Risk Management in Transport PPP Projects
In the Islamic Countries
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Infrastructure development priority has been reflected in the Malaysian planning which has a
hierarchical structure, from long-term to medium-term and lastly short-term plans. The long-
term visions inform the priorities of the ten-year plans which, in turn, define the strategic
guidelines of the five-year plans. The latter finally determines which projects receive funding in
the annual budgets.
In 1991 the current long-term strategic plan was defined, Vision 2020, which aimed at
transforming Malaysia into an industrialized and fully developed country by 2020. This strategy
identified the crucial role that sound infrastructures would play in achieving this goal.
The five-years economic plans (known as Malaysia Plans) represented the vital steps towards
the enhancement of PPP projects in Malaysia for infrastructure development.
In particular, under the Ninth Malaysia Plan (2006-2010), the Private Finance Initiative (PFI)
approach was introduced by the government as an alternative procurement method for the
public sector in the development and maintenance of infrastructures and other facilities. In
particular, PFI was defined as: ‘ the transfer to the private sector of the responsibility to finance
and manage a package of capital investment and services including the construction, management,
maintenance, refurbishment and replacement of the public sector assets which creates a
standalone business. The private sector will create the asset and deliver a service to the public
sector client. In return, the private sector will receive payment commensurate with the levels,
quality and timeliness of the service provision throughout the concession period ’. The Ninth
Malaysia Plan brought about another important novelty: the idea of developing economic
corridors as a vehicle for achieving balanced growth. In the Mid-Term Review of the Ninth Plan
(2008), five corridors were announced. They currently constitute the Malaysian strategy to push
forward the country's economic growth through PPP.
In the Tenth Malaysia Plan (2011-2015), the government increased its effort in encouraging
the private sector investment in various infrastructure sectors, such as transport, through the
reduction of the government's allocation for development projects while shifting the attention
to projects that will be implemented and funded by the private sector through Privatization and
Public-Private Partnerships (PPP). In the framework of this plan, the government also set up a
facilitation fund in order to support development projects implemented by the private sector
also through PPP projects. In fact, according to Malaysian PPP framework, the government is not
expected to provide funding support such as guaranties or loans to PPP projects (although it
happened in some cases).