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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.

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  • 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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    Cited by:

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    2. See, Kok Fong & Ma, Zhanxin, 2018. "Does non-revenue water affect Malaysia's water services industry productivity?," Utilities Policy, Elsevier, vol. 54(C), pages 125-131.
    3. repec:hal:journl:hal-01023795 is not listed on IDEAS
    4. Beard, Victoria A. & Mitlin, Diana, 2021. "Water access in global South cities: The challenges of intermittency and affordability," World Development, Elsevier, vol. 147(C).
    5. Goh, Kim Huat & See, Kok Fong, 2021. "Measuring the productivity growth of Malaysia's water sector: Implications for regulatory reform," Utilities Policy, Elsevier, vol. 71(C).
    6. Saiani, Carlos & Azevedo, Paulo Furquim de, 2018. "Is privatization of sanitation services good for health?," Utilities Policy, Elsevier, vol. 52(C), pages 27-36.
    7. 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.
    8. Estrin, Saul & Pelletier, Adeline, 2018. "Privatization in developing countries: what are the lessons of recent experience?," LSE Research Online Documents on Economics 87348, London School of Economics and Political Science, LSE Library.
    9. Goh, Kim Huat & See, Kok Fong, 2023. "Incorporating nonrevenue water in the efficiency assessment of water supply utilities: A parametric enhanced hyperbolic distance function," Utilities Policy, Elsevier, vol. 81(C).
    10. Purba H Rao & Sharad K Jain & Alan Millin, 2016. "Would Private Sector be Inclined to Take up Initiatives to Address Water Crisis in India?," Vikalpa: The Journal for Decision Makers, , vol. 41(2), pages 103-116, June.
    11. Wisuttisak, Pornchai & Kim, Chul Ju & Rahim, Mia Mahmudur, 2021. "PPPs and challenges for competition law and policy in ASEAN," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 291-306.
    12. Swann Bommier & Cécile Renouard, 2014. "On Equity in India's Water Supply Public-Private Partnerships," Working Papers hal-01023795, HAL.
    13. 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.
    14. 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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