Civil & Structural Department

Faculty of Engineering & Built Environment

The National University of Malaysia

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KKKH 4284

SUSTAINABLE URBAN DEVELOPMENT

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PRIVATISATION

Redevelopment of Kajang Stadium into an

Innovative Research Park

NAME : SITI NURLIYANA BINTI ABDUL HASIF

MATRIC NO. : A132529

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

1.0 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 INTRODUCTION

Privatisation has been proven to be one of the solutions to solve funding problems and lessen

the burden on the government by reducing the role of the state and encouraging the growth of

the private sector enterprises. However, privatisation takes a number of forms and has been

approached in various ways during the transition from state control to other forms of

ownership in developing and industrialised countries.

Any debate on the boundaries of privatisation raises the question as to how far can

privatisation be taken and where the boundaries lie. One view is that everything can be

privatised, except where there are important externalities, such as national defence. In this

case, the privatisation of an Innovative Research Park is a viable solution as it allows for the

project to receive the attention it needs. However, it is important to note that privatisation is a

political process and has important economic and social implications that not only effect

enterprise performance, but also social welfare and stability. The social effects have to be

considered in any impact assessment, particularly those related to employment, social safety

net measures, social privatisation that results from the extension of share ownership to small

investors and employees, and the role of public utilities and services in economic and social

development. It is therefore important that the framework for evaluating policy

developments, including all forms of privatisation, is clearly set in advance. Clearly, the

crucial question is how should success be measured? If privatisation is part of an integrated

policy framework, critical questions about priorities should emerge that reflect both technical

analysis and value judgements about the tradeoffs between objectives.

3.0 SITE BACKGROUND

Kajang is a township located in the eastern part of Selangor and is the district capital of Hulu

Langat. It is located 21 kilometers Kuala Lumpur and already has an extensive transportation

network as it is well connected with many major highway and expressway like Kajang

Dispersal Link Expressway as a ring road of Kajang, Cheras-Kajang Expressway, North-

South Expressway with Kajang exit and Kajang-Seremban Expressway at the south of

Kajang near Semenyih. Because the position of Kajang between three major city (Kuala

Lumpur, Seremban and Putrajaya), this city is included in Klang Valley or Greater Kuala

Lumpur. Public transports available in Kajang are bus, taxi, and train.

The total population of Kajang has grown rapidly in the past few years, with estimated

population growth of 9% per annum. Apart from primary and secondary schools, Kajang

houses various tertiary education institutions that encompasses a broad range of studies.

One of Kajang's landmarks is Stadium Kajang which is situated in the heart of the town.

Map of Kajang showing the proposed site and its surroundings

4.0 PARTIES INVOLVED

4.1 GOVERNMENT BODY

The government body responsible for the area of Kajang is the Kajang Municipal

Council (MPKj). As legislated by the Local Government Act 1976, Town and Rural

Planning Act 1976 and Strata and Title Act 1985, all matters regarding the

administrative and establishments are under the jurisdiction of the Local Authority.

Apart from that the plannings and projects to be carried out in the areas under the

jurisdiction of the Council need to be suitable with the local condition and inline with

the current development circulation. The roles of mpkj in this situation are to give

support as well as draw the line where the private sector’s influence in the project lie.

The government’s roles:

- Transfer of the land title to the developer with a reduced price

- Give assistance to get necessary approval

- Allow the demolishment of existing structures and buildings on the proposed site

- Ensure that the surrounding government-based education institutions are

cooperating when needed

- Allow the private company to construct an open-space shopping complex on one

area of the proposed site

4.2 PRIVATE COMPANIES

The private company that will invest in this project should be able to fulfil their part

of the bargain as in the long-term effect; the private sector will benefit much from this

project.

The private companies’ roles

- Construct a project plan for the Innovative Research Park

- Coordinate with local transportation service providers to allow for smooth

transportation network between the site to surrounding areas

- Ensure that the project will get support and the attention of research-based

institutions to conduct researches there

4.3 EDUCATION INSTITUTIONS

Since this project has a very close tie with the education sector, nearby education

sectors in the surrounding area should provide as much support as possible as they too

will benefit from the service to be offered at the Innovative Research Park in Kajang.

Education Institutions’ Roles:

- Participate in the planning of the Research Park by providing information on how

much capacity should the Research Park accommodate

- Give feedbacks on the effectiveness and needs of the research facilities

- Join the future researches to be conducted there

5.0 PROJECT COMPONENTS

The project component will consist of among others:

a) Laboratory and workshop facilities

b) Administration office

c) Prebuilt labs and offices available with short-term leases

d) Meeting rooms, discussion rooms and main seminar hall

e) Cafeteria

f) Lounge and foyer

g) Parking area

h) Open-air shopping compound

6.0 PROS AND CONS OF PRIVATISATION OF PROPOSED KAJANG INNOVATIVE

RESEARCH PARK

6.1 BENEFITS

a) Cost Effective

It has been widely established that the main reason the local authority turn to

privatisation is to minimise the monetary burden on the government. Moreover,

private enterprise is more efficient than government at allocating resources due to

the profit incentive; it increases investment; it allows the markets to operate

freely.

b) Increase Flexibility

Privatization gives state officials greater flexibility to meet program needs.

Officials can replace the private firm if it isn't meeting contract standards, cut

back on service, add to service during peak periods, or downsize as needed.

c) Improve Service Quality

Private companies has competition induces in-house and between other private

service providers to provide quality services in order to keep complaints down

and keep the contract.

d) Improved Maintenance

Private owners are strongly motivated to keep up maintenance in order to preserve

the asset value of the investment in the facility. Public owners often defer

maintenance due to political considerations, increasing overall long-term costs.

6.2 POTENTIAL SETBACKS

a) Different Priorities

Public sector strives to provide customer service while the private company

maintains profit-making as its main objective. Maximising profits for the private

company could result in cutting corners and products of lesser quality as well as

lack of maintenance in equipment.

b) Costly Transition

Should the contract fail for unforeseen reasons, it is costly to return to public

services that may also result in interruption in services.