Public-Private-People Partnership as a New Financing Model for

Infrastructure Development: A Conceptual Framework

Lukas B. Sihombing

, Achmad Jaka Santos

and Andreas Wibowo

Faculty of Economics and Business, University of Indonesia, Kampus UI Depok, Depok, Indonesia

Director of Postgraduate School, Djuanda University, Bogor, Indonesia.

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” (people’s movement) with

the total “Jan Bhagidari” (people’s 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

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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