Introduction
The Malaysian government has been privatizing some state-owned companies, including power generation companies, to reduce its debt burden and promote efficiency in the usage of resources. The approach has positively impacted Malays’ entry into the power market, as private companies can now compete for contracts to build and operate power plants. Over the past years, Tenaga Nasional Berhad (TNB) has monopolized the power industry in Malaysia. However, the Malaysian government embarked on a privatization program in the early 1990s, which saw the sale of several power generation assets to private corporations (Thillainathan, 2022). The recent privatization in Malaysia has significantly impacted Malays companies. While the move resulted in new opportunities for Malays to become involved in the sector, it has simultaneously brought many challenges and benefits. Following the move by the Malaysian government to privatize the power industry, it created room for the threat of new entrants and rivalry in the industry.
The New Entrants in the Market
After the privatization of the Malaysian power sector by the government, various well-established business organizations took advantage of the opportunity to venture into the market. Even though the entrance required a significant amount of capital, the majority of the enterprises had the necessary resources to set up their operations in the industry. With the increasing number of players in the market, the overall market share dropped significantly making the firm make losses. According to Taghizadeh-Hesary et al. (2022), the privatization of power generation in a country leads to the entry of several new entities into the market. The aspect has developed pressure on all competitors in the market, including Malays, to become more efficient and offer competitive prices.
The approach gave consumers the ability to choose from different suppliers in the market. It became challenging for the Malays to adapt to the new trends since it was used to the monopoly nature where it dictates the market prices. Furthermore, the threat further inserted pressure on the demand for labor and technicians.
If considering specific examples of the impact of this decision on the company, we should pay attention to such a company as Pfizer. It specializes in the manufacture and sale of drugs around the world, and for it the presence of remote control is important. When using this method, it is possible to manage the company at a distance, which is an important condition, eliminating the need for constant monitoring of the enterprise, and thus eliminating the need for long flights of the quality control committee.
Competitive Rivalry
Before the Malaysian government implemented the privatization of the power sector, the industry had no competitors in the market. However, after the decision, various firms entered the industry lowering the power of Malays Company. Currently, in the sector, there are more than eight players offering the same products to consumers in the market. The aspect has given the suppliers an added advantage because they tend to go for business organizations giving them better offers. In other words, the approach allowed the vendors to have more power over the companies making them sell their services at a higher cost. Speaking about competitiveness it is also worth mentioning that the industry of medical drugs production is practically unaffected by it. This sphere is actively developed in many countries of the world and remote control does not have a significant impact on the process of competition.
Conclusion
The decision to privatize the Malaysian power industry has significantly impacted the companies operating in the sector. The move facilitated new entrance leading to reduced market share. Furthermore, it enhanced the aspect of competitive rivalry giving the suppliers in the industry advantage over the companies. Although this move has presented several challenges, it has opened up new opportunities for Malays to become involved in the sector. For instance, it has a new opportunity to exercise full autonomy as a private firm. However, adapting and obtaining skilled labor is a big challenge.
References
Taghizadeh-Hesary, F., Rasoulinezhad, E., & Phoumin, H. (2022). Ways to achieve universal access to sustainable electricity in Southeast Asia. Economic Change and Restructuring, 1-20.
Thillainathan, R. (2022). Privatization of power generation in Malaysia: Impact on the entry of Malays into the power business. Malaysian Journal of Economic Studies, 59(1), 71–91.