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The Pitfalls of Water Privatization: Failure and Reform in Malaysia

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  • Tan, Jeff

Abstract

This paper examines why private participation in infrastructure (PPI) in water continues to be promoted despite poor results in developing countries. It argues that the main characteristics of infrastructure discourage private investment and necessitate state subsidies which dilute private risks and incentives and facilitate rent-seeking. As a result, PPI is characterized by public financing, selective private investments and inconclusive efficiency gains. This is reflected globally and in Malaysia where PPI continues to be promoted because it provides captive rents. The political factors that drive PPI invariably compromise institutional solutions as Malaysia’s water sector reforms illustrate.

Suggested Citation

  • Tan, Jeff, 2012. "The Pitfalls of Water Privatization: Failure and Reform in Malaysia," World Development, Elsevier, vol. 40(12), pages 2552-2563.
  • Handle: RePEc:eee:wdevel:v:40:y:2012:i:12:p:2552-2563
    DOI: 10.1016/j.worlddev.2012.05.012
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Post, Alison E. & Murillo, María Victoria, 2016. "How Investor Portfolios Shape Regulatory Outcomes: Privatized Infrastructure After Crises," World Development, Elsevier, vol. 77(C), pages 328-345.
    2. Ouda, Omar K.M. & Al-Waked, Rafat F. & Alshehri, Abdulrahman A., 2014. "Privatization of water-supply services in Saudi Arabia: A unique experience," Utilities Policy, Elsevier, vol. 31(C), pages 107-113.
    3. repec:hal:journl:hal-01023795 is not listed on IDEAS
    4. Swann Bommier & Cécile Renouard, 2014. "On Equity in India's Water Supply Public-Private Partnerships," Working Papers hal-01023795, HAL.
    5. Bommier, Swann & Renouard, Cécile, 2014. "On Equity in India's Water Supply Public-Private Partnerships," ESSEC Working Papers WP1411, ESSEC Research Center, ESSEC Business School.
    6. repec:eee:juipol:v:52:y:2018:i:c:p:27-36 is not listed on IDEAS
    7. Padfield, Rory & Tham, Mun Hou & Costes, Sophie & Smith, Laurence, 2016. "Uneven development and the commercialisation of public utilities: A political ecology analysis of water reforms in Malaysia," Utilities Policy, Elsevier, vol. 40(C), pages 152-161.

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