Annual Activity Report(From April 2018 to March 2019)

Asia PPP Institute (APPPI)TOYO University

Organization of Asia PPP Institute (APPPI)
Honorary Advisors
Dr. Mahathir bin Mohamad, the fourth Prime Minister of Malaysia
Dr. Yasuko Fukuda, the ninety-first Prime Minister of Japan

Evaluation Committee Members
Dr. Robert Orr, the former US Ambassador to ADB
Dr. Frank Schnidman, the former professor at FAU in the US
Dr. Khairuddin Abdul Rashid, the former professor at IIUM in Malaysia

Staff
Director: Prof. Sam Tabuchi, Professor of Toyo University, Vice-chair of the Executive
Board to UN PPP Team of Specialists under UNECE (The United Nations Economic
Commission for Europe)
Senior Staff: Fumiyo Takai

APPPI Members (FY2018)<In Japan>-

Kitakyusyu City, Fukuoka Prefecture-

Eight-Japan Engineering Consultants Inc.

-

Toyama City, Toyama Prefecture<Overseas>-

Butuan City, the Philippines-

Iriga City, the Philippines-

Cebu Province, the Philippnes

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Table of Contents

I.

Executive Summary ............................................................................................................ 4II.

APPPI Activities from April 2018 to March 2019 .............................................................. 5
1.

Regional Development Advisory Program (RDAP) /PPP Applicability Study ................... 5
1)

2.

JICA Policy Recommendation Research Program on PPP in Indonesia: .................... 5
PPP short-term seminars .................................................................................................. 91)

PPP seminar for the Ministry of Finance from South Africa in Tokyo ............................ 92)

PPP seminar for the local government officials in Cebu Province, the Philippines .... 10

3.

Other Activities ................................................................................................................. 11
1)

Attending the UNECE International PPP Forum ......................................................... 11

2)

Attending a PPP workshop organized by Korean Architecture and Urban ResearchInstitute in Seoul and Sejong, South Korea......................................................................... 113)

PPP Applicability Study on Agriculture in Indonesia .................................................... 124)

APPPI Open Seminars ................................................................................................ 13

III. Comments and Advises from APPPI Evaluation Committee Members...................... 15
IV. APPPI Activity Plan in 2019 and onward ........................................................................ 16
Appendix 1: Major Activities from September 2011 to March 2019 .................................... 17
Appendix 2: APPPI’s Network ................................................................................................. 19

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I.

Executive Summary

Since its establishment in 2011, APPPI has been continuing to grow with faith in goingahead with the mission to be a global driver to promote a notion of PPP frameworks and
PPP-based business development across Asia. Its activities have been broadening steadily
among APPPI target countries. While this year marks the 7th year of its foundation, themain activities in FY2018 are as follows;
The director of APPPI, Prof. Sam Tabuchi, became the co-chair of UNECEInternational PPP Forum.
Based on the three-year contract between Toyo University and JICA on Policy
Recommendation Research for Promoting PPP at local governments in Indonesia, 4field researches were conducted and final research report was submitted.
Two PPP Seminars were conducted; one for the Ministry of Finance from South Africa
in Otemachi, Japan and another for local government staff in Cebu Province, thePhilippines
Three field visits were conducted for PPP applicability study on Agriculture inIndonesia and the findings were presented to the Ministry of Agriculture and
BAPPENAS.
Three APPPI Open Seminars were conducted

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II.

APPPI Activities from April 2018 to March 2019

1. Regional Development Advisory Program (RDAP) /PPP Applicability Study
1) JICA Policy Recommendation Research Program on PPP in Indonesia:
This research was conducted between August 2016 and March 2019 based on athree-year contract between JICA and Toyo University. It aimed to make policy
recommendations for promoting PPP at local governments in Indonesia, by identifying
bottlenecks and contributing to the capacity development of local government officials
on PPP.
The main objective of the 1st year (FY2016) was to identify the factors which wereidentified as bottlenecks to PPP projects, particularly in local governments. We carriedout field surveys in September 2016 and March 2017, and visited several municipalities
in East Java Province and East Nusa Tenggara Province to conduct interviews with therelevant parties. Based on these interviews and the results of the field surveys, we (1)identified challenges related to the implementation of certain specific projects; (2)identified and investigated the institutional issues related to the implementation of PPP
projects by municipalities in general; (3) studied the perspectives for economic
development using PPP methods. In order to make our research practical, we decided
to follow two PPP project planning processes of the Sidoarjo Regency in East Java
Province: Krian Hospital Project and Government Office Consolidation Project.
In the 2nd year (FY2017), we conducted two field researches in September 2017 andMarch 2018, in order to follow up on the above two PPP projects in the planning stage
at the Sidoarjo Regency. In addition, we invited the Sidoarjo Regency officials, including
the Regent and the Congressmen, as well as the central government officials from
MOF, IIGF and PT. SMI to Japan for PPP seminars and site visits in Japan.
In the final year (FY2018), we conducted three field researches in May, September andNovember 2018 and submitted our findings as the final report to JICA in March 2019.

