Question

On private-public partnership, Would you recommend internal development, strategic alliances/joint ventures, or acquisition as the means to achieve this diversification? Provide reference

Answer 1

I will recommend strategic alliances/joint ventures to achieve the benefits of Public private partnership and achieve the diversification. This is due to the common findings that private players being part of PPP (Public private partnership) projects have obtained a rate of return which was higher than the typical government bond yields, even though most of the risk was associated with public sector. Another common problem found in PPP projects is the rigidity of contracts leaving either player with limited flexibility.

Typically used by governments and public agencies which are fund strapped, invite private players to partner for completing a major project. Thus, when PPP projects are run in joint venture or strategic alliance, it will bring both public agency as well as private firm on par in covering project risk, project execution and contract framing. Joint ventures also allow to set up as special purpose vehicles to allow governments to provide more powers to the agency executing that specific project rather than going through typical bureaucratic route.