How it actually works - Private Finance Initiative (PFI) procurement process in Malaysia: A comparative analysis of practices with the United Kingdom

Private Finance Initiative (PFI) offers an alternative to the conventional procurement of public service infrastructure. Originated form the United Kingdom (UK) from its public sector reforms, it has since been widely used in many countries such as Japan, Italy and France. The Malaysian government in the past six years has officially announced the adoption of PFI for its construction and infrastructure projects in order to promote greater involvement of the private sector in delivering public services. This paper aims at exploring the true nature of the Malaysian adoption of PFI, against the British experience; by extensive literature review of the official documents published by government bodies and government-link organisations in relation to the implementation of PFI for both countries. To support the literature findings, interview sessions were conducted with Malaysian government agencies where PFI is engaged. Empirical analysis indicates that Malaysia has a unique model of PFI, where it differs from UK in terms of its definition, financing system, and risks allocation. This paper hopes to supplement and improve knowledge in the management of PFI projects in Malaysia, primarily on the possible improvements that could be executed in strengthening PFI implementations in Malaysia by learning from the UK experience.