by K George
Aliran Monthly Vol 25 (2005): Issue 7

	Usually, the propaganda on privatisation will paint a rosy picture promising that it will bring about more efficient management, reduce corruption, and enhance competition. K George

Aliran Monthly (Vol. 25 No. 4) recently carried an article on privatisation as its cover story. Four articles were published - the first by Dr. Subramaniam Pillay, the second by the Malaysian Medical Association, the third by Charles Santiago and the fourth by Noam Chomsky, a well-known American professor and advocate of liberation and justice. Regular readers of Aliran Monthly would have definitely come across several other stories in the past critical of privatisation.

Privatisation's propaganda

Privatisation is a capitalistic concept involving the denationalisation of enterprises, institutions, statutory bodies and even departments under the control of the government. The net result of denationalisation is the accumulation of wealth in the hands of a few - which in effect means denial of social justice to the vast majority of deserving cases.

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 - are the institutions that have been entrusted with the responsibility of introducing and enforcing privatisation in as many countries as possible. Many governments, especially from developing countries, seek loans from these organisations. Loans are usually given with several conditions, one of which will require the privatisation of certain business ventures and enterprises owned by the borrowing governments.

Usually, the propaganda on privatisation will paint a rosy picture promising that it will bring about more efficient management, reduce corruption, and enhance competition. It will proclaim that consumers will benefit by way of quality products and excellent services. But all this is mere propaganda. The truth is something else.

Workers lose pension; Mahathir receives his

Privatisation is all around us. But the labour movement and workers only accept this concept with reservations. Once a sector is denationalised, workers lose their pensionable status. Of course, they will become eligible for provident fund benefits.

To be deprived of pensionable status is a painful experience. A survey conducted by the Harun Salary Commission, appointed by the government in the 1970s, came to the inevitable conclusion that pensions are more dependable than provident funds. Consequently, the commission recommended that employees should be given the option to choose either pensionable status or remain with the provident fund. The result was that a vast majority of them opted for pension.

A few years after Dr. Mahathir Mohamad became Prime Minister, however, the government offered a fantastic revision of salary - subject to one condition: public employees should revert to the provident fund. The offer was so attractive that almost all of them accepted the offer. Mahathir had a good laugh for it took several years before those employees got another increase in their remuneration.

I am of the opinion that Mahathir was against pensions; but ironically he is presently enjoying a fat pension!

The labour movements nationally and internationally have conducted workshops and seminars and carried out analyses on privatisation, turnkey projects and corporatisation. They have reached a consensus: privatisation is inevitable. Nevertheless, enterprises and departments that are rendering services to the people and to the nation such as healthcare, water supply, provision of energy, transportation and communication should continue to be controlled and owned by the government. Most of them (excluding healthcare) usually make profits, which will enhance the wealth of the nation. There must be open tenders and transparency in all instances. Bailing out any losing or bankrupt enterprise should be avoided. If unavoidable, the enterprise concerned should be re-nationalised.

Contracts for the boys

Mahathir became prime minister of Malaysia in July 1981. By 1982, he started talking about privatisation. He went on reiterating the benefits of denationalization. In 1983, a seminar was held. In his keynote address, he gave assurances that there would be open tenders and accountability. Since then, countless state assets have been privatised from car parks to Malaysia Airlines. Contrary to his assurances, there was no open tender or transparency.

The objective of the National Economic Policy (NEP) established in 1971 was to improve the economic status of the Malays and increase their equity to 30 per cent within 20 years. Although the NEP was committed to equitable distribution, the PM believed in creating Malay capitalists - consequently, most of the denationalised public assets and ventures were awarded to UMNO contractors, cronies and siblings. Strange as it may sound, almost all the contracts stipulated conditions that were favourable to the contractors.

The government has claimed that the privatised enterprises were substantially successful; they enriched the treasury and slashed the bloated bureaucracy by 92,000 personnel by 1995. This claim of glowing success, however, did not convince me for several reasons.

Heads they win, tails you lose

Without doubt, Mahathir succeeded in creating a coterie of Malay millionaires and billionaires. One of them, according to Mingguan Malaysia, is Abdullah Badawi�s son who, in 2004, was worth RM320 million.

Yet, Mahathir is on record as having bailed out several enterprises with public money. Most of these were privatised state assets. There were also other companies such as Renong Berhad, which was established under the �Malaysia Incorporated� concept. Under Malaysia Incorporated, the Federal and state governments were allowed to set up business ventures and even get listed in the stock market. Renong was reported to have been given several government contracts.

Halim Saad, one of the managers of Renong Bhd, was allegedly a proxy for Mahathir and Daim Zainuddin. In the course of time, Halim Saad became a multi-millionaire or a billionaire � which is which I am not sure. What I know from what I read in our media is that when he divorced his wife, she reportedly received a settlement of RM500 million and a few cars etc.

