The case for public-private partnerships


By ALVIN TAY

PRIVATISATION was the buzzword of industry in the 1980s especially in Britain under the leadership of Margaret Thatcher. 

At that time, countries worldwide began to embrace private sector management and investment models as the primary paradigm for economic growth, investment, and poverty alleviation, said H.K Yong, vice-president of Bintai Kinden Group, which has been involved in privatisation activities for over a decade.  

In particular, governments were especially keen to attract long-term private investment, private sector management practices, and technology into a variety of sectors including telecommunications, energy, transportation, water supply and wastewater treatment, environmental infrastructure, social services, and, most recently, information technology, Yong said. 

However, as leaders of Britain’s privatised businesses eventually discovered, it wasn’t as successful as had been expected and was replaced with the current Public Private Partnerships (PPP) programme in 1997. 

MODEL PROGRAMME: In Malaysia, an example of a PPP is the United Nations Development Programme’s (UNDP) community recycling and waste management project which was launched in Penang last year.

A PPP is the alliance between public bodies, local authorities or central government, and private companies. PPPs typically involve the joint ownership of a special purpose vehicle established under company law, and are now used to fund more than RM24bil of Britain’s annual public works expenditure.  

Throughout the world, more than 140 countries have used PPPs to jump-start projects that otherwise would not have been implemented due to the lack of public funds or capacities, Yong said. 

“There are subtle but significant differences between privatisation and PPP,” he said. 

“PPP tends to focus on delivering services. Most of the time there is no transfer of government assets to the private sector.” 

He said KPIs (key performance indicators) were very important in PPPs and that the private sector partners are measured against these KPIs. 

“They are penalised if they do not meet them,” said Yong, adding that there are certain underlying principles in a National PPP Programme. 

“These include value-for-money, optimal risk-allocation, KPIs and competition,” he said. 

Malaysia already has some experience in PPPs in the form of BOT (Build, Operate, Transfer) and BOOT (Build, Own, Operate, Transfer) programmes, Yong said.  

“Malaysia is well poised to have a model PPP programme for other countries to follow, given the good job done by our Economic Planning Unit on Malaysia’s privatisation programme.” 

To create more awareness about the PPP programme, Asia Executive Programs Sdn Bhd is holding a conference called “Public Private Partnership – Beyond Privatisation” in Kuala Lumpur on July 27 to July 28.  

A panel of distinguished international and local speakers has been invited to share their experiences on PPPs. They include Zaid Ibrahim & Co senior partner Chew Seng Kok, partners Izhar Ismail and Toh Beng Suan, KPMG Business Advisory partner Dr Chin Yoon Keong, Macquarie Group division director Darren Woodward, ACIL Tasman Australia chief executive Nick Morris, Edelman Public Relations Worldwide Sdn Bhd director Steve Bowen and Leighton Asia Ltd managing director David Savage.  

Windhu Hidranto, the Indonesian resident representative for The Institute for Public-Private Partnerships, Inc (IP3), will also be delivering a paper during the conference. 

Established in 1994 in Washington DC, IP3 provides global training and consulting services to governments and industries in PPP modelling, regulation design and implementation, and competitive utility management.  

According to the IP3 website, the Privatisation Section of the Economic Planning Unit, the Domestic Trade and Consumer Affairs Ministry, the Finance Ministry, and the Securities Commission of Malaysia are part of a list of organisations around the world that have sent participants to its Washington-based and Regional Training Courses. 

IP3’s training and consulting clients include the United States Agency for International Development (USAID), the World Bank, the Asian Development Bank (ADB), the African Development Bank (AfDB), the United Nations Development Programme (UNDP), the United States Trade and Development Agency (USTDA), the Inter-American Development Bank (IDB), the European Bank for Reconstruction and Development (EBRD) and hundreds of government agencies, financial institutions, and private organisations worldwide.  

The speakers will talk about the implementation of PPP programmes; the critical factors for a successful PPP project; financing PPPs and PPP opportunities in various countries.  

For more information, contact the Secretariat at 03-6203-2009 or at 019-237-4779. 

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