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Public Private Partnerships
in Malaysia
12 September 2012
www.pwc.com
Background of PPP in Malaysia
“One form or another of PPP
existed since the 1980s as a
result of the world economic
recess...
Background of PPP in Malaysia (cont’d)
Early major projects from inception
Infrastructure Early major projects
Roads 23 BO...
Background of PPP in Malaysia (cont’d)
Recent and upcoming PPP projects (2011 – 2015)
Sector Recent/Upcoming projects base...
Example PPP Projects Completed
Example 1: PLUS Expressways
PLUS Malaysia Berhad operates and maintains 973-kilometre
lengt...
Example 3: Westport
As part of the privatisation exercise by the Government in the early
90s, Port Klang was subdivided in...
Example 5: KLIA Expres and KLIA Tansit
The KLIA Expres and Transit which commenced operations in
2002 is a daily high-spee...
Example PPP Projects Under Construction
Example 1: Mass Rapid Transit (MRT)
This Project in Greater Kuala Lumpur (Klang Va...
Example PPP Projects Under Construction (cont’d)
Example 3: Perdana University
One of the recent most highlighted PPP proj...
Example 5: Combined-cycle gas power plant in
Kimanis, Sabah
The objective of this 300-megawatt power plant is to increase
...
Example PPP projects in Planning Stage
Example 1: West Coast Expressway (WCE)
In January 2012, KumpulanEuroplus Bhd has be...
PwC Contact Details
Andrew CHAN Yik Hong
Executive Director
andrew.yh.chan@my.pwc.com
T: +60 (3) 2173 1219
Pricewaterhouse...
Thank you
PwC
13
This publication has been prepared for general guidance on matters of interest only, and does not constit...
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Ppp projects-in-malaysia

ppp projects in malaysia

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Ppp projects-in-malaysia

  1. 1. Public Private Partnerships in Malaysia 12 September 2012 www.pwc.com
  2. 2. Background of PPP in Malaysia “One form or another of PPP existed since the 1980s as a result of the world economic recession that caused the Government to seek assistance from the private sector” Under the 9th Malaysia Plan, the Government officially announced the implementation of public projects using the Public Private Partnership (PPP) or Private Finance Initiative (PFI) scheme. In 2009, a new unit under the Prime Minister’s Department known as Privatisation and Private Finance Initiative Unit –PFI (currently known as Public Private Partnership - 3PU) was established . 3PU is the core agency with the responsibility to coordinate the Privatisation and the Public-Private Partnership (PPP) projects The Malaysian Incorporated Policy (1981) Privatisation Policy (1983) Guidelines on Privatisation (1985) Privatisation Master Plan (1991) PwC 2 3PU is the core agency with the responsibility to coordinate the Privatisation and the Public-Private Partnership (PPP) projects which have made an impact to the country’s economy. Must make government projects more efficient with risk and rewards optimally shared between the two parties To be used where government support enhances viability of private sector projects in strategic or promoted areas Two formats for PPP: Private sector construct assets/building and lease to Government for a specified fixed period Private sector identify projects that are deemed economically viable and would benefit the public to be executed via PPP scheme At present, the Government is undertaking 52 projects in the construction stage with an estimated value of RM62.7b. In line with the Government’s new approach based on the new economic model in the 10th Malaysia Plan, the Government is encouraging the private sector to invest in development project whether through PPP or through direct investment of the private sector in the country’s development programme. The key themes of the current 10th Malaysia Plan PPP initiative center around: • Improvement of basic infrastructure • Upgrading of public transportation in Greater KL Source: The Star Online, 2006 Two conditions for PPP:
  3. 3. Background of PPP in Malaysia (cont’d) Early major projects from inception Infrastructure Early major projects Roads 23 BOT*-style projects let between 1985 and 1997, usually with 25-year concessions Ports 2 BOOT*-style projects in 1993 and 1995 3 Lease-sale projects in 1986, 1992 and 1994 3 Corporatisations in 1993 and 1994 LocalAirports 19 Airports and 12 short take-off and landing ports under operation and management licences (1992) , normally with 30-year concessions PwC International Airport 1 (Kuala Lumpur) under operation and management licence (1998), with a 50-year concession Power 5 BOT-style projects let in 1995 – 1997, with 21-year power purchase agreements Water Supply 3 BOT-style projects let in 1987 – 1989 2 Corporatisations in 1994 Sewerage 1 BOT-style project (1992**), with 28-year concession Rail 3 BOOT-style projects (1992 – 1994, 2002)** with 60 + 60 year concessions Source: Australian Journal of Public Administration, Development and Distortion of Malaysian Public-Private Partnerships – Patronage, Privatised Profits and Pitfalls (2010) * BOT – Build, Operate and Transfer BOOT – Build, Operate, Own and Transfer ** The sewerage and three rail projects were subsequently re-nationalised 3
