Privatisation of fixed-rail transit systems: a case study of Malaysia's STAR and PUTRA

Abstract

Since the early 1980s, many public utilities have been privatised under Malaysia's privatisation programme. A few, however, have since prematurely returned to government hands, among them the two light-rail transit systems in the capital city of Kuala Lumpur, STAR and PUTRA. This paper chronicles the pre- and post-privatisation events of both facilities before attempting to provide rational explanation behind their untimely surrender to the public domain. Based on publicly available material, this paper argues that neither the quality of government negotiators nor the length of time devoted to negotiating could be attributed to the bailout. Nor is there hint that political favouritism and corruption were at play. More than likely, despite the copious incentives provided to the two concession companies, the two projects proved financially unviable.Key words: build–operate–transfer (BOT), Malaysia, privatisation, light-rail transit system.