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There is tremendous potential for public-private partnerships (PPPs) in the Organisation of Islamic Cooperation (OIC) countries due to their extensive infrastructure needs and growing interest from private investors, despite significant challenges persisting, according to ICD-Refinitiv OIC Infrastructure Outlook 2023 report.
The PPP landscape in the 57-member-state-strong OIC is still underdeveloped compared to other regions of the world. Nevertheless, PPP has risen in prominence in the development agenda of many OIC countries in recent years, as many seek to entice private sector investment and expertise to finance and deliver public infrastructure and services.
Many OIC countries are working to improve their legal and regulatory frameworks and to build the institutional capacity needed to support PPPs. In addition, they are seeking to attract greater private investment and improve public awareness and understanding of the benefits of PPPs, which may lead to an increase in PPP activity in OIC countries in coming years, the report said.
Successful implementation
Some OIC countries, such as Malaysia, Turkey, and the United Arab Emirates, have implemented successful PPP projects in various sectors such as transportation, healthcare, energy and infrastructure.
Turkey has invested $80 billion through 257 PPP projects to date, while Malaysian PPP investments have amounted to roughly $54 billion across 126 projects.
In Indonesia, 135 PPP projects across various sectors achieved a financial close of around $63.5 billion. Kazakhstan has also seen an increase in PPP projects, with 806 projects valued at approximately $3.26 billion, mainly in the education and healthcare sectors.
According to the report, PPPs effectively transfer the life-cycle costs of infrastructure projects out of public-sector budgets while creating investable assets for the private sector.
Such partnerships are pivotal in financing infrastructure and can be deployed in various sectors such as transportation, healthcare, education, and waste management.
Achieving benefits
Given PPPs' risk-, reward- and resource-sharing nature, they can benefit both the public and private sectors through improved efficiency, reduced costs, and increased access to expertise and resources.
In order to achieve these benefits, a country can consider establishing a dedicated PPP unit or launching special PPP programmes tasked with overseeing the development, financing and management of PPP projects.
Such units or programmes can enhance the capacity of OIC governments to successfully manage the risks associated with the increasing number and value of PPPs, the ICD-Refinitiv report stated.
(Writing by P Deol; Editing by Anoop Menon)
