Risk in Public – Private Partnership Mechanisms in Malaysia Essay

Hazard IN PUBLIC- PRIVATE PARTNERSHIP MECHANISM IN MALAYSIA

Chapter 1: Introduction

  1. Background of the survey

Since the epoch of 1980s, denationalization policy was introduced under the 4th Malaysia Plan to turn to the lacks in substructure development in Malaysia. The denationalization policy that aimed to cut down the support of authorities has subsequently motivate the authorities to implement the Private Finance Initiatives ( PFI ) and Public Private Partnership ( PPP ) under the 8th and 10th Malaysia Plan severally. PPP is seen as a derived function of denationalization, even though some of their characteristic sound the same but the construction and design of the mechanism different in such a manner that causes PPP deriving its popularity and signifiers around the universes.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

CIDAC ( 2007 ) , had compared the differences between the denationalization and PPP mechanism, it shows that the design of PPP in contract construction consequence in changing degrees of private engagement alternatively of private ownership. Besides that, it besides promote sharing of hazard, duty between the private and public sectors doing PPPs mechanism more preferred comparison to Privatization method which has merely exclusive duty in general for the private sector. In Malaysia, the PPP mechanism has include Key Performance Indicator ( KPI ) in the contract, where the payment for services is based on private sector public presentation.

Tan, Allen and Overy ( 2012 ) , viewed PPP is an “off-balance sheet” method to finance and present the public plus by the private sector in supplying and keeping populace installations which cut down the upfront cost that need to be provided by the authorities. Next, the private sectors are usually better in hazard direction, competitory and innovate which brings greater efficiency and value for money in bringing the public construction development ( Robinson, 2010 ) .

As a decision, PPPs are a long-run contractual understanding between the authorities and private sectors for the funding, developing, operation or managing of undertakings in supplying a public plus or service to increase the efficiency in bringing public substructure ( WBI & A ; PPIAF, 2012 ) .

In Malaysia, as an enterprise to strength the investing of private sector in building industry there are rather a Numberss of mega substructure undertakings that delivered utilizing PPP such as West Coast Highways, extension of Damansara-Ulu Klang Expressway ( DUKE ) highways, Kuala Lumpur Outer Ring Road ( KLORR ) main road, Second Penang Bridge, UiTM instruction edifices, Penang port, and infirmaries ( UKAS, 2015 ) . Dato’ Sri Ir Dr Judin Bin Abdul Karim, Chief Executive of CIDB mentioned that the authorities has apportion a budget of RM230 billion outgo and 60 % or RM138 billion for physical substructure development in the tenth Malaysia Plan. In 2010, there are 53 undertakings with RM 63 billion value was announced to be implemented under PPP understandings. The Public-Private Partnership Unit in the Prime Minister’s Department ( UKAS ) has approved 137 undertakings and mobilized RM 115 billion in private sector investing in between twelvemonth 2010 to 2013 ( Belgian Foreign Trade Agency, 2014 ) . In 2014, it was estimated that the authorities has allocated up to RM 2.7 billion under the facilitation fund for PPP ( BFTA, 2014 ) .

  1. Statement of the research job

PPPs mechanism were said to be portion and transportation hazard to the parties which better in managing hazard. In order to do certain the work carried out complied to the demand, inducements and public presentation demands to accomplish value for money throughout the procurance procedure, the design and agreement of PPP need to be set out clearly for the easiness of control of stakeholder audience, allocate the hazard to the right parties to accomplish the purpose of development of these mechanism. However, the complexness of the substructure undertakings in proficient, legal, political, economic and the scope of constituencies involved, it is non easy to put up a good PPP contract ( Ng, Martin Loosemore, 2006 ) .

One of the instance in UK, the PPP were set up to restitute and maintenance the London belowground railroad system. The undertaking were awarded to two private company Metronet and Tubelines, which worth over ?17 billion. Conveyance for London ( TfL ) and the UK authorities was forced to end the contract following Metronet failure to pull off the work within the budget which ran up a shortage over ?1 billion. Metronet went bankrupt after TfL refused to supply subsidy to cover the loss. In concurrence with the prostration instance, it was estimated had cost the taxpayer between ?170 million and ?410 million. The chief ground for the failure are because of the hapless direction, uneffective cost control, hapless planning and inefficient financial direction of Metronet ( PSI, 2012 ) .

