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Public-Private Partnership in Western and Non-Western Countries: A Search For Relevance
Public-Private Partnership in Western and Non-Western Countries: A Search For Relevance
https://www.emerald.com/insight/1366-4387.htm
Search for
Public-private partnership in relevance
Western and non-Western
countries: a search for relevance
Fadhli Zul Fauzi and Bevaola Kusumasari
Department of Public Policy and Management, Universitas Gadjah Mada,
Yogyakarta, Indonesia Received 30 August 2019
Revised 17 March 2020
13 April 2020
Accepted 12 August 2020
Abstract
Purpose – This paper aims to compare the implementation of public–private partnership (PPP) in Western
and non-Western countries by analyzing several predetermined aspects such as government and political
system, PPP’s model of agreement, political commitment and the role of PPP supporting unit.
Design/methodology/approach – This study uses comparative case studies to compare the
implementation of PPP in seven Western and non-Western countries by using various appropriate data such
as frequently used agreements, government systems, political commitments and PPP-supporting units to
understand the extent of differences in the success of PPP implementation found in each country.
Findings – The results reveal that the implementation of PPPs in Western and non-Western countries do
not significantly differ, except for in the instance of political commitments. Political interventions in PPP
implementation still frequently occurred in non-Western countries, which consequently disrupted the
implementation of PPP itself.
Originality/value – Previous comparison of PPP studies only focused on the implementation of PPP
without analyzing the political context in each country. One of the contributions that this paper will bring to
the conversations around PPP is that the implementation of PPP will be analyzed with regard to political
contexts.
Keywords Western, Public–private partnerships, Non-Western, Political commitment
Paper type Research paper
Introduction
The debate on the success and failure of implementing public–private partnership (PPP)
continues to develop along with the political and economic differences found in every
country, specifically concerning development planning (Leiringer, 2006). The results of
many studies discuss the concept of value for money (VFM) offered by the PPP model to the
public sector, as well as risk analyses in its implementation, such as payment delay,
government priority changes and even shift of development authority (Siemiatycki and
Farooqi, 2012; Romboutsos and Macario, 2013; Lawther and Martin, 2014). Meanwhile, other
studies attempt to analyze the critical failure factors (CFFs) of PPP by presenting cases that
occurred in various countries. Gauging these CFFs may be observed via both micro and
macro conditions within the development. Micro conditions refer to failure factors that
ensued on account of the project implementation itself, whereas macro conditions are those
caused by external factors (Trangkanot and Charoenngam, 2014).
Micro conditions look at failures from various factors such as incompetent contractors or
weak monitoring in a certain project. For macro conditions, failures occur because of factors Journal of Financial Management
of Property and Construction
such as the presence of political risks and economic crisis taking place in a country © Emerald Publishing Limited
1366-4387
(Trangkanot and Charoenngam, 2014). However, the failures found in the analysis results of DOI 10.1108/JFMPC-08-2019-0071
JFMPC the CFFs do not actually happen in countries with differing backgrounds. Other studies
indicated the opposite results by elaborating success factors in the implementation of PPP
through analyses of critical success factors (CSFs). Several countries have succeeded in
implementing PPP because they were able to meet the criteria demanded by CSFs, namely,
the availability of competent contractors, support and assurance from the government, good
monitoring, clear documents and trust fostered between the collaborating parties (Jacobson
and Choi, 2008; Wibowo and Alfen, 2015; Kavishe and Chileshe, 2018). The differing issues
confronted by PPP in various countries would undoubtedly result in differing output.
Initially, PPP had become a strategy championed by numerous Western countries, such
as the United States and Western European countries, for implementing complex urban
development plans (Sagalyn, 2008). Along with the growing understanding of PPP, the
scheme has eventually started to be implemented in various non-Western countries, even
developing ones (Melville, 2017). Various Western countries are the most active in applying
the PPP scheme, and they have contributed numerous innovations in its implementation
(Himmel and Siemiatycki, 2017; Maniatis and Vassilakou, 2017). This is also corroborated
by the substantial amount of cumulative expenses made in implementing PPP (in the
transportation sector) that is dominated by Western countries (Carpintero, 2015).
