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1. Introduction
Many governments around the world are frustrated by their limited resources, which make it difficult for them to keep pace with the demand to both maintain their existing infrastructure and push for new development (Aziz, 2007; Jin, 2010). Adopting the public-private partnership (PPP) as a model for private participation has become one of the most popular options worldwide in addressing concern over public resource scarcity in infrastructure delivery (Dulaimi et al., 2010; Mahalingam, 2010).
Under a PPP arrangement, the private sector brings its superior resources of financial capital and know-how, enabling a better value for the money to public users. In exchange, the host government compensates the private partner with a profit commensurate with the risks faced. However, attracting the private sector to infrastructure development is not easy (Sader, 2001). Prior to making capital decisions, prospective private investors comprehensively scrutinize the PPP business environment in host countries. Host governments must also carefully determine the extent to which their environment is suitable for the successful implementation of PPP projects.
This paper aims to identify Indonesian government-led critical success factors (CSFs) at the meso and micro levels, to measure their importance, and to prioritize factors for which performance needs improvement. The rationale for this emphasis is that governments play pivotal roles to ensure successful PPP infrastructure development (Kumaraswamy and Zhang, 2001). Like a tango, it takes two to “PPP”; however, beyond the visual impression of harmony, two partners – governments and private sector investors – are not altogether equal when one is always leading the other (Namblard, 2000). The role of lead must be held by governments, specifically, because they hold the ultimate responsibility for infrastructure service provisions.
In the present paper, meso-level factors and micro-level factors are defined as those factors specific to PPP business areas and project activities, respectively, and are fully under the control of the government. Other factors that affect economies as a whole, such as general investment climate (e.g. macro economic and political stability), considered to be macro-level factors, are beyond the scope of this paper and will be discussed elsewhere. To the best of our knowledge, this paper is the first report attempting to narrowly explore government-controlled CSFs in PPP development, at least in the case of Indonesia....