Malaysia Case

Introduction

The telecommunication industry is one of the world most competitive industries. The key to becoming a leader in this industry is technology. A well planned technological forecasting allows a firm to lead the race and acquire large market share. Currently, the industry is saturated with wired and wireless telecommunication technology. Malaysia has undergone numerous important physical and structural changes in the past. The period between 1986 and 2000 is where the industry began and boomed, with the country’s telephone penetration rate increased by 540%. It is in the 1980s where privatization and liberalization of the sector, that brought in an era of regulatory reform and competition.

Development of Industry Structure

Physical Expansion

The infrastructure sector represents a very important part in any country’s economic growth and development, including Malaysia. “The Sector’s share of development expenditure in the various five-year plans implemented since 1966 has fallen in the range between 18 per cent to as high as 34 percent (Lee 2000)”. However before the 1980s most of the expenditure was targeted at transport and power sectors, as a result telecommunications indicators, such as the fixed line penetration ratio, remained somewhat low especially prior to 1980 (see Table 1).

On the other hand cellular phone subscribers after the 1990s was about 84,557, 5.1 million in 2000 and in 2010 was 34.4 million. Regardless of the high achievement in telecom penetration rates there are still areas where the penetration rates are lower than the national average.

Liberalization and privatization

Restructuring in infrastructure started in early 1980s; and due to the encounter of twin deficits and escalating external debts throughout this time, convinced the Malaysian government to arrive at a strategy of encouraging private sector-led growth and development. The government considered privatization would be the way to ease their administration and financial burden whilst improving the efficiency in the service delivery.

Privatization was also important because it brought into light the issue of economic disparity between diverse races in the country. Consequently the government wanted to boost the participation of the indigenous community in typical economic activities. This mean the government was looking to carry out reforms that were efficient and had equity considerations.

It is complicated to determine the degree of clash among these two objectives. “Some critics tend to think that distributive considerations were given more emphasis compared to efficiency objectives. Adam and Cavendish (1995:129), for example, have regarded privatization as the second phase in the New Economic Policy (NEP) where assets