Risk Mitigation Strategy for Public Private Partnership (PPP) of Airport Infrastructure Development Projects in Indonesia

Abstract

The capacity of the Government of Indonesia to grow the country to be developed country in 2025 as mentioned in The Master Plan for Acceleration and Expansion of Indonesia's Economic Development (abbreviated MP3EI) faces many challenges, one of them is financial capacity. Huge archipelago like Indonesia needs to be connected by good infrastructure, especially airport, and it’s needed a big amount of money that the government still can afford it. The government realizes the limitation in funding the infrastructure needs. The government comes with the concept to form the cooperation with private sectors as known as a Public Private Partnership (PPP). The national planning agency in Indonesia for PPP planning and implementation issues the PPP book to provide potential investors the information on available infrastructure investment in Indonesia. Project listed in PPP Book are results of rigorous review and screening process by national planning agency. The projects are organized into potential projects, prospective projects, and ready to offer projects. The airport projects obtain the potential income from international flights and the forecast of passengers becomes the main factor in increasing the development of infrastructure. The PPP schemes is expected to fulfill the financial problems in infrastructure service providing. However, the private participation is expected not only to fill the funding but also to share experience and knowledge in the development, operation, and management of qualified infrastructure service. Therefore, the aim of the study is to develop risk mitigation strategy for airport infrastructure development projects and expected to be problem solving for the lack of succession of PPP and can be a solution for acceleration of infrastructure development in Indonesia. The research study was conducted by collecting data at several airports in Indonesia. The data used were primary and secondary data. The primary based upon field survey, while secondary according to the study on the various literatures of the success with the implementation of PPP in Indonesia and abroad. The findings and recommendations for the study are risk response and risk strategy in order to address of each risk that already identified. Risk response can be: Retention, Avoidance, Reduction, or Transfer.