FACULTY OF ENGINEERING AND BUILT ENVIRONMENT DEPARTMENT OF CIVIL AND STRUCTURAL ENGINEERING

KKKH 4284 SUSTAINABLE URBAN PLANNING

________________________________________________________ TASK 3: PRIVATIZATION

LECTURER: PROF. IR. DR. RIZA ATIQ ABDULLAH BIN O.K. RAHMAT

NAME MATRIC NO. DEPARTMENT

: NURUL SYAFINA AUNI BINTI SAMAD : A132101 : JKAS/4

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PROBLEM STATEMENT Kajang Municipality intends to redevelop the stadium into an Innovative Research

Park. The park is intended to take advantage of a number of universities and research centres in Kajang area to turn the municipality into centre for innovative, high value added industries. However the administration is in no position to fund the proposed project. You are required to propose a viable solution to ensure the success of the project. Explain the responsibility of all parties involved in the project, project component, the benefit of your proposal and the problem that might occur in the future. 2.0 PROJECT OVERVIEW Kajang is a town in the eastern part of Selangor located 21 kilometres from Malaysias capital Kuala Lumpur. It is a district capital of Hulu Langat region with a population of 342 657. While the center of Kajang is the bustling Old Town, where all the roads meet. Most of the colonial-era buildings were constructed around 1920s to 1930s. The architecture of these shop houses is a combination of traditional Chinese and European designs. The ground floor was used mostly for commercial activities and the upper floor as the family living quarter. The Kajang Stadium which is a proposed site, is a prominent landmark as it is located smack in Kajang town. Its main entrance faces Jalan Kelab while the back portion looks out to Jalan Cheras leading to the bustling Jalan Besar. In its heyday, many important football league and club matches, involving the likes of celebrated legendary football players Mokhtar Dahari and M. Chandran in action, were played at the stadium to capacity crowds. During the pre-war era, it was just a field with grass tennis courts and a clubhouse. It was only fenced up during the 1980s. The Kajang Stadium has persevered through many decades and seen some important football matches. Nowadays, it is often used for sports day, fun fairs and community events. The stadium can accommodate up to 5000 people and is used throughout the year for the community soccer competitions. With the famous satay Kajang owned by Haji Samuri which is also a hangout place and walk shop houses near to the Stadium Kajang, the location is claimed to be a strategic place to redevelop the stadium into an Innovative Research Park. In addition, it is suitable to place the research centre as it is placed about 10 km from the National University of Malaysia and others higher education places in Bandar Baru Bangi which recently crowned as

Knowledge City. Otherwise, the soon-to-be realised Klang Valley MRT station in Bandar Kajang will boost its property value. Thus, this project is one of a good start to turn Kajang City into a live centre for innovative, high value added industries. However, as mentioned above, the administration is in no position to fund the proposed project. Therefore, the best solution in order to continue this project is by using privatization method. This report will discuss on how municipality can turn a mini stadium into an innovative research park. 3.0 CONCEPT OF PRIVATIZATION The term privatization can be defined as the transfer of ownership, property or business from the government to the private sector. The government ceases to be the owner of the entity or business. The process in which a publicly-traded company is taken over by a few people is also called privatization. The stock of the company is no longer traded in the stock market and the general public is barred from holding stake in such a company. The company gives up the name limited and starts using private limited in its last name. Privatization covers a wide spectrum of government operations, management and ownership arrangements. Some types of privatization which may be considered are; Outsourcing means that a government agency delegates some of its in-house operations or processes to a third party. It is a contracting transaction where the government agency purchases services from a private firm while keeping ownership and ultimate responsibility for the underlying processes. They inform the private firm of what they want and how they want the work performed. The private firm can be authorized to operate as well as redesign basic processes in order to ensure even greater cost and efficiency benefits. Design, Build, Operate (DBO) means negotiating a contract with a private firm for design and construction services with comprehensive operating agreements for new, expanded, or upgraded facilities. The project components are procured from the private sector in a single contract with financing secured by the public sector. From design through operation, these contracts can extend for periods of up to 20 years or more. Public-Private Partnership refers to a cooperative arrangement between a local government and a private organization in which both parties assume some

