ABSTRACT
Privatization is supposed to enhance enterprise efficiency. There are two relevant aspects of efficiency to be considered, namely productive and allocative efficiency. Productive efficiency is attained when a firm's output is produced at minimum resource cost. In Malaysia, the case of the Kelang Container Terminal has been much celebrated as proof of the success of Malaysia's privatization policy. In the early 1980s, Malaysia Airlines (MAS) suffered losses due to high interest rates and fuel costs. The government's own financial difficulties and other priorities also limited the funds available to MAS for expansion. MAS has been operating in two different market conditions. The airline faces an oligopolistic market internationally while enjoying a domestic monopoly. The corporatization of the Telecommunications Department (Jabatan Telekom Malaysia) has seen the introduction of some better services such as improved counter-services; the option of a detailed billing system reducing errors (for which one has to pay more), and quicker responses to applications for telephone installations.
