2. Background of PPP in Malaysia
“One form or another of PPP
existed since the 1980s as a
result of the world economic
recession that caused the
Government to seek assistance
from the private sector”
Under the 9th
Malaysia Plan, the Government officially announced the implementation of public projects using the Public Private
Partnership (PPP) or Private Finance Initiative (PFI) scheme. In 2009, a new unit under the Prime Minister’s Department known
as Privatisation and Private Finance Initiative Unit –PFI (currently known as Public Private Partnership - 3PU) was established .
3PU is the core agency with the responsibility to coordinate the Privatisation and the Public-Private Partnership (PPP) projects
The
Malaysian
Incorporated
Policy (1981)
Privatisation
Policy (1983)
Guidelines on
Privatisation
(1985)
Privatisation
Master Plan
(1991)
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3PU is the core agency with the responsibility to coordinate the Privatisation and the Public-Private Partnership (PPP) projects
which have made an impact to the country’s economy.
Must make government
projects more efficient with
risk and rewards optimally
shared between the two
parties
To be used where
government support
enhances viability of
private sector projects in
strategic or promoted areas
Two formats for PPP:
Private sector construct
assets/building and lease to
Government for a specified
fixed period
Private sector identify
projects that are deemed
economically viable and
would benefit the public to be
executed via PPP scheme
At present, the Government is
undertaking 52 projects in the
construction stage with an estimated
value of RM62.7b. In line with the
Government’s new approach based on the
new economic model in the 10th
Malaysia
Plan, the Government is encouraging the
private sector to invest in development
project whether through PPP or through
direct investment of the private sector in
the country’s development programme.
The key themes of the current 10th
Malaysia Plan PPP initiative center
around:
• Improvement of basic infrastructure
• Upgrading of public transportation in
Greater KL
Source: The Star Online, 2006
Two conditions for PPP:
3. Background of PPP in Malaysia (cont’d)
Early major projects from inception
Infrastructure Early major projects
Roads 23 BOT*-style projects let between 1985 and 1997, usually with 25-year concessions
Ports 2 BOOT*-style projects in 1993 and 1995
3 Lease-sale projects in 1986, 1992 and 1994
3 Corporatisations in 1993 and 1994
LocalAirports 19 Airports and 12 short take-off and landing ports under operation and management licences
(1992) , normally with 30-year concessions
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International Airport 1 (Kuala Lumpur) under operation and management licence (1998), with a 50-year concession
Power 5 BOT-style projects let in 1995 – 1997, with 21-year power purchase agreements
Water Supply 3 BOT-style projects let in 1987 – 1989
2 Corporatisations in 1994
Sewerage 1 BOT-style project (1992**), with 28-year concession
Rail 3 BOOT-style projects (1992 – 1994, 2002)** with 60 + 60 year concessions
Source: Australian Journal of Public Administration, Development and Distortion of Malaysian Public-Private Partnerships – Patronage, Privatised Profits
and Pitfalls (2010)
* BOT – Build, Operate and Transfer
BOOT – Build, Operate, Own and Transfer
** The sewerage and three rail projects were subsequently re-nationalised
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4. Background of PPP in Malaysia (cont’d)
Recent and upcoming PPP projects (2011 – 2015)
Sector Recent/Upcoming projects based on 10th Malaysia Plan 2011 – 2015
Roads Seven highway projects amounting to an estimated RM19billion, including:
• West Coast Expressway
• Guthrie-Damansara Expressway
• SungaiJuru Expressway
• Paroi-Senawang-KLIA Expressway
• Ampang-Cheras-Pandan Elevated Highway
Rail and
Transport
• Integrated TransportTerminal in Gombak, Selangor
• Mass Rapid Transit (MRT) project in Greater Kuala Lumpur (RM40billion)
• Kuala Lumpur – Singapore High Speed Rail of 400km (RM18.6billion – currently in feasibility stage)
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• East Coast Rail Route (RM29 billion – currently in feasibility stage)
Power • Two coal electricity generation plants (RM7billion)
• 300-megawatt Combined-Cycle Gas Power Plant in Kimanis, Sabah (RM1.5billion)
• Construction of the liquefied natural gas regassification by Petronas in Melaka (RM3billion)
