Selling What Belongs to the Nation

In 1987, Lim Kit Siang walked into the Kuala Lumpur High Court and asked the judge to slam on the brakes.

What he wanted to stop was not a car.

It was an expressway leading from the northern end of Malaysia to the southern end.

The Minister of Works had issued a letter of intent to United Engineers Malaysia, abbreviated as UEM. The government was preparing to let this company build, operate, and maintain the North-South Expressway; then-Opposition Leader Lim Kit Siang sued in his capacity as a Member of Parliament, a taxpayer, a driver, and a frequent road user, challenging the legality of this arrangement.^1,2

The most glaring thing in the lawsuit was not just the scale of the project.

It was the vested interests between UEM and UMNO.

The statement of claim alleged that several Cabinet members who concurrently served as UMNO leaders had participated in discussions to hand the expressway over to UEM, while UMNO held a substantial interest in UEM. Thus, a project that could have been answered with "who is the most capable, and who offered the best price" suddenly turned into another question:

How much distance was there really between the person deciding the winner, and the winner itself?^3,4,1

The court ultimately did not fully adjudicate whether this concession arrangement served the public interest.

The Supreme Court, in a majority decision, held that Lim Kit Siang did not have sufficient private legal interest, meaning he lacked the locus standi (standing to sue) to continue the challenge; the government and UEM were able to push forward with the contract.^1,2

An expressway continued forward.

While a question about power was left beside the toll booths.

The State Suddenly Says: We Don't Have to Do Everything Ourselves#

In the chapter before this story, the state was still establishing HICOM, building factories, and making national cars.

Now, the direction seemed reversed.

In 1983, Mahathir introduced the concept of Malaysia Incorporated. According to him, the nation could be thought of as a company: the private sector is the economic department, and the government is the service department; the two sides should not suspect and delay each other, but should work together to increase national productivity.^5,6

It sounded like the government was not going to disappear.

The government wanted to step out from behind the counter and sit at the same meeting table with businessmen.

In the same year, privatization was also explicitly proposed. By 1985, the Economic Planning Unit issued privatization guidelines; in 1991, it further accelerated and standardized implementation through the Privatization Masterplan. The official objectives listed were comprehensive: relieve the government's financial and administrative burden, improve efficiency and productivity, encourage private investment, reduce the size of the public sector, and assist the New Economic Policy, particularly in developing Bumiputera entrepreneurship.^7,8

For every objective, a realistic reason could be found.

Following the implementation of the New Economic Policy, the government established a large number of public enterprises to undertake development, employment, and social restructuring tasks. By the early 1980s, some agencies had conflicting goals, vague performance standards, and weak oversight; an international recession and fiscal pressures also made it difficult for the government to continue funding all mega-construction projects on its own.^8,3,4

Privatization thus offered an enticing exchange:

The government spends less.

Enterprises increase efficiency.

The people receive highways, telephones, electricity, and services faster.

But in actual execution, "selling it out" was not always a literal sale.

Sometimes Selling Shares, Sometimes Selling Future Toll Rights#

Privatization can have many faces.

Government departments can first be corporatized, then partially listed on the stock exchange; public assets can be sold off; services can be outsourced; and private companies can also acquire multi-decade concessions, financing and building first, then collecting fees from users.

The paths taken by Telekom, the National Electricity Board, ports, and toll expressways were not exactly the same. Even if the government reduced its shareholding, it might retain a "golden share" or other veto powers. Therefore, Malaysia's privatization was not a neat state exit from the economy, but rather the state remaining on the field in different capacities—as shareholder, regulator, lender, guarantor, and contract awarder.^7,8,9

The North-South Expressway displayed this complexity most clearly.

The private operator obtained the right to build and collect tolls, while the government provided soft loans and support against risks such as insufficient traffic volume and exchange rate fluctuations. The expressway fully began operations in 1994, completing ahead of schedule, becoming the critical infrastructure connecting the west coast of the Peninsula.^9,10

This is an achievement that cannot be erased.

The highway was truly built.

Transportation times were genuinely shortened.

The nation indeed pushed a massive project across the finish line amid fiscal difficulties.

However, "private construction" does not equal "the private sector bears all the risks."

When revenue comes from legally granted toll rights, and loans and risks are backed by the government, the value of this business depends heavily on how the contract is written. Who gets the contract, for how long they collect tolls, when they can adjust prices, and who compensates them if traffic volume falls short—these are not just commercial secrets, but matters of public finance.^9,10

This is also why the 1987 lawsuit was so important.

The controversy was not just asking whether the highway should be built.

But asking: When drivers nationwide have to pay tolls according to the contract for decades to come, do they have the right to know why the contract was handed to this particular company?

The Government Exits the Enterprise, Power Does Not Exit#

In textbook narratives, state-owned and privately-owned are like a seesaw.

A little less state, a little more market.

The Malaysian experience, however, shows that things are not necessarily so.

If the government opens a competitive market to many enterprises, prices and services might be constrained by competition.

If the government hands a public monopoly over to a single private operator, the monopoly does not disappear; it merely changes hands. At this point, regulation, open tendering, contract disclosure, and conflict of interest rules must be stronger than before; otherwise, the so-called efficiency might just be transferring public power into private income.^7,3,9,10

Malaysia Incorporated emphasized cooperation between officials and businessmen, which indeed could reduce bureaucratic delays.

But it also blurred an important boundary.

The government's job is to set the rules for all enterprises.