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The following describes the details of each field trip conducted in this financial year
(FY2018).

<The 5th Field Visit: May 1st to 4th, 2018>
We visited the Sidoarjo Regency to follow up on the project planning process of the
Krian Hospital Project. The Regency officials explained to us that the Congressmen felt
enough research was not undertaken whether the project should go under PPP,
conventional way (a pure public project), or utilizing a local loan. This caused the delay
in obtaining permission from the Congress.
As for the Government Office Consolidation Project, we visited several private realestate developers to find out the market price range of commercial premises. In
addition, we had interviews with the Regency’s Tax and Asset Management Office toexchange opinions over effective PRE (Public Real Estates) and obtain recent
information on land sales data and tax (NJOP) calculations in Sidoarjo.

<The 6th Field Visit: September 8th to 13th, 2018>
According to BAPPENAS (Indonesian Ministry of National Development Planning), a
total of 56 projects were categorized as PPP pipeline projects in Indonesia. Out of 56
projects, 50 were solicited projects (1 under operation, 12 under construction and 37
under the preparation phase), and 6 were unsolicited projects (2 under construction
and 4 under the planning phase). Fifty (50) % of the above projects were either under
the road sector (21 cases) or the transportation sector (8 cases). As for the promotionof PPP among local governments, BAPPENAS officers explained that the lack ofconfidence in officers, who deal with PPP projects caused excessive dependency on
the central government and this prevented to establish the project ownership at the
local government level.

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Then we presented our proposal on the Government Office Consolidation Project to the
Sidoarjo Regency. About 20 officials, including the Regent and the Vice Regent,attended the presentation. Although the presentation was positively accepted, theRegency officials explained that the Congressmen possessed a negative image over
PPP due to the issues of the Krian Hospital Project.

<The 7th Field Visit: November 24th to 28th, 2018>
We visited Bandar Lampung Water Supply PPP Project, which entered the construction
phase from October 2018. This project is under a mid-term development plan
2015-2019, which aims to supply 100% of water to the country. By implementing thisproject, Bandar Lampung city estimates to increase the water supply rate from 20.51%
to 50.04%. The project was initiated in 2009-2010 when PDAM (city owned local watersupply company) requested to the Ministry of Finance (MOF) to consider a PPP project.
Although the 1st bidding, conducted in 2015 did not succeed, due to the high water pricepresented by the private sector, the SPC was selected among 4 competitors in the 2nd
bidding in 2017. According to the interviews with the relevant stakeholders, the lessons
learned from planning this project are; 1) strong commitment is required from eachstakeholder, especially from the local government, 2) it requires at least a couple ofyears to develop proper legal systems for a new project, and 3) the government needs
to offer support or take certain risks to implement a water PPP project to encourage

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private participation.

<The 8th (Final) Field Visit: February 10th to 16th, 2019>
Firstly, we visited JICA Indonesia office to share the final findings of the research. Then
we conducted a 2-day PPP seminar for South Sumatera Provincial Government under
the cooperation with IIGF Institute in Bandung city. About 20 provincial staff, mainly
from the development planning department (BAPPEDA), participated in the training.
We shared the Japanese PPP case studies in transportation, public housing andenergy sectors, and a water supply PPP project case study in the Philippines. In
Bandung, we visited PT Kereta Api to discuss the issues on how to promote TOD(Transit Oriented Development) in Indonesia. In Surabaya we visited ITS (Sepuluh
Nopember Institute of Technology) to share the final findings of the research andexchange views on how to promote PPP to local governments in Indonesia. We also
visited the Sidoarjo Regency to follow up on the 2 PPP project planning proceedings.
As for the final findings of the research, all the stakeholders had a common recognition
that there are many PPP related authorities and it creates confusion and complexity for
local governments and the private sector as to who and where they should contact,
and there are the issues of coordination among different authorities. Regarding the longtime/ process taken for PPP project preparation, it should be completed within 5 years,
otherwise it may require starting the relevant research once again. We also exchanged
ideas how to connect the PPP planning process with the budget allocation process andthe project planning process beyond the election terms of the head of local
government.

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<Outline of the Final Report>
We prepared the final report in both Japanese and English and submitted them to JICA
as the final outcome of this 3 year research in Indonesia. The contents of the final
report are as follows: Chapter 1 describes the research purposes and the details ofeight field researches conducted by a total of 67 people. Chapter 2 outlines PPP related
laws and regulations in Indonesia. Chapter 3 analyses regulatory issues, challenges inprocess and institutional challenges in realizing PPP projects. In addition, it presents
Bandar Lampung Water Supply PPP Project as a successful case study. Chapter 4
explains our proposals of 2 PPP projects planned in the Sidoarjo Regency, East Java
Province. Finally, Chapter 5 outlines the policy recommendations to promote PPP tolocal governments in Indonesia as the conclusion.

