Government leaders discuss how to accelerate infrastructure projects in Indonesia

Today a roundtable discussion took place for leaders from the private and public sector to discuss ideas on how to leverage the newly-established KPPIP to enhance institutional collaboration and accelerate infrastructure projects with the Public Private Partnership (PPP) scheme in Indonesia. The event was hosted by the Unit Kerja Presiden Bidang Pengawasan dan Pengendalian Pembangunan (UKP4) and The Centre of Public Impact (CPI), a BCG foundation.

JAKARTA—Achieving impact in the public sector can be challenging. Governments are highly complex organisations tasked with balancing a vast array of interests. Political objectives and timelines must be squared with practical reality. The sheer scale and complexity of many government activities is an order of magnitude greater than the private sector, so simply managing the machine can become an all consuming task.

The Centre for Public Impact (CPI) will provide an independent space for policymakers, politicians and practitioners to share ideas and debate how public impact can be improved. It will have a global scope and cover a range of policy areas encouraging the cross-fertilization of ideas.

In Indonesia, one of the areas where there is still a gap to achieve desirable public impact is infrastructure development.

Public-private partnerships (PPPs) will increasingly play a crucial role in bridging the gap. These partnerships—in which the private sector builds, controls, and operates infrastructure projects subject to strict government oversight and regulation—tap private sources of financing and expertise to deliver large infrastructure improvements. When managed effectively, PPPs not only provide much needed new sources of capital, but also bring significant discipline to project selection, construction, and operation.

Successfully forming and managing PPPs, however, is no small feat. For one thing, governments, accustomed to focusing on delivering services, need to change their mindset and begin viewing these partnerships as a product that they must develop, market, and sell to potential private-sector partners. At the same time, both the public and private sectors must overcome the challenges created by an inherent conflict between their respective objectives: the public sector wants to minimize total or overall economic costs and ensure the delivery of high-quality service, while the private sector aims to maximize returns.

If not managed properly, that conflict can wreak havoc. In Latin America, for example, many PPPs have had to be renegotiated, a development that often results in greater costs to taxpayers. And in the United Kingdom, the government’s first private-finance initiative was criticized for, among other things, failing to deliver good value for taxpayers’ money.

In Indonesia, the government has been pushing for PPP for many years. While there is considerable progress, there is still much room for improvement. One of the key issues is the need for better institutional collaboration, among government agencies, between central and regional government, and across regional government.

Recently, through Perpres No. 75/2014, the government established Komite Percepatan Penyediaan Infrastruktur Prioritas (KPPIP) to help accelerate high-priority infrastructure development in Indonesia.

CPI seeks for collaboration with Unit Kerja Presiden Bidang Pengawasan dan Pengendalian Pembangunan (UKP4) and has hosted a private roundtable discussion today to have a discussion on ideas to leverage KPPIP to enhance institutional collaboration and accelerate PPP implementation in Indonesia.

The roundtable discussed a variety of questions relating to accelerating infrastructure investment in Indonesia including the role of government and how KPPIP can enhance collaboration between the private and public sectors.

For enquiries, please contact:
Wong Poh Yi
Head of External Affairs
The Boston Consulting Group. Southeast Asia
wong.pohyi@bcg.com
Tel: (6) 03 2688 5052
Fax: (6) 03 2688 5100

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