Restructuring to Improve Water Services in Malaysia

Nariman Mohd Saad () and Azhar Harun
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Nariman Mohd Saad: Universiti Utara Malaysia
Azhar Harun: Universiti Utara Malaysia

Institutions and Economies (formerly known as International Journal of Institutions and Economies), 2017, vol. 9, issue 3, 21-49

Abstract: The regulatory structure of the Malaysian water services industry is complex as both the state and federal authority manage water supply at the state level. In 2008, the Federal Government restructured the water industry and centralised the water management of the state government by establishing SPAN (National Water Services Commission) and PAAB (Water Asset Management Company). The objective of SPAN and PAAB is to improve the efficiency of water operators in Peninsular Malaysia including Labuan. Therefore, this study aimed to measure the level of efficiency of the state’s water operators before and after the restructuring, and also to determine the factors that affect the level of efficiency of the state’s water operator. DEA approach (Data Envelopment Analysis), and Malmquist index were used to measure technical efficiency and productivity of the operator over the period 2000-2013. The DEA score showed that the sector’s mean technical efficiency was 73%, and only 42% of the state water operator showed an increasing in efficiency score. Penang’s water operator was the most efficient with a score of one over the study period. Total Factor Productivity analyses show that the water industry lags in the area of technology and inadequate capital. SPAN and PAAB also need to review their current key performance indicators in order for the latter to improve the efficiency of the operators.

JEL-codes: L51 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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