A study on the implementation of Public-Private Partnership (PPP) in the socio-economic, political, cultural and Islamic context of Indonesia

Abstract

Public-Private Partnership (PPP), as an arrangement to involve the private sector in the provision of public services, has been extensively adopted in both developed and developing countries. However, the adoption of PPP in developing countries is believed to be more challenging as it encounters unique local contexts. Accordingly, this research aims to explore the implementation of Public-Private Partnership (PPP) in Indonesia by seeing PPP as a
practice situated by local settings that relate to socio-economic, political, cultural and religious contexts of Indonesia. Specific attention is paid to the process of PPP diffusion, the development of PPP rationales and the evolution of PPP.
To investigate such issues, this study employs an open interpretive methodology, in which a grounded approach is used to extract findings and potential theories from the data. Qualitative methods are employed to collect and analyse the data. Accordingly, the research conducts in-depth interviews with 25 officials of the Indonesian government, international financial institutions and PPP consultants. In addition, to enrich the analysis and complement the main approach, the research also uses quantitative methods to take and analyse a survey involving more than 100 stakeholders of PPP in Indonesia.
Key findings on PPP diffusion suggest the central role of the international financial institutions, notably the World Bank, in introducing PPP to Indonesia, facilitated by other channels such as the international community and local actors with Western educational backgrounds. In such a way, the diffusion may occur voluntarily, but it may also be coercive in that Indonesia is driven by conditions obligated by international agencies. On PPP
rationales, the findings show that although the lack of government capacity to finance infrastructure provision is developed as the main government rhetoric in adopting PPP, other motives are revealed for implementing PPP. These motives include non-economic motivations such as maintaining access to donor agencies and exploiting benefits directed to personal and political interests. Moreover, findings on PPP evolution suggest that the
Indonesian local setting has transformed PPP in Indonesia from a “sector issue” to a “reform issue”, a “planning issue” and, more recently, a “financing issue”.
The research contributes to the PPP literature by offering a new framework to study the implementation of PPP, through which a thick description can be provided to show how PPP is both shaped by and shapes its socio-economic, political, cultural and religious settings,
suggesting a number of unique characteristics of PPP implementation in Indonesia.