Public Private Partnership Essay

Public Private Partnership (PPP) is a public sector procurement mechanism whereby the government engages commitments from the private sector. The government transfers a certain level of responsibilities and significant risks to the private sector in providing the public service or facilities for community such as public transportation network, parks and convention centres (Ismail, 2013). In depth, PPP is a transfer of responsibility of financing and managing a package of capital investment and services including construction, management, maintenance, refurbishment and replacement of public sector assets which creates a standalone business (Economic Planning Unit, 2006). Here, the private party will provide public infrastructure-based services

The industrialisation of Malaysia is being facilitated by the government policies since 1980s. In order to facilitate the trading and industry activities in Malaysia, the infrastructures have to be developed. However, there is a limitation for the government to do and to deliver in order to meet the growth and development needs. Hence, Privatisation Policy and Malaysia Incorporated Policy were introduced together with their respective implementation guidelines in 1980s in a hope to increase the involvement of private sector in national development and to promote the growth of private sector in

Characteristics of PPP in Malaysia There are a few characteristics of PPP projects as follows (Public Private Partnership Unit, 2009):

• Relationship between public and private sectors is based on partnership;

• Public sector procures outcomes of a service for a concession period;

• Private sector determines the required inputs to achieve the outcomes and the private sector is given latitude to introduce innovation into their designs and development to reduce overall costs;

• Payment for services is based on predetermined standards and performance of the private sector providers;

• Promotes a ‘maintenance culture’ where the concessionaires will be responsible for the long term maintenance of the assets throughout the operational tenure agreed upon;

• Integration of design, construction, finance, maintenance and operation as a total package;

• An option to transfer assets to the government at the end of the concession period;

• Optimal sharing of risks whereby risk is allocated to the party who is best able to manage it;