The Malaysia Incorporated Policy was introduced in 1981 to encourage cooperation between the public and private sectors whereby both sectors act and operate within a "Malaysian Company". Through this policy both parties depend on each other; where the private sector upholds the commercial and economic activities, while the public sector draws up major policies, identify the direction and provides the specialised supporting services which are conducive to the success of businesses.
In line with the Government's new approach based on the new economic model in the Tenth Malaysia Plan, the Government intends to stimulate its effort in encouraging the private sector to invest in development projects. As such, the Government's allocation for development projects will be reduced and it can then shift its attention to projects that will be implemented and funded by the private sector whether through Privatisation and Public Private Partnerships (PPP), or through direct investment of the private sector in country's development programme. The Government has also set up a facilitation fund under the Tenth Malaysia Plan in order to support development projects implemented by the private sector as the Government's contribution through the cooperation of the public and private sectors.
3PU is the core agency that has been given the responsibility to coordinate the Privatisation and the Public-Private Partnership (PPP) projects which have made an impact to the country's economy, and which can be given injection from the facilitation fund.
The Privatisation Policy was launched in 1983 to support the Malaysia Incorporated Policy towards increasing the private sector's role in the country's economic development. The main objective of this policy is to lessen the financial and administrative burden of the Government, improve skills and production, accelerate economic growth, reduce the size and involvement of the public sector in the economy, and to assist in reaching the country's economic policy's goal.
In line with the implementation of the policy, a Privatisation Section (in the earlier days known as the Privatisation Special Task Force) was formed by the Government and was put under the Economic Planning Unit of the Prime Minister's Department (EPU, PMD) which acts as the secretariat to the Privatisation Committee, which in turn is made up of various agencies working towards finalising and confirming the proposals on privatization for the Ministers' Council's approval.
In 1985 the Government produced a Guideline On Privatisation which detailed out the objective of the policy, method of privatization, as well as the implementation mechanism. And in 1991 the Government produced a Master Plan on Privatisation to explain the policy and strategy for privatization.
Amongst the achievements in the implementation of the national privatization policy are:
- Provided infrastructure facilities of world class stature such as the North - South Highway, the development of the Light Rail Transit (LRT), the Tanjung Pelepas Port and the development of the Kuala Lumpur International Airport (KLIA) projects;
- Created local conglomerate companies which are successful and competitive such as the Tenaga Nasional Berhad (National Electricity Board) and Telekom Malaysia Berhad;
- Provided employment opportunities in the private sector apart from producing a professional work force, especially amongst the Bumiputra; and
- Energised the country's capital market through capital investments of the private sector in privatised Government projects.
Since the introduction of the privatization programme from 1983 to April 2009, about 500 privatised projects have been implemented throughout the country. The Government has benefited through savings in the form of capital expenditure amounting RM161 billion and annual management expenditure (operations) amounting to RM7.79 billion (or an estimated RM25 billion in a 25 year period). The burden of the Government's administrative expenditure was successfully reduced following the privatisation of 58 Government agencies which involved the transfer of 113,440 government employees to the private sector. This savings has enabled the Government to redistribute its limited development resource to more needy sectors such as the education, health and poverty eradication programme.
Under the Ninth Malaysia Plan (9th MP), the Private Finance Initiative (PFI) approach was introduced by the Government as an alternative procurement method for the public sector in the development and maintenance of infrastructures and other facilities, which in turn benefits the innovation and efficiency of the private sector management. Implementation of the PFI projects is also the Government's first step to ensure a more efficient Government's asset acquisition management based on the value for money towards the Government's expenditure programme.
On 22nd April 2009, YBhg. Tan Sri Mohd Sidek bin Haji Hassan, the Chief Secretary to the Government, announced the establishment of a new unit under the Prime Minister's Department known as Privatisation and Private Finance Initiative Unit - PFI (currently known as Public Private Partnership - UKAS) in line with the economic transformation effort towards being more competitive. YBhg. Tan Sri Dr. Ali bin Hamsa was appointed as the first Director General of UKAS.