PROTON: A Riddle of Privatization in Malaysia

This research explains the mismanagement happened in the implementation of privatization in Malaysia specifically in relation to PROTON who received substantial support and intervention from the government. The ‘divide and rule’ policy by the British caused the ethnic politics and ethnic identification based economy. From there the New Economic Policy (NEP) 1971 was established because of the dissatisfaction with imbalance and inequality in politics and economy. The NEP aimed to eradicate poverty restructure the society and resolve inter-ethnic resentment but still in any case Malay had the highest priority as the indigenous ethnic. Then the government created privatization initiative with the main intention of promoting Malay industrialist and capital accumulation other than to relieve the financial burden increase productivity advance the economy and reducing public sector enterprise. Malaysia’s privatization involved too much political considerations and caused inefficiency to the private enterprise. In order to help Malay capitalists the government continuously provided capital protection technology acquisition assistance regulatory support and learning rent.