Malaysia's privatisation programme needs to be seen as part of the government's strategy for capital accumulation and growth. This process was first initiated under the New Economic Policy (NEP). The ultimate aim of the NEP and privatisation was the creation of a viable Malay capitalist class (while not disregarding non-Malay or foreign investment) which could contribute to economic growth. It is argued that successful policy can be judged by whether state and business elites institutionalised market augmenting policies, and whether state subsidies created an innovative, competitive class of manufacturers, or a politically dependent, protected class of rentier capitalists. However, coordinating public and private decisions is politically problematic due to conflicting goals, motivations and pressures. The efficiency of privatisation depends on the capacity of the state, not only in selecting and monitoring candidates, but also in enforcing discipline. These are, in turn, affected by the availability of information, quality of state institutions (e.g. regulatory framework), and political constraints (i.e. distribution of power in society). This paper concludes that privatisation in Malaysia has failed. Sections explain policy failure under the headings: 'crony capitalism', ethnic redistribution, privatisation, public sector problems, ideology, changing political dynamics, the Malay middle class, state capacity, and patron-client networks.
Manchester, UK, CRC Working Paper, No. 28, 40 pp.