  4. 4. Background of PPP in Malaysia (cont’d) Recent and upcoming PPP projects (2011 – 2015) Sector Recent/Upcoming projects based on 10th Malaysia Plan 2011 – 2015 Roads Seven highway projects amounting to an estimated RM19billion, including: • West Coast Expressway • Guthrie-Damansara Expressway • SungaiJuru Expressway • Paroi-Senawang-KLIA Expressway • Ampang-Cheras-Pandan Elevated Highway Rail and Transport • Integrated TransportTerminal in Gombak, Selangor • Mass Rapid Transit (MRT) project in Greater Kuala Lumpur (RM40billion) • Kuala Lumpur – Singapore High Speed Rail of 400km (RM18.6billion – currently in feasibility stage) PwC • East Coast Rail Route (RM29 billion – currently in feasibility stage) Power • Two coal electricity generation plants (RM7billion) • 300-megawatt Combined-Cycle Gas Power Plant in Kimanis, Sabah (RM1.5billion) • Construction of the liquefied natural gas regassification by Petronas in Melaka (RM3billion) Education • Perdana University, a joint venture between Academic Medical Centre Sdn Bhd and John Hopkins Medicine International as well as Royal College of Surgeons Ireland (RM2billion) • Five Universiti Teknologi MARA (UITM) branch campuses • International Islamic University Malaysia Teaching Hospital in Kuantan (RM413million) Port • Privatisationof Penang Port Sdn Bhd Others • Development of Malaysian Rubber Board’s 3,300 acre land in Sungai Buloh, Selangor (RM10billion) • Redevelopment of the Angkasapuri Complex Kuala Lumpur as Media City • Kuala Lumpur Strategic Development by 1MDB; Sungai Besi Airport area • KL International Financial District in Kuala Lumpur (RM26 billion) • Two aluminium smelters in Sarawak Corridor of Renewable Energy (SCORE) Source: Utusan Online, 2010 4
  5. 5. Example PPP Projects Completed Example 1: PLUS Expressways PLUS Malaysia Berhad operates and maintains 973-kilometre length of inter-urban expressways in Peninsular Malaysia, including the North-South Expressway (NSE) stretching from the border of Thailand to Singapore and others including the Expressway Lingkaran Tengah (NSECL) linking Kuala Lumpur to the Kuala Lumpur International Airport (KLIA), the Malaysia- Singapore Second Crossing (MSSC), and the Penang Bridge linking Penang Island to the mainland Peninsular Malaysia. It is the first expressway to be implemented via PPP using the Build PwC 5 It is the first expressway to be implemented via PPP using the Build Operate Transfer model in Malaysia. It was completed in 1988. Example 2: Stormwater Management and Road Tunnel (SMART) SMART is an initiative by the Government to alleviate the flooding problem in the KL city centre as well as being a traffic dispersal scheme. The project was completed in 2007 and the construction cost of RM1.9b is expected to be recovered via toll collections within 40 years. The project was implemented through a JV pact between MMC Corp Berhad and Gamuda Berhad with the Department of Irrigation and Drainage Malaysia and the Malaysian Highway Authority as the executing government agencies.
  6. 6. Example 3: Westport As part of the privatisation exercise by the Government in the early 90s, Port Klang was subdivided into 3 terminals now known as Northport, Southpoint and Westports. With a current quay length of 3.2kilometres including 5 container terminals, Westports remain a key seaport terminal for Malaysia, responsible for providing storage, bunkering, cargo/freight handling and other port related facilities. As part of the Facilitation Fund of RM20billion which will be Example PPP Projects Completed (cont’d) PwC 6 As part of the Facilitation Fund of RM20billion which will be provided under the 10MP to help bridge the private sector viability gap with respect to projects that have a strategic impact and those with huge economic spill over, land reclamation in Westport is being considered for financing under this fund. Example 4: Privatisation of Penang Port The 225-year old Penang Port which was previously owned by the Ministry of Finance was recently privatised to Seaport Terminal Sdn Bhd. The port has seen a drop in ranking to number five in the country from number two in terms of throughput behind Port Klang, Northport, Westport and Port of Tanjung Pelepas. Privatisation has been claimed as necessary to boost the port’s competitiveness, efficiency and ensure its long-term survival.
  7. 7. Example 5: KLIA Expres and KLIA Tansit The KLIA Expres and Transit which commenced operations in 2002 is a daily high-speed, non-stop air-rail connection between Kuala Lumpur International Airport (KLIA) and Kuala Lumpur City Air Terminal (KLCAT). Under the BOT model, the high-speed rail train is designed, financed, constructed, operated and maintained by Express Rail Link Sdn Bhd (ERLSB) for a concession period of 30 years. The Concession Agreement was signed between ERLSB and the Ministry of Transport in August 1997. Example PPP projects (cont’d) PwC 7 Ministry of Transport in August 1997.
