatisation (1985) and the Privatisation Masterplan (1991), it clearly stipulated a number of fundamental principles to serve public interest.

Furthermore, Proham recognises that while the privatisation approach adopted by the Malaysian government through the transference of public sector services to private ownership and control, there were to be instituted clear regulatory frameworks, check and balances to ensure that public good objectives were also achieved through greater efficiency at an affordable and reasonable price for the consumers.

Therefore the promotion of competition, improvement of efficiency and increase productivity in the delivery of services was envisioned. There was to be inherent efficiency gains to consumers through lower prices and quality services as compared to if these services were operated by the public sector.

However at the implementation and delivery levels major difficulties are noted. This aspect is well articulated by Prof Jomo KS and Jeff Tan in a recent article entitled “Lessons from Privatisation” published in the ISIS book on Malaysian Polices & Issues in Economic Development (2011). They reveal a number of staggering findings:-
  • First, that privatisation has not been accompanied by significantly increased competition, with many privatised entities remaining virtual monopolies.
  • Second, that user costs have generally risen disproportionately higher with adverse implications for consumers.
  • Third, that politically influential and well-connected have had enhancement of their private wealth
  • Fourth, that the entire privatisation process seems beyond accountability and lack of transparency.
Proham recognises that privatisation can be successful when it fulfils basic human rights and public good and not for private greed. This is especially so when water must not be regarded as a commodity for profit and money making but as a basic human right

In this context Proham calls on the Federal Government to review all the public utility companies where were privatised and which supply basic needs ie water, electricity, transport, housing to ensure that these privatised companies fulfil the principle objectives as set in the EPU Privatisation Guidelines.

Proham appeals for greater public accountability and transparency of these essential services especially to review the checks and balances to eliminate abuses, ensure greater efficiency and affordable prices for the common good of all people.

Proham also calls on the Federal Government to investigate and act immediately on gross abuses if any as in the case of Puncak Niaga in order ‘to right the wrongs’ for the immediate benefit of the consumers.

* Issued on behalf of Proham by Tan Sri Ramon Navaratnam (Proham member) and Datuk Dr Denison Jayasooria (Proham Secretary-General) on August 21, 2012.

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