Home 2007: 2 The demerits of privatisation

The demerits of privatisation

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Imagine if all the toll collection over the years had gone to the Treasury, how many poor people could have been saved from poverty. It is high time that all the highways are renationalised and this too, as soon as possible. Please don’t ever think of privatising health care. Indeed, it is time to renationalise state assets and use the revenue for the people’s benefit, says K George.

I was an activist in the Malaysian trade union movement for about four decades. Even now I keep in touch with the Malaysian Trades Union Congress (MTUC) and a number of my old colleagues. The formation of trade unions started in 1946 with the help of an advisor sent to Malaya by the Labour Party of Britain, which won the election after the end of the Second World War in September 1945.

Hardly any trade unionist in our country knew anything about the concept of privatisation until Dr Mahathir Mohamad started talking about it after he became the Prime Minister in July 1981. A three-day seminar was held in 1983 in which Mahathir delivered the keynote address. He said that privatisation would improve efficiency and transparen-cy. As the PM, he also gave an assurance of open tenders, which, of course, he never ever practised. His chosen successor has followed suit.

Some of Malaysia’s publications, especially Aliran Monthly, have carried numerous articles on the subject since Mahathir started the privatisation exercise in mid-1985. Let me briefly describe them to refresh your memory:

A capitalist concept

It is a capitalist concept originally introduced by the World Bank, the International Monetary Fund, the Asian Development bank and the African Development Bank, established by the United States of America, Japan and other G7 members. Since its introduction, privatisation has spread to numerous countries. Strictly speaking, it is denationalisation of state assets. Every country in the world has assets in various forms.

Malaysia has tin mines, petrol, gas and even gold as well as enterprises involved in telecommunications, postal services, public transport,  and the supply of electricity and water. There are also a few dozen business concerns known as Government-Linked Companies (GLC) under the concept of Malaysia Incorporated. To whom do they belong? To the Prime Minister, to the Cabinet? No, to the people.

READ MORE:  Has Mahathir's privatisation agenda failed the nation?

Malaysia has accepted parliamentary democracy as the system of governance and under this system, we, the people, elect our leaders. They are entrusted with the responsibility of managing the affairs of the nation systematically and democratically. Under this system, when the government decides to privatise any of its assets, there should be open tenders as well as transparency and accountability.

Unfortunately, Mahathir, although he had promised open tenders and transparency, kept everything under wraps. The terms and conditions of the contracts were, by and large, favourable to the contractors. Now he admits that the people have the right to know the conditions of privatisation of the people’s assets.  In the past, the nation lost billions through bailouts.  The New Sunday Times of 4 February 2007 carried front page stories of  such bailout examples.

A few get rich quickly

When the toll rates of five highways were increased by 20-70 per cent, there was a storm of  protest and criticism by the people. Have you heard of any elected government that has increased the toll by 60-70 per cent at one go? Well Abdullah has done it. Who gets the millions resulting from this price hike? Not the government but some cronies and well connected filthy rich men. First and foremost, the highways should never have been privatised. That money from toll collection should have gone to the Treasury, which means it could have been used for the benefit of the people. But the government, elected by the people, privatised the people’s assets, without open tenders and undemocratically refuses to disclose details of the contract to the people.

As a citizen, I say it is an intoleratble stand to take which shows scant respect for the people. Is the Official Secrets Act meant to cover up the truth from the people? Mr. Prime Minister, since you took office, the price of petrol and gas were hiked four times (the last being 30 sen per litre). There has also been a 15 per cent increase in electricity tariffs, a 12 per cent rise in water tariffs and a hike in postal rates. Now the increased tolls, coupled with the natural devastation caused by floods, has resulted in a drastic hike in consumer prices. Yet, we are being asked to believe that the rate of inflation remains more or less the same!

READ MORE:  Why must the poor in Malaysia beg to save a life?

Fan Yew Teng, one of Harakah’s columnists, raised the possibility of questionable and suspicious clauses in the contract that could lead to corruption (Harakah English Section of 16-28 February 2007). Otherwise, there is no reason whatsoever to hide the terms and conditions and even the identity of contractors in respect of the privatisation of people’s assets. Can we plausibly rule out the possibility of questionable dealings even before the contract was signed? Otherwise, why should a privatisation contract be kept under cover? It is business, which means there could be losses, in which case either the contractor accepts the situation or declares bankruptcy. I don’t think any government in the world resorts to classifying the privatisation of people’s assets under the OSA.

I had the opportunity to go through a booklet produced by AFL-CIO (the most prominent trade union movement of USA) and a German trade union organisation. Both booklets say privatisation is neither beneficial to the consumers nor to the workers and that there are instances of “cutting corners”. It is aimed at accumulation of wealth in the hands of a few. Strictly speaking, revenue-earning concerns should not be privatised.

Laughing all the way

Coming back to toll, let me draw your attention to a statement made by Samy Vellu, the Works Minister, in November 2005. As you know, Malaysia introduced toll in 1989 after the construction of the North South Expressway (NSE). He said: ”The NSE was built for a projected use of 160,000 vehicles per day, but is now (2005) being used by 1,200,000 vehicles per day”. It was an increase of 7.5 times within 17 years. We are told the contract was given to Plus, the highway concessionaire. How many times was Plus allowed to increase the toll? I have lost count. Mr. P. Ramakrishnan, the Aliran President, tells me, “Plus laughs its way to the bank”.

READ MORE:  Has Mahathir's privatisation agenda failed the nation?

Imagine if all the toll collection over the years had gone to the Treasury, how many poor people could have been saved from poverty. It is high time that all the highways are renationalised and this too, as soon as possible. Please don’t ever think of privatising health care.

Let me conclude this piece by narrating a joke. You might recall Mrs. Thatcher, the ‘Iron Lady’ who was the Prime Minister of Britain. She was very deeply involved in privatisation. She became well known because of privatisation and at the end of the day, she became very unpopular because of the very  same privatisation. Disgusted with her privatisation policies, one of her critics asked her, “When are you going to privatise Mr. Thatcher?”

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The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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