Private finance initiative (PFI) and privatisation in the Malaysian infrastructure projects: a conceptual review

Abstract

Private Finance Initiative (PFI) is a way of creating Public-Finance Partnerships (PPPs) by funding public infrastructure projects with private capital, whilst privatisation is defined as the transfer of activities and function of public sectors to the private sector that only applies to the government enterprise and the implementation of new project by public sector. Although the demand of PFI and privatisation is significantly increasing for the better quality of work and valuefor money from public sector and private sector, they are facing challenges of restructuring of the national economic and financing. In addition, the insufficient guidelines on how both PFI and privatisation should be dissimilarly implemented plus with limited fund by the public sector and financing problem by the private sector have reduced the services and the efforts of ideally implementing both the PFI and privatisation in the Malaysian infrastructure projects. Hence, this paper aims at theoretically reviewing the differences of implementation between PFI and privatisation in the Malaysian infrastructure project. It is expected that the findings of this study will propose proper guidelines of the different implementation between PFI and privatisation for infrastructure projects in better managing PFI and privatisation in the Malaysian construction industry. The findings are in line with National Key Result Areas (NKRA) to achieve the on-time delivery of construction projects, create opportunity of financial and business services where the Malaysian construction industry will positively develop and become one of the best-performance industries via on-time delivery of infrastructure projects.