Content area
Full text
Introduction
Privatisation which was made popular as a policy instrument in the western economies during the early 1980s has now become a global economic phenomenon. The Malaysian response to it, however, was relatively early. When the Thatcher government in Britain and the Reagan administration in the United States started their economic liberalisation policy during the period, the Malaysian government under the administration of Prime Minister Dr Mahathir Mohamed immediately saw its potential not only in balancing the role of government and the private sector but also as instruments for lessening the national debt burden and attaining national economic restructuring.
Early in the 1980s the Malaysian economy, being very much an open economy, was also experiencing the worldwide stagnation. In addition, as a result of policies in the 1960s and 1970s especially the New Economic Policy (NEP), the government sector has grown rather disproportionately and exerting great strain on the national budget. A substantial amount of public sector funding especially at the State level was -also from external sources.
These economic circumstances more or less forced the Malaysian government at the Federal level to re-examine its economic strategies, and privatisation was then seen as a very attractive option. This paper will specifically try to examine the role that the privatisation policy plays in reducing the national debt and in restructuring the national economy. Analysis of the national debt burden will be carried for the period 1970 till 1990 thus covering both the pre-privatisation and the privatisation period of the 1980s and above. National economic restructuring will mainly be in terms of the relationships between the public and private sector and the achievement of the objectives of the NEP. The same period of analysis will also be used in this case. However, before such an analysis is undertaken it would be useful to look at the Malaysian public sector and its influence on the economic performance of the country and the background of the privatisation policy in Malaysia.
The Public Sector
It could also be stated that it has been a global phenomenon since the 1950s for governments to play an increasingly important role in the economic activities of the nation. This was true not only for welfare economies of many countries in Europe but also of...