PLUS laughs its way to the bank

If you have been driving a four-wheeled vehicle since 1989 you should have an idea of the amount of money or toll you have been paying when using the North-South Expressway (NSE) to a private company, PLUS. According to a recent statement by Samy Vellu, the Public Works Minister, the NSE was built for a projected use of 160,000 vehicles per day, but is now being used by 1,200,000 vehicles per day.

Undoubtedly, it is a fantastic increase � 7.5 times. Is not PLUS satisfied with the 7.5 times� increase in toll within a period of about 17 years? Unfortunately, we, the public have no idea about the conditions of the contract and who the bosses of PLUS are. Isn't it unjust and unbecoming for an elected government to hide the contents of the contract from the people? Should the truth be hidden from the people who are the source of the government's power?

As it is, PLUS is expected to report some RM834 million in net profit for the current year. If only these profits could go to government coffers, it could have been used for the sole benefit and welfare of the people.

If you wish to know more about the NSE toll, please refer to Aliran Monthly (Vol. 25 No. 1 p. 13).

What next? Privatise the air?

In another article published in Aliran Monthly (Vol.25 No. 2), Anil Netto reminds us why water - like air - should be in public hands: it is an essential commodity for human beings to survive.

Parliament on 18 January 2005 passed an amendment to the Constitution transferring supply and management of water away from the respective states to the Federal Authority. The states and the people were not happy. The media, however, recently published a statement by the PM that the status quo would remain. It has been internationally recognised that access to water is a basic human right.

Water should never be privatised. Privatisation or even corporatisation will lead to corruption and mismanagement. Water authorities should follow the example set by the Penang Water Authority � Perbadanan Bekalan Air (PBA). It charges 22 sen per cubic meter and earns a profit of 50 to 60 million ringgit annually. In an about-turn, the minister concerned, Lim Keng Yaik, is now proposing that other states should emulate the PBA. The Coalition Against Water Privatisation, comprising 127 groups including the MTUC, has taken a strong position to oppose privatisation and even demonstrated outside Parliament.

Medical bills that can make you ill

Health is the best wealth of not only human beings but also the nation. Mahathir, the mastermind behind Malaysia�s privatisation exercise, was planning to privatise health care. In fact, certain segments of healt hcare � such as pharmaceutical procurement and supply, laundry, and clinical waste management were privatised in the 1990s. The cost of all these services increased substantially after privatisation.

In one of the contracts signed by the Health Minister, there was a condition that all medicine should be bought only from one particular company, until the supplier gives in writing that a particular item is out of stock. How could anybody sign such a contract on behalf of the government? The person responsible for this outrage should be investigated by the Anti-Corruption Agency. Did Mahathir know of this ridiculous provision in the contract?

It was during the Mahathir era that so many private hospitals mushroomed. Their charges are frightening. It is a question of prestige and status for a patient with a common cold to want to get admitted to a private hospital. As a result, government hospitals lose their specialists and other experienced and efficient staff.

Mahathir has left the scene. Let us hope that healthcare will remain under the state and render efficient and better service.

Privatising profits

Before denationalization, these service-oriented departments were functioning efficiently and making profits. Why was it necessary to privatise them? Both have been making profits. Pos Malaysia�s profit for last year was RM90 million - it is also sitting on a huge pile of cash and near-cash reserves. Why did the government allow them to increase charges for a number of postal services? Are they also seriously affected by the unjustified increase in petrol and diesel prices?

Big fat worms...

Privatisation and turnkey projects should be carried out with transparency and based on open tender. Once a state asset is denationalised, the only condition that should be imposed by law or regulation is to protect the interests of the people so that they are not burdened by higher tariffs for postage, telephone charges, etc. Besides, the privatised enterprise should run its business in accordance with Company Act.

There should never be any bailout. If it is vital to revive the collapsing enterprise in the interest of the nation, it should be renationalised.

As far as the collection of the toll is concerned, it must be taken over by the government. If I were forced to pay more tolls to the government, I would do it because the money could then be used for the common good of the people. I would hate to pay if it went to private profits involving cronies and PLUS.

Malaysia Incorporated breeds corruption. It was Mahathir�s brainchild. Let us scrap it for good. Privatised enterprises that render essential services to the people and make super profits in the process should be renationalised.

Finally, Pak Lah, would you like to appoint a commission of inquiry to look into the whole issue of privatisation, turnkey projects, corporatisation and white elephants? If you do so, it is quite possible that some worms - big fat ones at that - would drop out!

Please support our work by buying a copy of our print publication, Aliran Monthly, from your nearest news-stand. Better still take out a subscription now. If you prefer to read our web-based edition, please support our work and make a donation.

Now tell us what you think in fewer than 250 words. Your comments may be published in the Letters section of our print magazine, Aliran Monthly.