Education • Perdana University, a joint venture between Academic Medical Centre Sdn Bhd and John Hopkins
Medicine International as well as Royal College of Surgeons Ireland (RM2billion)
• Five Universiti Teknologi MARA (UITM) branch campuses
• International Islamic University Malaysia Teaching Hospital in Kuantan (RM413million)
Port • Privatisationof Penang Port Sdn Bhd
Others • Development of Malaysian Rubber Board’s 3,300 acre land in Sungai Buloh, Selangor (RM10billion)
• Redevelopment of the Angkasapuri Complex Kuala Lumpur as Media City
• Kuala Lumpur Strategic Development by 1MDB; Sungai Besi Airport area
• KL International Financial District in Kuala Lumpur (RM26 billion)
• Two aluminium smelters in Sarawak Corridor of Renewable Energy (SCORE)
Source: Utusan Online, 2010
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5. Example PPP Projects Completed
Example 1: PLUS Expressways
PLUS Malaysia Berhad operates and maintains 973-kilometre
length of inter-urban expressways in Peninsular Malaysia,
including the North-South Expressway (NSE) stretching from the
border of Thailand to Singapore and others including the
Expressway Lingkaran Tengah (NSECL) linking Kuala Lumpur to
the Kuala Lumpur International Airport (KLIA), the Malaysia-
Singapore Second Crossing (MSSC), and the Penang Bridge linking
Penang Island to the mainland Peninsular Malaysia.
It is the first expressway to be implemented via PPP using the Build
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It is the first expressway to be implemented via PPP using the Build
Operate Transfer model in Malaysia. It was completed in 1988.
Example 2: Stormwater Management and Road
Tunnel (SMART)
SMART is an initiative by the Government to alleviate the
flooding problem in the KL city centre as well as being a traffic
dispersal scheme. The project was completed in 2007 and the
construction cost of RM1.9b is expected to be recovered via toll
collections within 40 years.
The project was implemented through a JV pact between MMC
Corp Berhad and Gamuda Berhad with the Department of
Irrigation and Drainage Malaysia and the Malaysian Highway
Authority as the executing government agencies.
6. Example 3: Westport
As part of the privatisation exercise by the Government in the early
90s, Port Klang was subdivided into 3 terminals now known as
Northport, Southpoint and Westports.
With a current quay length of 3.2kilometres including 5 container
terminals, Westports remain a key seaport terminal for Malaysia,
responsible for providing storage, bunkering, cargo/freight
handling and other port related facilities.
As part of the Facilitation Fund of RM20billion which will be
Example PPP Projects Completed (cont’d)
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As part of the Facilitation Fund of RM20billion which will be
provided under the 10MP to help bridge the private sector viability
gap with respect to projects that have a strategic impact and those
with huge economic spill over, land reclamation in Westport is
being considered for financing under this fund.
Example 4: Privatisation of Penang Port
The 225-year old Penang Port which was previously owned by the
Ministry of Finance was recently privatised to Seaport Terminal
Sdn Bhd.
The port has seen a drop in ranking to number five in the country
from number two in terms of throughput behind Port Klang,
Northport, Westport and Port of Tanjung Pelepas. Privatisation has
been claimed as necessary to boost the port’s competitiveness,
efficiency and ensure its long-term survival.
7. Example 5: KLIA Expres and KLIA Tansit
The KLIA Expres and Transit which commenced operations in
2002 is a daily high-speed, non-stop air-rail connection between
Kuala Lumpur International Airport (KLIA) and Kuala Lumpur
City Air Terminal (KLCAT).
Under the BOT model, the high-speed rail train is designed,
financed, constructed, operated and maintained by Express Rail
Link Sdn Bhd (ERLSB) for a concession period of 30 years. The
Concession Agreement was signed between ERLSB and the
Ministry of Transport in August 1997.
Example PPP projects (cont’d)
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Ministry of Transport in August 1997.
8. Example PPP Projects Under Construction
Example 1: Mass Rapid Transit (MRT)
This Project in Greater Kuala Lumpur (Klang Valley) is estimated
to involve private investment of RM40billion, and is the largest
infrastructure project in Malaysia. It was implemented from
beginning 2011 and expected to be completed by 2017.
