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" context. Through this policy, both parties will rely on each other where the private sector undertakes commercial and economic activities, while the public sector sets the direction, draws up major policies and provides specific supporting services to create a conducive environment for business success.
Over the last 30 years, Malaysia’s PPP initiative has undergone a series of evolutions and transformations, which has contributed to the rapid development of the nation. The many project models implemented under the overarching PPP framework has unlocked opportunities for the Government to stimulate the economy via full private sector financing, thus creating economic spill-overs and multiplier effects specifically from infrastructure projects. . In line with global economic growth, PPP projects will continue to play a central role in driving the economic development of the country. With Malaysia’s aspiration to remain competitive in all economic sectors, UKAS remains committed to strategically plan, evaluate, coordinate and negotiate private public partnership projects that benefit the nation.
UKAS was established as a central agency under the Prime Minister's Department with the role to facilitate strategic partnerships between the public and private sectors, through the Public Private Partnership (PPP) and Facilitation Fund programme to spur national economic growth.
To support the Malaysia Incorporated Policy, the Privatisation Policy was launched in 1983 towards increasing the private sector's role in the country's economic development. The main objective of this policy is to lessen the Government’s financial and administrative burden, improve efficiency and productivity, accelerate economic growth, reduce the size and involvement of the public sector in the economy, and to support efforts in achieving National Economic policy goals.
In line with the implementation of these policies, a Privatisation Section (formerly known as the Privatisation Special Task Force) was formed by the Government and placed under the purview of the Economic Planning Unit (EPU), Prime Minister's Department which acted as the secretariat to the Privatisation Committee. This committee comprised representatives from various Government agencies who worked towards analysing and recommending privatisation proposals for the Cabinet’s approval.
The Government introduced the Privatisation Guideline in 1985 which detailed out the policy objectives, privatisation methods and its implementation mechanisms. Following this, the Government in 1991 developed a Privatisation Master Plan detailing out policies and strategies for the privatisation programme.
Amongst the noteworthy achievements attained under national privatisation policy are:
- World Class infrastructure facilities such as the North - South Highway, the Light Rail Transit (LRT), the Tanjung Pelepas Port and the development of the Kuala Lumpur International Airport (KLIA);
- Establishment of successful and competitive local conglomerates such as Tenaga Nasional Berhad (National Electricity Board) and Telekom Malaysia Berhad;
- Creation of employment opportunities in the private sector including producing a professional work force, especially amongst the Bumiputra community; and
- Energised the country's capital market through increased capital investments by the private sector in privatised Government projects.
Since the introduction of the privatisation programme from 1983 to April 2009, a total of 500 privatised projects have been implemented throughout the country. The Government has benefited through savings in capital and operating expenditure amounting to RM161 billion and RM7.79 billion respectively (or an estimated RM25 billion over a 25 year period). The burden of the Government's operating expenditure was successfully reduced following the privatisation of 58 Government agencies which involved the transfer of 113,440 public employees to the private sector. This savings has enabled the Government to redistribute its limited development resources to other essential sectors such as the education, health and poverty eradication programmes.
The Private Finance Initiative (PFI) approach was introduced by the Government under the Ninth Malaysia Plan (9th MP) as an alternative procurement method for the public sector to develop and maintain public infrastructure and other facilities by leveraging on the private sector’s innovations and efficiencies. Implementing PFI projects was also the Government's first step towards managing asset procurements more efficiently based on value for money vis-a-vis the Government's expenditure.
Towards being more competitive in line with the economic transformation initiative, 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 on 22nd April 2009, known as the Privatisation and Private Finance Initiative Unit (currently the Public Private Partnership Unit - UKAS. YBhg. Tan Sri Dr. Ali bin Hamsa was appointed as the first Director General of UKAS.