'Smart and effective partnerships between the public and private sectors will be established to drive the economic transformation agenda. This new wave of PPP will ensure equitable sharing of risks and returns' (YAB Dato' Sri Mohd Najib Bin Tun Haji Abdul Razak, Prime Minister of Malaysia, in his speech during the launching of the 10th Malaysia Plan).
By Khairuddin Abdul Rashid
The provision of public infrastructures and services has, in the past, been the responsibility of the government. However, through modern and innovative procurement strategies such as Privatization, PPP and PFI the government has been able to share some of the responsibility with the private sector.
Broadly, when a government agency and a private sector entity work together in delivering a public infrastructure or service, the arrangement is referred to as Public-Private-Partnership or PPP. However, when such working relationship involves the private sector entity providing funding and expertise the arrangement is referred to as Private Finance Initiative or PFI.
It is a known fact that governments across the world would not always be in a position, financially as well as in other resources, to provide the necessary public infrastructures and services especially if the demand is almost always continuous and on the upward-side. Privatization and PPP are therefore increasingly being seen by most governments as among the key strategies in order to meet the said demands.
In the case of Malaysia, Privatization and PPP are not new. Malaysia started PPP in 1981 with the implementation of the Malaysian Incorporated Policy. The implementation of the policy was further enhanced when the Privatization Policy was implemented in 1983, followed by the Guidelines on Privatization in 1985, and later on by the Privatization Master-plan in 1991. Under the 9th Malaysia Plan, a significant measure to streamline PPP was introduced via the Private Finance Initiative or PFI.
Under the 10th Malaysia Plan, measures to be implemented by the government in order to make PPP more effective include mechanisms to ensure both the public and private sectors are subjected to a more equitable distribution of risks and returns.
The government is very determined to make PPP work. This can be gauged by looking at the efforts currently being planned. For instance, under the 10th Malaysia Plan 52 high-impact projects worth RM 63 billion have been identified and are to be implemented via the PPP.
In addition, to help the private sector in initiating and implementing projects the government has established a Facilitation Fund of RM 20 billion.
Further, institutional infrastructures have also been formed in order to facilitate the implementation of PPP. These include the establishment of the Public Private Partnership Unit or 3PU (Unit Kerjasama Awam-Swasta or UKAS) parked under non-other than the Prime Minister's Department, and the publication of the 'PPP Guideline'.
3PU was established on 22nd April 2009. It has been given the responsibility to coordinate the implementation of PPP and the administration of the Facilitation Fund.
The new wave of PPP has led to renewed interest and intense debate among Malaysians especially those related to the construction, manufacturers of construction related materials, plant and equipment and the banking and financial sectors; the accounting, business, legal, insurance and facilities management service providers, government officers and policy makers, NGOs, academics, researchers and others.
For further details contact:
Prof Sr Dr Khairuddin Abdul Rashid Procurement and Project Delivery System Research Unit, IIUM