In Malaysia, the Batu Pahat Bus Station which redevelop through PPP direct dialogue between the Batu Pahat Municipal Council ( BPMC ) and the private developer is consider as a failures as differences happens between BPMC and the developer. The understanding took topographic point with the status that, the composite will be managed by the developer, and sharing of net incomes between the two parties. After 60 old ages, the council will take over the composite. However, in 1996 the council did non pay the direction fee to the developer where causes the contractual job started to happen. To pull off the disbursals, the developer refused to pay assessment revenue enhancement and so offered BPMC to take over complete complex and manage themselves. However, BPMC refused and took a legal action against the developer in 2008. Finally, the council took charge of BPMC and bared disposal and care disbursal of the composite. The major failure of this PPP undertaking was the pool spouse was non selected through unfastened command procedure ( Singaravelloo, 2010 ) .

Besides that, there are besides statement on that the development, command and on-going costs in PPP undertaking are likely to be greater than the traditional authorities procurance processes. The long grant contracts for PPPs undertaking causes high waste rework and dealing cost due to its complexness to bring forth the pre and station stamp work in order to procure the hazard of the populace sector ( Ng & A ; Loosemore, 2006 ) . For illustration, the Second Penang Bridge building faced a nine-month hold and lifting costs of edifice stuffs due to building issue such as land acquisition, design issues ( Zurairi, 2014 ) .

  1. Aim
  1. To place the key hazard factor associated in PPP.
  2. To find the possible solutions to understate the hazard.
  3. To develop a schemes to pull off hazard in PPP.
  1. Scope and restrictions

The range of this research focuses on the Public Private Partnership mechanism implemented in Malaysia. It focuses on the hazard associated in the PPP mechanism in presenting substructure undertakings in Malaysia. The survey will be carry out based on theory of the success and failure PPP undertaking in Malaysia, to happen out the possible solution to understate the hazard and develop an deduction or scheme to pull off the hazard.

  1. Research Design

Data will be collected through interview, instance surveies and observation. The mark interviewers will be the authorities bureaus, developer, contractors, moneyman which has been in charge in running and working on these mechanism. The secondary beginnings of information such as on-line newspaper, articles, administration web site and books will be used for instance survey.

Table 1.0: Table of Research Design including the types of informations, beginnings of informations and method of aggregation

Aim

Type OF DATA

Beginning OF DATA

METHOD OF COLLECTION

1 ) To place the key hazard factor associated in PPP.

  • The job faced in PPP undertakings.
  • Type of hazard
  • Public Private Partnership Unit Malaysia ( UKAS )
  • Interview
  • Case surveies

2 ) To find the possible solutions to understate the hazard.

  • Solution and schemes to get the better of or minimise the hazard.
  • Hazard Analysis
  • Public Private Partnership Unit Malaysia ( UKAS )
  • Interview
  • Case surveies

3 ) To develop a schemes to pull off the hazard.

  • Hazard direction
  • Public Private Partnership Unit Malaysia ( UKAS )
  • Interview
  • Case surveies
  1. Importance of the research findings

The expected findings comprise the key hazard factors associated in PPP in Malaysia. This survey will analyze the hidden hazard and issues in the deduction of PPP in Malaysia and other states which determine the success and failure factors for PPP. Study the possible hazard and jobs that might originate and necessitate to be considered when utilizing this mechanism. Through instance surveies, to find the possible solution and therefore understate the hazard and job. The research will so reason with a series of recommendations and scheme from the instance surveies on how manage the hazards in PPP undertakings.

  1. Structure of the Thesis

The study is logically organized into five ( 5 ) chapters:

Chapter oneis composed of background and general information, which give an overview of the working mechanism of Public Private Partnership in substructure undertaking. It includes the hazard, issues that associate in the mechanism which causes arise of job in utilizing these mechanism in Malaysia and around the universe causes these mechanism less favorable.

Chapter twocomprises of literature reappraisal, and assorted related plants done in this country of survey.

Chapter threedescribes in item the methodological analysis followed in this research survey.

Chapter fourcontains the analysis of the information gathered through the interview and instance surveies to place the key hazard and issues in Public Private Partnership in Selangor, Malaysia. Determine the possible solution to understate the hazard and develop a schemes to pull off the hazard.

Chapter fiveprovides the decisions and recommendations of the survey.

