Government Initiatives to Unlock Private Participation in Infrastructure

Abstract

This chapter aims to answer the question of how developing countries can unlock private participation in the clean water infrastructure. First, using the World Bank database on Private Participation in Infrastructure, this study conducts quantitative analysis related to the factors affecting private participation in developing countries. The result shows that government support plays a vital role in attracting private sector participation in the water sector infrastructure. Next, we present a case study on Indonesia’s recent clean water infrastructure projects. Through in-depth interviews with government officials and private counterparts, we found that Indonesia is more progressive compared to its peers in the region in terms of government support and facilitation. Considering its high economic and social impacts, the Government of Indonesia provides support to almost all public-private partnerships in clean water projects. The Viability Gap Fund, Project Development Facility, and some government guarantees have helped make the projects feasible. The case study shows how the institutional aspects, governance, and government support are critical to unleashing private sector participation in water sector infrastructure in Indonesia.