responsibility for operating a program or service. Each party brings something to the arrangement that contributes to the operation of that particular service. Asset Sale means the sale of government-owned assets to private companies, such as the sale of water/wastewater and electric utility assets. Proponents of privatization often point to success stories which demonstrate cost savings, while opponents express concerns about accountability and undermining organized labour, which results in jobs without health, pension, and other benefits. The most common type of privatization is contracting out programs or services to a private company or another governmental entity to operate. The contracting government is still responsible for the service, but someone else actually provides the service. This is usually the most popular method of privatization that is accomplished through a Request for Proposal (RFP) process or an Invitation to Bid (ITB). In the RFP process, any and all qualified businesses may submit a proposal to the government agency that describes in detail how they would perform the particular service and for what cost. Through this competitive process, it is not necessarily the lowest cost that wins the contract, but that which demonstrates that a service can be both improved and operated more economically at the same time. While an Invitation to Bid is the standard sealed competitive bid in which the lowest bidder usually gets the job. Contracts may take a variety of forms, including fixed price contracts and cost plan contracts. They usually are quite detailed. It is important that a contractor can be held accountable for the performance of the service as desired by the government, and that the expectation of such performance is clearly defined. The contract should be capable of being terminated under pre-established conditions if necessary, and include options for the government in such a situation. There are typically more opportunities for privatization than local officials realize for solving problems involving governmentowned assets, facility operations, services, debt structure, and other facilities and infrastructure. 4.0 OBJECTIVES OF PRIVATIZATION The concept of privatization has been introduced in our country as one of national policy by government since 1983. It represents a new approach in national development policy to developed increase role of private sector in the development of Malaysia economy. This approach is to facilitate the economic growth of the nation, relieve the financial and

administrative burden of the government, beside reduce the governments presence in the economy where decrease both level and scope of public spending. More than that, the privatization is to allow a market forces govern economic activities that will improve efficiency and increase productivity in our country. From 1983 until 31st December 2003, there are total 474 privatized projects had been achieve by our country in national development. Privatization is helped in another way where can solve the problem that involve government-owned assets, facility operations, services, debt structure and other facilities like infrastructure. 5.0 PROJECT COMPONENT Objective of this project is strives to provide an environment where dreams become reality, businesses are grown, and knowledge, research and resources are turned into economic opportunities. The development of the Innovation Research Park will implementing green building concepts and practice in terms of energy saving, higher productivity and less waste during construction. In addition, the building will embraced the concepts of eco-friendly building with four attributes of green design, which are increase ventilation control, enhanced temperature control, enhanced lighting control and increased day lighting. Overall, the Innovation Research Park proposal consists of three main buildings (see Figure 1). It is including: Wet and dry laboratories for research First-class office space Conference rooms facilities Seminar halls Lecture Theatre Greenhouse space

Figure 1 Design Concept of Innovative Research Park Buildings

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RESPONSIBILITIES OF PARTIES INVOLVED

Government (MPKj) Provide the blueprint to the private company and also the complete design of the Innovative Research Park. Give assistance to get necessary approval. Facilitate, coordinate, purchase contract on market services by the private company. Transfer of the land title to the developer. Give benefits to private company such as can apply loan from government agencies to show their support since this project will give a lot of benefits to publics. Developer Implement green building policies in construction to be synchronize with the concept of eco-friendly building. Construct an underground pedestrian crossing that allowed people go to the park easily without crossing road.

Upgrade existing road infrastructure network surrounding the development to make sure the development will not disturb the existing traffic. Plan a scheduling maintenance of the overall operation of research park so that everything will be in a well condition. Hire good researchers that can produce good technology for better future generation Advertise about the research park so that the inventors, innovators, researchers and universities students from inside and outside will attracted to go there.

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BENEFIT OF PROJECT PROPOSAL In the main, privatization give benefits to both side, government and private sector.

One of the good returns to the government is they can develop city faster with strong finance. It is because the private sector will cover the overall budget to build the Innovative Research Park. This will decreasing the expenses in development of Kajang. Indirectly, the governments burden can be reduce as well as it will not be an excuse for the government to proceed project that gives benefits to public. Otherwise, public sector also gain greater advantages from privatization as the facilities provided by the private sector can be used by public at lower cost. With this development, it will turn Kajang area into a smart city. Also, the competition between private company will give more efficient service, higher quality of materials used, multiple choice and less corruption as they need to convince the client and compete to get the project. For the private sector side, they will get their benefits such as when the project succeed, it will boost up their company name. Thus, it will be easier for them to get another big project as people had acknowledge their successful project. 8.0 POSSIBLE PROBLEMS

However, there are some drawbacks from privatization method for this project. For instance, there might be an upcoming issue on people will thought about government sell the city to the private sector as the private sector receive free land to develop. From the other side, private company needs to stand with risk like technical risk and financial risk. They also might need to buy technology from outside for research purpose. Less advertisement will make the existence of Innovative Research Park being invisible for citizens.

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CONCLUSION As a conclusion, to ensure the successful of this project through privatization method,

government need to pick a private company with strong finance background so that they will not having finance problems during the construction and also for the maintenance. Besides, government sector needs to give a hand to advertise the existence of research park to public and good collaboration from both side will ensure the privatization method achieve their objectives.