  8. 8. Example PPP Projects Under Construction Example 1: Mass Rapid Transit (MRT) This Project in Greater Kuala Lumpur (Klang Valley) is estimated to involve private investment of RM40billion, and is the largest infrastructure project in Malaysia. It was implemented from beginning 2011 and expected to be completed by 2017. The Land Public Transport Commission (LPTC) will be the supervising and coordination agency, while project and asset owner Prasarana has appointed RapidKL as the system operator and MMCG JV as the project delivery partner. The Ministry of Finance is to set up a special purpose vehicle company as the PwC 8 Example 2: Electrified Double Track Ipoh-Padang Besar project The Electrified Double Track Ipoh-Padang Besar project is a 329- km northern railway project that integrates with Keretapi Tanah Melayu’s (KTM) main line from Ipoh to Johor Bahru. When completed in 2013, the entire electrified dual tracks will stretch 968-km from south to north of Peninsular Malaysia. MMC-Gamuda Joint Venture Sdn Bhd is a joint venture company between MMC Corporation Berhad and Gamuda Berhad charged with construction of infrastructure works, track and system works of the the Electrified Double Track Project on a 5-year Design and Build Contract. Finance is to set up a special purpose vehicle company as the infrastructure’s funding entity.
  9. 9. Example PPP Projects Under Construction (cont’d) Example 3: Perdana University One of the recent most highlighted PPP projects in Malaysia, this is a RM2billion PPP project involving the tie-up betweenPerdana University with John Hopkins University School of Medicine (JHU) and the Royal College of Surgeon Ireland (RCSI) The project was initiated by the public-private partnership at the Prime Minister’s Department and Academic Medical Sdn Bhd (AMC). Two agreements, between AMC and the JHU and John Hopkins Medicine International, and another formalising the collaboration PwC 9 Medicine International, and another formalising the collaboration between AMC and RCSI were signed last year. Example 4: International Islamic University Malaysia (IIUM) teaching hospital The project will be developed by Ahmad Zaki Resource’s Berhad (AZRB), a wholly-owned subsidiary of Peninsular Medical Sdn Bhd (PenMedic) upon signing of the concession agreement between IIUM and AZRB. The first hospital to be funded and built under the government’s private financing initiative (PFI), the project is expected to cost around RM413m. It comes with a concession period of 25 years including three years and six months for construction, under a design, build, lease, maintain and transfer basis.
  10. 10. Example 5: Combined-cycle gas power plant in Kimanis, Sabah The objective of this 300-megawatt power plant is to increase electricity generation capacity to meet rising demand . Once completed, the Kimanis Power Plant will be the biggest IPP plant in Sabah. The power plant costs about RM1.5billion to build and it is owned by Kimanis Power Sdn Bhd (KPSB), a 60:40 joint venture initiative between Petronas Gas Berhad and NRG Consortium (Sabah) Sdn Bhd, a company underYayasan Sabah. Example PPP Projects Under Construction (cont’d) PwC 10 Bhd, a company underYayasan Sabah.
  11. 11. Example PPP projects in Planning Stage Example 1: West Coast Expressway (WCE) In January 2012, KumpulanEuroplus Bhd has been awarded a 60-year concession by the Public Private Partnership Unit of the Prime Minister’s Department to build the West Coast Expressway from Banting, Selangor, to Taiping, Perak, at a cost of RM7.07 billion. The 316km road project will be undertaken on a Build, Operate, Transfer basis by Europlus’s 64% owned subsidiary, West Coast Expressway Sdn Bhd, and will be backed by a government support loan of RM2.24billion . PwC 11 support loan of RM2.24billion . Example 2: Kuala Lumpur International Financial District (KLIFD) The KLIFD is a key enabler to strengthen the position of Kuala Lumpur as the global financial city of choice, transforming Kuala Lumpur into an international hub for banking and finance as well as related professional services. Valued at RM26billion, this project have been implemented from 2011 by 1Malaysia Development Berhad (1MDB) in collaboration with Mubadala Development Company, an investment arm of the Government of Abu Dhabi.
  12. 12. PwC Contact Details Andrew CHAN Yik Hong Executive Director andrew.yh.chan@my.pwc.com T: +60 (3) 2173 1219 PricewaterhouseCoopers Capital Sdn. Bhd. Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral P O Box 10192 50706 Kuala Lumpur, Malaysia www.pwc.com/my T: +60 3 2173 1188 F: +60 3 2173 1288 12 Kay-Li KIM Associate Director kay-li.kim@my.pwc.com T: +60 (3) 2173 1286 PwC
  13. 13. Thank you PwC 13 This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Capital Sdn Bhd, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequencesof you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. PwC firms provide industry focused assurance, tax and advisory services to enhance value for their clients. More than 169,000 people in 158 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspective and practical advice. See pwc.com/my for more information. © 2012 PricewaterhouseCoopers Capital Sdn Bhd. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia each of which is a separate and independent legal entity.

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