CONDITIONS FOR SUCCESSFUL PRIVATELY INITIATED INFRASTRUCTURE PROJECTS.

Abstract

In South East Asia, an increasing number of privately initiated build-operate-transfer (BOT) infrastructure projects are in progress. This paper identifies the conditions which are likely to lead to successful private infrastructure BOT projects; it is based on recent experience with three such projects in Malaysia. There are two types of schemes initiated by the private sector: (1) those already identified by the Government, but not proceeding due to lack of funds or feasible technical solution; and (2) those meeting previously unidentified needs. The most important stage in the total development of a BOT proposal is the correct identification of a suitable scheme. Often, a problem or need is identified, then a viable solution is proposed to solve the problem or satisfy the need. The conditions for successful development of BOT projects can be grouped under country, project, and clients. The country should be economically stable, have the political will to proceed with the project, and have a fairly well developed local capital market and a proper legislative and regulatory framework for privatisation. The project should have a forecast steady demand, offer adequate returns, and be fairly large. The client should be creditworthy, and show its active participation and support for the project.