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The following features are critical for PPP implementation: coherent policy, public sector capacity to manage PPP appropriately, public sector willingness to have mutual relation with private partners, and leadership.

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The above figure indicates a consistent pattern of close linkages between fundamental macroeconomic and institutional variables, and infrastructure development. Infrastructure is needed to foster growth and macroeconomic stability, while good business climate, represented by positive macroeconomic and supportive institutional frameworks, will attract more investments, including in infrastructure.

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There are certain types of basic infrastructures essential to fulfill basic human needs and foundations of welfare that can provide opportunities to empower people. Those infrastructures are related to knowledge accumulation, health care, and support for productivity.

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The Umbulan project shows that coordination under strong leadership can conclude the long delayed process. It also provides an example of the benefits of credit enhancement, provided by the Indonesia Infrastructure Guarantee Fund, and fiscal support through viability gap funding provided by the Ministry of Finance. PPP policies across Southeast Asia are at various stages of maturity; this Bite+ highlights recommendations to strengthen the policy framework for infrastructure PPPs.

Public–Private Partnership Development in Southeast Asia

Governments in Southeast Asia try to attract the private sector in infrastructure development under public–private partnership where its competence and innovative resources can be utilized.

This paper by The Asian Development Bank provides a landscape of public–private partnership (PPP) infrastructure development in Southeast Asia, where PPP has been promoted as a complement of limited public funds. PPP typically contributes less than 1% of gross domestic product (GDP), while public finance greatly varies from about 2% to 10% of GDP. Among major factors supporting PPP implementation are conducive business environment, good governance, innovative financial schemes, and public-sector capacity to manage PPP appropriately. In addition to hard infrastructure development, private participation in social infrastructure is also growing in Southeast Asia.

Access The Asian Development Bank's Economics Working Paper here.