A Study of the Implementation of Private Finance Initiative (PFI) in Malaysia under Private Sector

Diow, Huey Zhi (2020) A Study of the Implementation of Private Finance Initiative (PFI) in Malaysia under Private Sector. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Private Finance Initiative (PFI) is a channel of relationship between public and private sector in voluntary and community sector. It objective is to achieve a closer partnership between public sector and private sector. PFI project such as transport infrastructure, services and education development. Furthermore, PFI involve the transfer of responsibility in term of financing and managing capital investment and services of public sector assets to private sector. Nowadays Malaysia is having a high demand in public services. However, by using conventional procurement method, large project are often been broken down into their component parts and managed separately which need to be implement sequentially due the limitations of budget. Therefore, government may need to spend tones of money on the development of public infrastructure as there are limited yet insufficient capital funding. Consequently, government use PFI to run public project to solve the current issue. This research has study the implementation of PFI in Malaysia under private sector and aim to enrich more awareness and knowledge of Malaysia parties regarding PFI. The research objectives are to study regarding PFI procurement in Malaysia and determine its benefits, critical success factor and yet solution to overcome the critical success facto in implementing PFI in Malaysia. To achieve those objective, literature review has been done and a survey questionnaire has been done toward different profession of private construction parties who involved in PFI projects. This will enhance the efficiency as the date collected are from diverse perspective of professional. Furthermore, data can be collected in large specialized population in a short time and cost efficient. From the result, the major key principle in implementing PFI in Malaysia is risk distribution. Proper allocation of risk between private sector and public sector is the major key principle in implementing PFI in Malaysia. Next, value for money is the most significant benefits voted by the public as PFI is implemented as PFI able to provide and deliver a better value of money as compare to conventional procurement method in Malaysia. Moreover, the upmost critical success factor in implementing PFI in Malaysia is due to allocation of risk between private sector and public sector. Any misallocation of risk may cause negative impact toward the project completion. Furthermore, the best solution to overcome those critical success factor is by having a strong private consortium. The characteristic of a strong private consortium consist of well structure, competent and financially capable as it will lead to a success in PFI projects. In addition, this research able to contribute towards the construction industry with better understanding toward PFI and able to enhance the development of public infrastructure. The implication of study is to increase the awareness of private sector to encourage more private sector parties to participate in PFI projects.