Public-Private-People Partnership as a New Financing Model for
Infrastructure Development: A Conceptual Framework
Lukas B. Sihombing
1
, Achmad Jaka Santos
2
and Andreas Wibowo
3
1
Faculty of Economics and Business, University of Indonesia, Kampus UI Depok, Depok, Indonesia
2
Director of Postgraduate School, Djuanda University, Bogor, Indonesia.
3
Agency for Research and Development, Ministry of Public Works and Housing, Indonesia
Keywords: Public-private-people partnership, Financing model, Infrastructure, Land acquisition
Abstract: One of the financing schemes in providing an infrastructure project is a public-private-partnership (PPP). PPP
is an implementation option and infrastructure service that provides incremental benefits as well as private
financing access to promote the government. This study aims to provide a new concept that combines PPP
with society (people) to become a public-private-people partnership (PPPP). Therefore, to analyze the state-
of-the-art schemes of PPPP, a meta-analysis method is employed that is based on a literature study. However,
this PPPP concept is a framework to encourage the society (people) to participate more, especially in land
acquisition. The land can be owned by individuals or traditional (communal) society (masyarakat adat). The
results of this paper are in the form of a conceptual framework of PPPP as a new financing model for
infrastructure development, where the PPPP concept involves the current PPP financing scheme and societal
participation, whether in terms of legal aspects and policies or institutional matters. This new concept can
help the society (people) to have prosperous welfare together with the institution under PPPP, as well as to
not depend on the state budget, as it increases private equity.
1 INTRODUCTION
When the ‘public-private-partnership (PPP)’ was first
formed in the United States, it was during the
financing of an education program; that is, joint
financing between the public sector and the private
sector (Yescombe, 2011). In addition, PPP is a
financing method that provides a potential solution
for the problems of urbanization, innovation transfer,
and knowledge (Beh, 2015).
According to Dong et al. (2016), the role of the
government is given more attention during the old
partnerships by providing support and supervision
regarding finances. However, the failure of using PPP
occurs when a signed contract does not include
provisions (Khoteeva & Khoteeva, 2017).
Another difficulty in PPP, especially by the
private sector, is an approach with a third party; that
is, insurance, re-insurance, or hedge fund insurance
bond finance (Bovis, 2015). On the other hands, other
factors to make the private sector interested are the
government’s positive attitude towards private sector
investments, a favorable existing legal framework
and policy, as well as well-organized and committed
contracting authority (Osei-Kyei & Chan, 2017).
An additional point is the weak connection
between the year of financial close and the project
cost (Daito & Gifford, 2014). Therefore, this paper
has developed a conceptual framework that identifies,
defines, and describes the characteristics of PPPP as
a new financing model for infrastructure
development.
2 LITERATURE REVIEW
The Indian Government, through the policy of
Narendra Modi, has people’s participation and public
participation in PPPP in the form of a project
execution a “Jan Andolan” (peoples movement) with
the total Jan Bhagidari (peoples participation),
including housing, health, education, and the
adoption of orphan children or even physical
infrastructure (Modi, 2018).
In Nepal, PPPP is being developed to build
hydropower, where the local people are urged to
invest with the potential to receive shares of up to
B. Sihombing, L., Jaka Santos, A. and Wibowo, A.
Public-Private-People Partnership as a New Financing Model for Infrastructure Development: A Conceptual Framework.
DOI: 10.5220/0009008401950197
In Proceedings of the 7th Engineering International Conference on Education, Concept and Application on Green Technology (EIC 2018), pages 195-197
ISBN: 978-989-758-411-4
Copyright
c
2020 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
195
24% (Acharya, 2018). In Nigeria, in building ICT, the
people’s role in PPPP is to make n-kind contributions
to set up networks (land, labor etc.), as well as
demand and utilize value added services (CTO,
2011). In addition, using PPPP is also suggested in a
post-disaster reconstruction (Zhang et al., 2015).
Nevertheless, previous studies did not research
PPPP for infrastructure financing, so that the state-of-
the-art contribution of this paper is PPPP for
infrastructure financing.
3 METHODOLOGY
A survey was conducted to gage the importance of the
people’s role in PPPP. The survey was divided into 2
sections, an Indonesian local context and a global
context.
The survey was conducted in the form of an online
survey that went from the beginning of September
until September 12, 2018. There was a total of 60
participants, including 46 Indonesian locals and 14
foreigners (3 from Australia, 2 from the USA, 2 from
Malaysia, as well as 1 person each from Austria,
Egypt, Greece, Italy, Jamaica, Japan, and Portugal).
4 RESULTS AND DISCUSSION
The survey results revealed that on a Likert scale of
1-5, for the role of people in financing for Indonesian
respondents, 39.1% found it important, while 34.8%
thought it was very important. Meanwhile, for those
outside of Indonesia, for the role of people in
financing, 57.1% found it very important, and 35.7%
thought it was important.
According to Indonesian locals, the involvement
of people in infrastructure financing can improve the
people welfare, there are 80.4% said Yes, and 15.2%
replied Maybe. Then for the opinions of those outside
of Indonesia, 64.3% said Yes, and 35.7% replied
Maybe.
Regarding the societal context or the society who
lives around the infrastructure development, for
Indonesian locals, 71.7% said Yes, and 28.3% replied
No. Meanwhile, for those outside of Indonesia, 78.6%
said Yes, and 21.4% replied No.
The people of Indonesia play a role in
infrastructure financing in the form of: private-owned
enterprises (cooperatives, limited companies) at
45.7%; state-owned enterprises/ region-owned
enterprises/ village-owned enterprises at 21.7%; and
special institutions at 19.6%. Meanwhile, other
countries said that state-owned enterprises/ region-
owned enterprises/ village-owned enterprises were
35.7%; private-owned enterprises (cooperatives,
limited companies) were 35.7%; and individuals were
14.3%.
From the results above, there are differences in
opinion between Indonesians and those of other
countries like in people’s role in infrastructure
financing, where other countries tend to think it is
very important, while in Indonesia it is primarily
considered as important. Nevertheless, the
participants tend to think the people’s role in
infrastructure financing is important.
Therefore, the people’s role is more dominant in
the form of private-owned enterprises (cooperatives,
limited companies), while other countries tend to be
either in the form of private-owned enterprises
(cooperatives, limited companies) or the form of
state-owned enterprises/ region-owned enterprises/
village-owned enterprises.
5 CONCLUSION
The PPPP conceptual framework for infrastructure
financing plays an important role in making society
prosperous, which has a direct effect on infrastructure
development. The people’s role in PPPP is in the form
of private-owned enterprises (cooperatives, limited
companies) and state-owned enterprises/ region-
owned enterprises/ village-owned enterprises.
This paper could be more complete, but a future
paper will establish the critical success factors (CSFs)
of PPPP that can be applied.
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Public-Private-People Partnership as a New Financing Model for Infrastructure Development: A Conceptual Framework
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