The Acceptability of Private Finance Initiative (PFI) Scheme in Malaysia

Abstract

Today’s competitive global environment has led governments around the world to seek new ways to finance projects, build infrastructure and deliver services. Private Finance Initiative (PFI) is increasingly being used as a tool to bring together the strengths of both sectors, public and private to facilitate the delivery of projects and services. However, the new PFI Scheme introduced by the Government of Malaysia through the Ninth Malaysia-Plan in the delivery of public infrastructure is subject to criticisms, in particular when the Employees Provident Fund (EPF) was used as a main source of project financing. The study presented in this paper investigates the acceptability of PFI in Malaysia, taking into consideration factors contributing to success, negative factors, and key differences between PFI and the traditional forms of procurement. Empirical research was undertaken based on a questionnaire survey to public and private sectors in Malaysia. In total 60, valid responses were received, constituting a response rate of 45 per cent. The results were analysed by means of various statistical methods. The study disclosed that 97 percent (public) strongly disagree that EPF was the main source of project financing in implementing PFI projects in Malaysia