Meanwhile, regarding non-Western countries, although there have been a number of
successful cases in PPP implementation (Tafesse, 2014; Kwofie et al., 2014), there are, in fact,
also quite a number of cases that experienced problems and failures (Kokkaew et al., 2013;
Trangkanot and Charoenngam, 2014; Ameyaw and Chan, 2015).
Some studies eventually begin to develop their research by comparing the
implementation of PPPs in various countries, and comparing the level of success or failure in
implementing PPP (comparative studies) in the respective countries (Boardman et al., 2015;
Dong et al., 2016; Hurk et al., 2016). One comparative study had even compared not only the
implementation of PPPs in various countries but it also analyzed how those countries
resolved conflicts in a particular PPP case (Osei-Kyei et al., 2018).
Nevertheless, it is observed that there are gaps in some of the existing research on PPP.
As described earlier, the success of implementing PPP is dependent on the political contexts
of the country (Leiringer, 2006). Meanwhile, according to some of the available studies, not
much comparison has been done regarding the implementation of PPPs in various countries
by examining those countries’ contexts in their entirety. This research aims to compare the
implementation of PPPs in various Western and non-Western countries by examining the
contexts of those countries in their entirety. The comparison of these PPP implementations
takes several aspects into consideration, such as geographical conditions, economic
background, system of government, regulatory system, the scheme used and project
monitoring mechanism.
This paper is aimed to compare the implementation of PPP in Western and non-Western
countries by analyzing several predetermined aspects such as government and political
system, PPP’s model of agreement, political commitment and the role of PPP supporting
unit. The choice of comparing between Western and non-Western countries is because of
several prior studies indicating a high level of success in the implementation of PPPs in
Western countries (Carpintero, 2015; Himmel and Siemiatycki, 2017; Maniatis and
Vassilakou, 2017), as well as several problems and failures confronted by non-Western
countries (Kokkaew et al., 2013; Trangkanot and Charoenngam, 2014; Ameyaw and Chan,
2015). This article is divided into four sections. The first section provides a description of the
existing literature on the PPP model. The following section discusses the methodology used
in the study to analyze the data findings. The next part contains a discussion concerning the
data findings and their analyses. In the last section, a summary of the existing analysis Search for
results and recommendations for future studies are provided. relevance
Conceptual framework in public–private partnership
Governments are not necessarily able to fulfil the constant rise of public needs because of
the limitations these governments have. Consequently, the PPP scheme is considered a
viable alternative to address their needs by using the partnership model between public and
private entities (Broadbent and Laughlin, 2003; Jacobson and Choi, 2008; Rebeiz, 2012;
Elwell, 2012; Rashed et al., 2017). As the needs for PPP continue to grow, some theories on
factors that influence differences in the implementation of PPP in various countries have
also increasingly developed (Jooste and Scott, 2011; Boardman et al., 2015). Therefore, this
section contains the expansion of several previous deliberation results, which were
subsequently used as indicators in analyzing the data in this study.
Methodology
This study compares the implementation of PPPs in various Western and non-Western
countries; accordingly, the analysis used was a comparative case study (CCS; Goodrick,
2014; Bartlett and Vavrus, 2017). A CCS was used to compare several cases with similar
outcomes but differing effects, or a number of cases with similar effects but differing
outcomes (Goodrick, 2014). In this study, the effects of the PPP scheme in public
infrastructure development of the respective countries with their varying outcomes are
observed. By using the CCS method, similar data was selected according to a predetermined
standard and gathered systematically to produce a structured collection of data; the data
collection results were subsequently made to go through a focused comparison process
(Hurk et al., 2016). Every case in this article is a representation of Western and non-Western
countries that are compared by using several set criteria.
Unlike traditional case study methodology, CCS is considered as a method that can
increase data findings by comparing several previous cases, and it can interpret every
process up to the results obtained from every case (Goodrick, 2014; Kurniasih et al., 2016;
Dinour et al., 2017; Martinus and Hedgcock, 2015). Both general and specific sources from
the respective countries were used by applying the CCS method to compare them. The data
sources were acquired from country reports, policy papers, policy evaluations or
constitutional amendments, government websites and even previous studies containing the
opinions of various experts (Hurk et al., 2016).