The Land Public Transport Commission (LPTC) will be the
supervising and coordination agency, while project and asset
owner Prasarana has appointed RapidKL as the system operator
and MMCG JV as the project delivery partner. The Ministry of
Finance is to set up a special purpose vehicle company as the
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Example 2: Electrified Double Track Ipoh-Padang
Besar project
The Electrified Double Track Ipoh-Padang Besar project is a 329-
km northern railway project that integrates with Keretapi Tanah
Melayu’s (KTM) main line from Ipoh to Johor Bahru. When
completed in 2013, the entire electrified dual tracks will stretch
968-km from south to north of Peninsular Malaysia.
MMC-Gamuda Joint Venture Sdn Bhd is a joint venture company
between MMC Corporation Berhad and Gamuda Berhad charged
with construction of infrastructure works, track and system works
of the the Electrified Double Track Project on a 5-year Design and
Build Contract.
Finance is to set up a special purpose vehicle company as the
infrastructure’s funding entity.
9. Example PPP Projects Under Construction (cont’d)
Example 3: Perdana University
One of the recent most highlighted PPP projects in Malaysia, this is a
RM2billion PPP project involving the tie-up betweenPerdana
University with John Hopkins University School of Medicine (JHU)
and the Royal College of Surgeon Ireland (RCSI)
The project was initiated by the public-private partnership at the
Prime Minister’s Department and Academic Medical Sdn Bhd (AMC).
Two agreements, between AMC and the JHU and John Hopkins
Medicine International, and another formalising the collaboration
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Medicine International, and another formalising the collaboration
between AMC and RCSI were signed last year.
Example 4: International Islamic University
Malaysia (IIUM) teaching hospital
The project will be developed by Ahmad Zaki Resource’s Berhad
(AZRB), a wholly-owned subsidiary of Peninsular Medical Sdn
Bhd (PenMedic) upon signing of the concession agreement
between IIUM and AZRB.
The first hospital to be funded and built under the government’s
private financing initiative (PFI), the project is expected to cost
around RM413m. It comes with a concession period of 25 years
including three years and six months for construction, under a
design, build, lease, maintain and transfer basis.
10. Example 5: Combined-cycle gas power plant in
Kimanis, Sabah
The objective of this 300-megawatt power plant is to increase
electricity generation capacity to meet rising demand . Once
completed, the Kimanis Power Plant will be the biggest IPP plant
in Sabah.
The power plant costs about RM1.5billion to build and it is owned
by Kimanis Power Sdn Bhd (KPSB), a 60:40 joint venture initiative
between Petronas Gas Berhad and NRG Consortium (Sabah) Sdn
Bhd, a company underYayasan Sabah.
Example PPP Projects Under Construction (cont’d)
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Bhd, a company underYayasan Sabah.
11. Example PPP projects in Planning Stage
Example 1: West Coast Expressway (WCE)
In January 2012, KumpulanEuroplus Bhd has been awarded a
60-year concession by the Public Private Partnership Unit of the
Prime Minister’s Department to build the West Coast
Expressway from Banting, Selangor, to Taiping, Perak, at a cost
of RM7.07 billion.
The 316km road project will be undertaken on a Build, Operate,
Transfer basis by Europlus’s 64% owned subsidiary, West Coast
Expressway Sdn Bhd, and will be backed by a government
support loan of RM2.24billion .
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support loan of RM2.24billion .
Example 2: Kuala Lumpur International Financial
District (KLIFD)
The KLIFD is a key enabler to strengthen the position of Kuala
Lumpur as the global financial city of choice, transforming Kuala
Lumpur into an international hub for banking and finance as well
as related professional services.
Valued at RM26billion, this project have been implemented from
2011 by 1Malaysia Development Berhad (1MDB) in collaboration
with Mubadala Development Company, an investment arm of the
Government of Abu Dhabi.
12. PwC Contact Details
Andrew CHAN Yik Hong
Executive Director
andrew.yh.chan@my.pwc.com
T: +60 (3) 2173 1219
PricewaterhouseCoopers
Capital Sdn. Bhd.
Level 10, 1 Sentral, Jalan Travers
Kuala Lumpur Sentral
P O Box 10192
50706 Kuala Lumpur, Malaysia
www.pwc.com/my
T: +60 3 2173 1188
F: +60 3 2173 1288
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Kay-Li KIM
Associate Director
kay-li.kim@my.pwc.com
T: +60 (3) 2173 1286
PwC
