Public-Private Partnerships: an International Development vis a vis Indonesia Experience

For more than two decades, Public Private Partnerships (PPP) had developed worldwide as an instrument to procure public infrastructure where government funds are limited. This practice supports the covergent theory of the public and private sector. Indonesia experience with PPP follows most of what had been done by countries overseas with some deviations. The main reasons for going for PPP for Indonesia government is to fill the gap in finance and capability in procuring the infrastructure. Unofficial reason such as for off-balance sheet and ideological is not relevant. Up to now, the Government only allow investment in hard economic infrastructure. Instead of using pure private finance, Indonesia Government facilitates public funds either from Central Government or Local Governments to finance PPP projects. In most cases, this involvement is because of marginality of the project. This results in the condition where the Government still has dominant role in the existing PPP projects. Compared to the PPP framework in other countries like in the UK, Indonesia PPP lacks of attention on output specification and risk transfer. This may be because of lacking of experiences as well as due to high degree of Government involvement. Rigorous policy is needed in this area to ensure Government to achieve better value for money