The comparative study conducted in this paper involves comparing the implementation
of PPPs in various Western and non-Western countries. The case of PPP implementation in
Western countries includes Belgium, France, Italy and the UK. These countries have
increasingly been using PPPs to accelerate the development of major infrastructure projects.
Furthermore, these countries are highly economically and administratively developed and
find that the private sector is more able than the public sector to supply a variety of goods
and is more able to manage financial risks. On the other hand, India, Indonesia and Thailand
were chosen as the example of cases in non-Western countries because the interest of PPP in
these countries is growing in sustaining and expanding Asia’s economic growth (van der
Geest and Jorge Nunez-Ferrer, 2011). Promoting PPP implementation appears to offer a
solution to overcome barriers to growth in the various sectors such as infrastructure,
transportation, electricity, tourism and other public facilities. Although several countries
JFMPC were selected to represent Western and non-Western countries, it should be emphasized that
the sources obtained from those countries may have differing degrees of reliability. This is
because of a difference in data availability regarding PPP implementation in the selected
countries. Additionally, PPP implementations were observed in the infrastructure
development projects conducted in the selected countries in general, and the countries
representing the Western and non-Western countries were also those considered to have
adequate data sources. Accordingly, it is expected that the study results have gathered
enough data to appropriately explain the differences in PPP implementations in various
Western and non-Western countries. Subsequently, the criteria from the respective countries
were analyzed based on the topic, methodology, and theory used. As for the criteria used,
they are in line with a few factors explained in the previous part of this article, so that data
findings capable of explaining the difference of PPP implementation in various Western and
non-Western countries were eventually obtained. The frequently used agreement model and
the government system of the country were set as a standard in differentiating PPP
implementations in the Western and non-Western countries under study (Table 1).
In this study, the source of the data obtained not only comes from articles in international
journals that discuss the implementation of PPP in selected countries and government
reports but also from international institutions (Table 2). The data obtained from these
various sources was then selected according to the need of study which is based on the
predetermined criteria (Dinour et al., 2017).
Comparative
analysis of PPP
India Parliamentary BOT The priority change has Frequently change the Dissemination, policy Public body under Substantial
republic impacted to development policy that hinders PPP function and green- ministry responsibility
delayed implementation lighting (direct)
Indonesia Presidential BOT The priority change has Policy change for better Dissemination Public body under Limited
impacted to development PPP implementation function, the policy ministry/public law responsibility
delayed function body (indirect)
Thailand Constitutional BOT The priority change has Policy change for better Dissemination, policy Public body under Substantial
monarchy impacted to development PPP implementation function and green- ministry responsibility
delayed lighting (direct)
Belgium Constitutional DBFM The priority change has Availability of PPP Dissemination and Public body under Limited
monarchy not impacted to policies policy function ministry responsibility
development delayed (indirect)
France Semi- DBFO The priority change has Policy change for better Dissemination, Policy Public body under Substantial
presidential not impacted to PPP implementation function and green- ministry responsibility
development delayed lighting (direct)
Italy Parliamentary BOT The priority change has No adequate PPP policy Dissemination and Public body under Limited
republic not impacted to policy function ministry responsibility
development delayed (indirect)
United Parliamentary DBFO The priority change has Policy change but hinder Dissemination and Public body under Limited
Kingdom impacted to development PPP implementation policy function ministry/separate responsibility
delayed legal entity without (indirect)
private sector
participation
Countries PPP’s project Model of PPP
Search for
relevance
India Road sectors, such as expressways and national highways, BOT
commonly use the BOT model in their implementation
(Parthasarathi and Aryasri, 2017). The development of 1,000 km
of expressways under the National Highways Development
Program is an example of the BOT model in India (Kalidindi and
Singh, 2009).
Indonesia Jakarta-Bandung High-Speed Railway is a top project PPP in Concession, BOT
Indonesia today; it is a partnership involving several Indonesian
and Chinese companies. This project is planned to be extended to
Surabaya (Jakarta-Surabaya HST Project) by using a concession
scheme along with several companies in its implementation
(Berawi, 2018).