CompletedIn Progress

1.8 Research Program Chart

Activities

Week

1

2

3

4

5

6

7

8

9

10

11

12

13

14

1. Forming research thoughts

  1. Explore chances and funding for research survey subjects
  2. Discuss with supervisor

2. Submission of research subject

  1. Formulate job statement and nonsubjective
  2. Discuss with supervisor

3. Prepare research Proposal

  1. Developing the content and construction of the research
  2. Discuss with supervisor

4. Submission

  1. Chapter 1: Introduction
  2. Proposed Working Program Chart for each Semester

5. Finding information, roll uping journal articles

  1. Reading around the subject
  2. Summarize, analyse and measure the published work

6.Literature Review Writing

  1. Submit Chapter 2: Literature Review ( Draft )
  2. Discuss with supervisor and do amend to better

7.Submission

  1. Chapter 2: Literature Reappraisal
  2. Discuss with supervisor and amend to better

Table 1.1: Program Chart for Semester 5

Outstanding

1.8 Research Program Chart Continued

Activities

Week

1

2

3

4

5

6

7

8

9

10

11

12

13

14

1. Conduct Research Methodology

  1. Method used collect informations
  2. Discuss with supervisor

2. Data Collection and Analysis

  1. Evaluate and Analyse collected informations
  2. Discuss with supervisor

3. Data Presentation

  1. Overview
  2. Discuss with supervisor

4. Producing the thesis

  1. Developing the content and construction of the research
  2. Discuss with supervisor
  3. Make rectification and amendment to better

5. Pull a decision for research paper Revising concluding bill of exchange

  1. Pull a decision, Preface, Appendix, Reference composing
  2. Check overall administration, paragraph degree and sentences degree concern
  3. Documentation ( Consistent usage of format )

6. Concluding entry

  1. Prepare for scrutiny
  2. Get ready for oral, unwritten and thesis defense mechanism

Table 1.2: Program Chart for Semester 6

Mentions:

A.Ng, Martin Loosemore,Hazard allotment in the private proviso of public substructure, International Journal of Project Management( 2006 ) , doi:10.1016/j.ijproman.2006.06.005.

Herbert Robinson,Governance and Knowledge Management for Public-Private

Partnerships. Chichester, U.K. : Wiley-Blackwell, 2010. at p. 4.

Singaravelloo K. PPP:The Right Marriage between Local Government and the Private Sector in Malaysia. International Journal of Institutions and Economies2010 ; 2 ( 2 ) :142-166

World Bank Institute, PPIAF ( 2012 ) .Public-Private Partnerships: Reference steer version 1.0. World Bank, Washington, DC. © World Bank. [ Website ] Retrieved from: hypertext transfer protocol: //openknowledge.worldbank.org/handle/10986/16055

Belgian Foreign Trade Agency, BFTA ( 2014 ) . Construction Sector in Malaysia [ Website ] Retrieved from: hypertext transfer protocol: //www.abh-ace.be/nl/binaries/BFTA % 20- % 20Construction % 20Sector % 20in % 20Malaysia % 20LD_tcm448-253807.pdf

Prof. Dr Stephane SAUSSIER, An Economic Analysis of the Closure of Markets and other Dysfunctions in the Awarding of Concession Contracts [ Website ] Retrieved from:

hypertext transfer protocol: //www.europarl.europa.eu/RegData/etudes/note/join/2012/475126/IPOL-IMCO_NT % 282012 % 29475126_EN.pdf

CIDB ( 2014 ) Keynote Address: Y.Bhg. Dato’ Sri Ir Dr Judin Bin Abdul Karim, Chief Executive, CIDB Malaysia for International Construction Conference 2013 [ Website ] Retrieved from: hypertext transfer protocol: //www.cidb.gov.my/cidbv4/ ? option=com_content & A ; view=article & A ; id=554: keynote-address-y-bhg-dato-sri-ir-dr-judin-bin-abdul-karim-chief-executive-cidb-malaysia-for-international-construction-conference-2013 & A ; catid=40 & A ; Itemid=279 & A ; lang=ms

Public Services International: Why Public-Private Partnership ( PPPs ) don’t work [ Website ] Retrieved from: hypertext transfer protocol: //www.world-psi.org/sites/default/files/documents/research/psiru_ppps_case_studies.pdf

Zurairi Ar. Longest span in Southeast Asia opens today in Penang. [ Website ] Retrieved from: hypertext transfer protocol: //www.themalaymailonline.com/malaysia/article/longest-bridge-in-southeast-asia-launches-today-in-penang1