Abstract
Today’s competitive global environment has led governments around the world to seek new ways to finance projects, build infrastructure and deliver services. Private Finance Initiative (PFI) is increasingly being used as a tool to bring together the strengths of both sectors, public and private to facilitate the delivery of projects and services. However, the new PFI Scheme introduced by the Government of Malaysia through the Ninth Malaysia-Plan in the delivery of public infrastructure is subject to criticisms, in particular when the Employees Provident Fund (EPF) was used as a main source of project financing. The study presented in this paper investigates the acceptability of PFI in Malaysia, taking into consideration factors contributing to success, negative factors, and key differences between PFI and the traditional forms of procurement. Empirical research was undertaken based on a questionnaire survey to public and private sectors in Malaysia. In total 60, valid responses were received, constituting a response rate of 45 per cent. The results were analysed by means of various statistical methods. The study disclosed that 97 percent (public) strongly disagree that EPF was the main source of project financing in implementing PFI projects in Malaysia.
Highlights
Since the beginning of the 1980s, there has been growing pressure to increase the quality of development projects by the construction industry in Malaysia
In the study reported in this paper, a questionnaire was adopted to elicit information from selected senior functionaries/personnel involved in Private Finance Initiative (PFI) projects in Malaysia, from the public and private sectors, on issues to do with (i) critical susses factors to PFI adoption and implementation (ii) negative factors to the adoption of PFI projects (iii) Perceptions of experienced functionaries involved in PFI projects on the criticality of need of a PFI framework/guidelines (iv) key differences between PFI and traditional procurements
Analysis of the data presented shows that long contract period and value for money are the two most critical success factors for PFI
Summary
Since the beginning of the 1980s, there has been growing pressure to increase the quality of development projects by the construction industry in Malaysia. The fundamental objectives are to reduce the length of time, the use of excessive budgets, the problems of cost overruns, shoddy work and substandard construction products. In response to this issue, the Malaysian Government is seeking new ways to finance projects, build infrastructure and deliver services. Private Finance Initiative or PFI procurement strategy is increasingly being used as a tool to bring together the strengths of both public and private sectors to facilitate the delivery of Mega projects and services (Norwawi, 2006). Serco (2007) reckons that United Kingdom, Japan, Italy, France, Germany, Australia and USA are the world leaders in PFI. The UK government has been a pioneer of this procurement through concession contracts ranging from 10 to 40 years, embracing services, IT and facilities management (Smyth and Edkins (2007)
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