Review of Malaysian telecom sector: assessment of policy changes

Abstract

The Malaysian economy has been growing rapidly, with concomitant demand for telecom services. With a view to reducing the role of the government in economy and introducing efficiency, the government planned to corporatize public sector organizations as a first step forward privatization. The telecommunication sector was chosen as one of the initial government departments to be corporatized and is experience was going to be used as a basis for deregulation and privatization in other state controlled sectors. In 1987, legislation was enacted to bring in major reforms in the telecom sector. Malaysia was the first ASEAN country to introduce such reforms. Due to the pervasive effect of telecom in the economy, management of this initiative was of interest in various quarters. This paper documents the state of Malaysian telecom sector and highlights the policy changes that have been initiated since 1987. These changes range from deregulation to privatization of the state owned telecom monopoly. Experience of managing this change and comparing it with similar initiatives in other developing countries provides important guidelines to decision makers on management of reform process. The paper emphasizes that effective separation of policy, regulation and operations, presence of effective regulatory body and fair regulatory guidelines, access to capital and trained human resources is crucial to the success of the reform program. In comparision to many other developing countries (e.g. India, Thailand, Philippines etc.), Malaysia has been able to successfully implement a reform program on these dimensions.