Once officials and a few businessmen are seen as partners in the same "company," those outside will suspect: Is the government still the referee, or is it already discussing tactics with one of the teams?

Edmund Terence Gomez and Jomo K. S., who research Malaysia's political economy, argue that highly centralized executive power and close ties between political parties and businesses made privatization one of the tools for distributing political patronage and economic rents. "Rents" here do not mean house rentals, but the excess opportunities an enterprise gains due to government-created scarce licenses, concessions, protection, or contracts.^3,4

This does not mean that every entrepreneur who obtained a concession lacked capability.

Nor does it mean that every privatization project failed.

It means that when evaluating corporate performance, two capabilities must be separated:

One is the ability to defeat competitors in the market.

The other is the ability to be chosen by the government.

To Cultivate Bumiputera Entrepreneurs, or to Cultivate Connected Entrepreneurs?#

Privatization also had another public objective: assisting the New Economic Policy by creating Bumiputera entrepreneurs capable of commanding large enterprises.

This had its historical logic.

The early New Economic Policy relied heavily on government agencies holding assets in trust and the establishment of public enterprises. Privatization, on the other hand, attempted to transfer assets and opportunities to individual entrepreneurs, allowing Bumiputeras to become not just salaried managers, but capitalists who owned, controlled, and expanded companies.^7,8,4

The problem is, the state cannot support everyone at once.

It must pick.

And the selection criteria determine what class is ultimately cultivated.

If the conditions are open, the bidding is genuine, and performance is verifiable, support can help new enterprises cross the threshold of capital and experience.

If the conditions are opaque, the risks are borne by the state, and the returns are retained by a few, the policy might cultivate not entrepreneurs brave enough to compete, but concessionaires skilled at maintaining political relationships.^3,4,10

Thus, the New Economic Policy, originally meant to restructure society and reduce the identification of race with economic function, faced a sharp internal problem in the era of privatization:

Bumiputera participation increased.

But within Bumiputera society, among how many people were these participation opportunities divided?

A major Bumiputera shareholder obtaining a highway, port, or telecommunications concession will naturally raise Bumiputera corporate equity ownership.

But whether an ordinary small Malay businessman, a FELDA settler, and a newly graduated engineer thereby possess the same opportunities for upward mobility is another question.^3,4

Ethnic composition ratios can tell us under whose name the assets are registered.

They do not necessarily tell us in how many hands the wealth is concentrated.

That Lawsuit That Wasn't Tried to the End#

Returning to the 1987 courtroom.

Lim Kit Siang had obtained a temporary order halting the arrangement, and the case subsequently went up to the Supreme Court. Ultimately, the majority of the judges placed the threshold on locus standi: acting merely in the capacity of a taxpayer, driver, and Member of Parliament was insufficient to prove that his private legal rights suffered special damage.^1,2

From the perspective of procedural law, this was a debate over "who can sue."

From the perspective of democratic governance, it left a greater dilemma:

If a contract whose consequences will likely be borne by taxpayers and highway users nationwide cannot be challenged by a taxpayer, highway user, and Member of Parliament, then who can ask the courts to review it before it is signed?

The case did not prove that all the allegations were established.

Nor did it prove that all the allegations were unfounded.

It ended before the substantive issues could be fully tested. It is important to write this point clearly: history cannot record untried allegations as convictions, nor can it write a procedural defeat as proof that the contract was flawless.^1,2

The highway was later completed ahead of schedule, becoming one of the country's most vital transport backbones.^9,10

That is precisely the hardest part of this history to process.

A project can be immensely useful.

The system that awarded the project can still be insufficiently transparent.

The outcome does not automatically wash the process clean.

Flaws in the process also do not make the existing outcomes vanish into thin air.

The Evidence for This Article, Clearly Explained#

The original intent of Malaysia Incorporated comes from Mahathir himself. This article is based on his speeches in August and October 1983, outlining the concept of the government and private sector jointly serving the "National Company"; the "referee and team" analogy is this site's analysis, not disguised as his original words.^5,6

Privatization is not a single asset sale. Official plans and World Bank studies both show it includes corporatization, share sales, outsourcing, and concession models like build-operate-transfer, while the government might also retain equity, veto power, or risk liabilities.^7,8,9

The success of the North-South Expressway and government support are presented together. Early completion and infrastructure improvement come from World Bank records; soft loans, traffic, and exchange rate risk arrangements are from the same study and supplemented by toll road governance research. This article does not miswrite "private operation" as "the government paid nothing or took no responsibility."^9,10

The UEM-UMNO vested interests and lawsuit outcomes are strictly articulated according to judgments and academic research. The main text writes "the statement of claim alleged" alongside procedural facts verifiable by judgment records, without writing claims that did not undergo full substantive trial as criminal convictions.^3,4,1,2

"Political patronage" is not a label arbitrarily stuck on by this site. This is the academic analysis of Malaysia's privatization system by Gomez and by Gomez and Jomo; this site adopts their explanation, while preserving the distinction that projects could be effectively completed and enterprises could possess actual capability.^3,4,9

This article is sensitive: true. Before publishing, every sentence involving UMNO, UEM, vested interests, political patronage, toll rights, and judicial procedures must be reviewed line-by-line by Jay.

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Next article: When the government handed assets and concessions into private hands, at least the highways were still on the map, visible, and drivable. But in the same era, massive loans from Bank Bumiputra crossed the South China Sea into a few real estate companies in Hong Kong. Later, investigators followed the trail and found that some of the money could no longer be found, and an auditor never came back.