Thailand Data from PPI (PPI World Bank) shows that Bangkok Pink and Concession, BOT
Yellow Monorail Lines is one of the PPP’s projects under the
concession model, with $3.129m of total investment.
Belgium Brabo I Light Rail in the North of Belgium was one of the Flemish DBFM
PPP projects with DBFM as the agreement model used (Hurk
et al., 2013).
France New generation access network in Limousin (DORSAL) is one of DBFO, concession,
the examples of a concession scheme with a contract period of partnership
20 years for construction and maintenance, while the Waste Water contract
Treatment Plan Grand Prado on The Reunion Island is an
example of the DBFO model in France (The European PPP
Expertise Centre, 2012).
Italy BOT is the most traditional model of PPP implementation in Italy, BOT, concession
which came about along with the advent of PPP regulation in the
1990s (Carbonara and Pallegrino, 2014). Most PPP projects in Italy
are in health-care construction, with the construction of nine
hospitals as examples of the concession model implementation
(MEF, 2015).
Table 4.
UK A69 Newcastle-Carlisle is one of the PPP implementations in the DBFO
UK, with a DBFO scheme and agreement to construct a 3.5 km by- PPP agreement
pass. Another example is the M1-A1 Motorway Link, with a total models in Western
distance of 30 km and a total investment reaching £214m (Shaoul and non-Western
et al., 2006). countries
Conclusion
Based on the classification conducted in this study, it is shown that the implementation of
PPPs in Western and non-Western countries does not significantly differ. When observed
through the form of government systems and the agreement they frequently use, no
noticeable differences were found because some of the Western and non-Western countries
had similar government systems or frequently used agreements, although in some cases, the
agreement model used by each country had a different understanding. However, a difference
in PPP implementation is very much apparent in the political commitment that the Western
and non-Western countries maintain. Political interventions in PPP implementation still
frequently occurred in non-Western countries, which consequently disrupted the
implementation of PPP itself. Although in terms of the policy, some of the non-Western
countries above had made changes toward better results. In reality, the intervention of
interests from various parties still influenced the implementation of PPP. Even though such
problems also occurred in Western countries, such as the UK, which made policy changes
and disrupted development consistency in implementing PPP, political interventions in
Western countries are classified as low. The problem that caused the delay or cancelation
project in non-Western countries was considered as an impact of the weak political
intervention that still occurred in these countries.
The strong political will and legal structure extend to all countries in this study
experienced are the crucial factors in implementing PPP models. PPP has typically proved
less costly than normal procurement in Western and non-Western countries because the
private sector is increasingly productive. PPP can at the same time allow countries to build
infrastructure and public facilities faster and cheaper, however, PPP often leads to increased
risk of failure where the specifics of the project service rates and the distribution of the risk
are not very well prepared and identified.
PPP provides the government with a way of building and improving public service Search for
without taking on the financial strain of the projects necessary. The financial climate and relevance
unpredictable future policy changes will however influence the implementation of PPPs
across countries and sectors. This article offers the ideas for future research that focuses on
specific parameters to determine, select and enforce PPP desirability to allow the
sustainability of long-term projects to be carried out in PPP contract terms. However, in
view of the longer duration of PPP contracts, public and private sectors both should
seriously concerned with how to plan for risk which is uncertain or even unpredictable in the
future. Furthermore, in the best approach to the selection of PPP models, the levels of
economic development of countries should also be taken into account. As infrastructure and
services sectors evolve, PPP implementation should be focusing on services delivery in some
economic system. In the future, new approaches and criteria for selecting PPPs should also
include anthropological and environmental concerns as well as political, social and economic
concerns that drive the expectations of stakeholders as never before. As a consequence of
new technology development, the risk will be seen as a potential opportunity to enhance the
implementation of PPP through creative funding in the future.
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International Journal of Public Sector Management, Vol. 19 No. 2, pp. 117-129.
Zhang, X. (2005), “Critical success factors for public-private partnerships in infrastructure
development”, Journal of Construction Engineering and Management, Vol. 131 No. 1, pp. 3-14.
Corresponding author
Bevaola Kusumasari can be contacted at: bevaola@ugm.ac.id
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