Chapter 7:

Administrative Reforms in Malaysia

KLB 2213: Introduction to Public Administration
Class Activity
A public talk by the selected students
are being held as to cover this topic
Public Talk: Administrative Reforms

The Malaysia Experience
Moderator:
Yusrin

The Speakers:
(i) Noor Kamilah
(ii) Yugendhran
(iii) Eissa
The Topics
i. Introduction to Administrative Reforms
Concept

i. The Malaysia Experience: Administrative
Reform in Malaysia
Phases of Administrative Reform Efforts
The Concept of Malaysia Incorporation
The Concept of Privatization
An Introduction to
Administrative Reforms
Administrative Reforms
Administrative reforms is meant to improve
administrative capability and capacity, for the purpose
of achieving national goals effectively.

It is meant to encourage an effective administration
capable of bringing about economic, political and social
development (Caiden, 1969).

The changes that are to bring about in an organization to
cover both (a) structure and procedures of public
bureaucracy & (b) the attitudes and behavior of public
bureaucrats. ( Quah , 1976)

Administrative reform is needed in
the following circumstances:
i. When the administration is obviously failing to
meet the demands put on it.
ii. When the administration, though meeting
current demands, is not equipped to tackle
extra demands.
iii. When the administration with reserve capacity
is unable to anticipate future demands.
iv. When the administration does not adopt the
most effective method

Administrative Reforms in
Malaysia
Background to Administrative Reforms
Malaysia Three Phases of
Administrative Reform Efforts
The Colonial Period
Pre-Independence Period
The New Public Management
(NPM) Era
Phases I: The Colonial Period.
British replaced the traditional-feudal administrative
system with a more modern, organized and systematic
administrative structure.

The British laid down the basic principles of the modern
public administration system in the country.

The British model of financial accounting and judicial
system which are more structured and advanced were
introduced in Malaysia (then Malaya).

Based on this background, the Malaysian public service had
developed and progressed.
Phase II: Pre - Independence Period
The second stage called Development Administration emphasized mainly
the structural changes in the government administration

Main changes was Malayanising the bureaucracy replacing the
expatriates with Malayan civil servants (from 67% in 1957 to 9.2% in
1963).

As a newly independent countries, the government function as national
building has been added with a new role in national development the
one directly involved in the country economic development.
Implementation of New Economic Policy (NEP)

Resulted in the growth of the public sector department - from 10 in 1957
to 659 in 1988 and over 1, 000 in the 1990s
The government started interfere into economic and commercial activities by
establishing the public enterprises (PE) to lead the developmental programmes.
National Training Institute to train
public sector employees
To identify major issues and suggest
recommendations on public
administration issues
Resulted in the growth number of public sector employees - from 139, 476 in
1970 to nearly 521, 818 in 1983 in 1957

The growth had caused not only fiscal crisis for the ruling government but also
resulted in the ineffective in the public service.
Phase III: The NPM Era
Impressed on the government the need to review the effectiveness and efficiency
of its public service in line with its efforts to ease its financial difficulties.
overhaul the governments policies and the governments machinery

Government administration upheld the philosophy of public-private sector
cooperation by the Japanese experience in economic growth inspired the
Malaysian government to formulate the Malaysia Incorporated (MI) Policy

Later, strengthened by privatization programme, to provide the avenue to the
emergence of an effective and dynamic private sector.

By 1990 the New Economic Policy (NEP) was replaced by the National
Development Policy (NDP).

The main objective of NDP is to obtain a balanced development in order to
establish a more united and just society - advanced stage of social engineering
process to restructure the multi-racial society which stress not only economic and
social aspects but also moral and ethical values.

The Concept of Malaysian
Incorporated
Launched in 1983

Provides the framework for public-private sector
collaboration in pushing the economic agenda of the
nation

The public service should play the role of a facilitator,
supporter, regulator and adviser.

The private sector play an important role in deriving
the market growth.
The Malaysian Concept of
Privatization
Privatization is the process of selling state-
owned enterprises to the private sector.

Privatization was policy taken by the
government to:
i. counter the poor performance of public
enterprises and
ii. combat the public sector deficits as well as the
debts problem.
In Malaysia, the term privatization was
officially defined as the transfer of ownership
and management of government services and
enterprises to the private sector.
limiting the governments role and reducing the
size of the government bureaucracies to promote
market efficiency
an alternative form of delivering services
previously provided by the public sector


Objectives of Privatization
FIVE (5) major objectives in implementing the
privatization programme:
i. Relieving the Financial and Administrative
Burden of Government
ii. Improving Efficiency and Productivity
iii. Facilitating Economic Growth
iv. Reducing the Size and Presence of Public Sector
in the Economy
v. Helping to Meet the National Development
Policy Targets
Methods of Privatization
FOUR (4) methods of privatization government entities:
i. Sales of Assets or Equity
- Sales of Equity (SOE): transfer of all or any of the three
organization-related components of management
responsibility, assets and personnel.
- e.g: EON, MISC and Syarikat Telekom Malaysia

ii. Lease
- transfer of rights to use or occupy the assets for a
specific period, in return for specified amounts of
payments
- e.g: Privatization of the Aircraft Maintenance Depot
iii. Management Contract
- Involves the management of government entity by the
private sector for a fee.
- Entails the transfer of management responsibility, may or
may not involve the transfer of personnel.
- e.g: Semenyih Water Treatment Plant

iv. Build-Operate-Transfer (BOT) and Build-Operate (BO)
- Applicable in privatizing new project, developed by the
public sector.
- usually utilized for infrastructural and utility project
- BOT methods: private sector construct a facility using its
own funds and operates for a concessionary period.
- e.g: North-South Highway
- BO methods: does not involve transfer of the facility to the
government
- e.g: Light Rail Transit (LRT)


Thank You