2. PPP short-term seminars
1) PPP seminar for the Ministry of Finance from South Africa in Tokyo, Japan in June
2018
Following the PPP seminars conducted in August 2016 and May 2017, we conducted
another 1-day PPP seminar for seven central government officials from South Africa on
4th of June 2018 in Tokyo. In the seminar Prof. Tabuchi and Assoc. Prof. Namba
explained PPP concepts, PPP project appraisals, PPP structuring etc. The professors

9emphasized the importance of incentives topromote private sector participation andpresented an experience of PPP regional
platforms

in

Japan

to

promotePPPknowledge as well as local companies’
participation in PPP.

2) PPP seminar for the local government officials in Cebu Province, the Philippines inAugust 2018
We conducted a 2-day PPP seminar on 28-29 August 2018 in Cebu Province, thePhilippines. There were a total of 33 participants, mostly local government officials from
Cebu province and also from Butuan and Iriga cities that were registered as APPPI
members. On the 1st day, we delivered lectures on PPP basics, VfM outlines and risk
management. In the afternoon, we presented a PPP case study of Butuan city. On the
2nd day, we divided the participants into several groups to develop possible structures ofseveral PPP projects presented by the participants. In the afternoon, each grouppresented their work and the professors provided advice to improve the structures.

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3. Other Activities
1) Attending the UNECE International PPP Forum (May and November 2018 in Geneva) :In November 2018, the director of APPPI, Prof. Sam Tabuchi, became the co-chair of
UNECE International PPP Forum. APPPI is eager to expand its presence at theinternational conference to promote PPPs by introducing Japanese PPP cases and theactivities of Toyo PPP School. In this regard, Prof. Tabuchi and Assoc. Prof. Namba
participated in the UNECE International PPP Forum on the promotion of People FirstPPP in May and November 2018 in Geneva and made some presentations aboutsome PPP case studies and lessons learned. In addition, they visited Beijing, Chinaalong with the UNECE activities to participate in the 3rd PPP forum in China, which washeld at Tsinghua University. After the forum, they had discussion regarding how topromote the high quality infrastructure in urban railways under the UNECE committee
meeting on urban railway PPP standard development.

2) Attending a PPP workshop organized by Korean Architecture and Urban ResearchInstitute in Seoul and Sejong, South Korea (October, 2018) :We were invited to Seoul and Sejong, South
Korea to participate in a PPP workshop on the
rehabilitation of decrepit government offices,which was organized by Korean Architecture
Urban Research Institute between 16th and 18thof October 2018. On the 1st day of the workshop,
we presented PFI law, its action plans and public facility management in Japan. On the 2ndday, we shared six Japanese PFI case studies on the redevelopment of decrepit
government offices.
In South Korea, there are increasing demands in the renovation of existing government

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offices, most of which were constructed in 1970s -1980s, as they became decrepit and too
small to function in. It is calculated that 4.2 trillion South Korean won (about 410 billion
Japanese yen) is required to renovate all the government offices, which were constructed
more than 35 years ago. In this regard, PPP methods are considered to reduce thegovernment financial burden and bring private funds regarding this issue. The followings
are 4 PPP methods for PRE (Public Real Estates) in South Korea:
Table 1 Four PPP Methods for PRE in South Korea
1) Consignment development method

Public oriented method

2) Public - Private joint development method
3) Private participation development method

Private oriented method

4) Private investment method

Methods 1, 3 and 4 could be used for the redevelopment of government offices in theory.
However, certain regulations need to be changed to make the methods usable in an actual
PPP project, according to Korean Architecture and Urban Research Institute. In addition, we
observed much interest among South Korean stakeholders in the Japanese “fixed-term
land lease right” and its utilization for PPP projects.

3) PPP Applicability Study on Agriculture in Indonesia (May, September and November, 2018):
We continued a PPP applicability study on agriculture in Indonesia. During this financial
year, we conducted 3 field visits in May, September and November 2018. And in February
2019, we made presentations at the Ministry of Agriculture (MOA) and BAPPENAS
agricultural department to share the final findings from the research. Firstly at thepresentation, we explained the PPP definition and outlines, then described the positive
impact of introducing PPP in agriculture to minimize the government support and theirexcessive intervention in order to seek for sustainable agriculture in Indonesia. Secondly,
we analyzed agricultural finance. Micro finance schemes led by the initiatives of Indonesian12

government have a long history and its flexible structure and implementation experiencebased on the demands of lenders created the positive impacts on risk allocation andmitigation of small scale households, including farmers. On the other hand, themicrofinance schemes are not effective in expanding the existing businesses nor creating
new businesses. Therefore we need to establish another tool to respond to such needs. In
this regard, we proposed a possible PPP scheme on sharing and leasing of agricultural
machinery, which aims to improve the productivity of certain crops. The MOA officials
responded that a further detailed ground study is required, as the MOA implements the
distribution of agricultural machinery through UPJA (farmers groups organized by the MOA
for receiving agricultural machinery). The BAPPENAS officers pointed out that PPP in
Indonesia is defined as “cooperation between government and business entities ininfrastructure provision for the public interest” under the Presidential Regulation, thus PPP
in agricultural machinery is not applicable. We responded that there are wider PPP
schemes, which do not necessarily follow PPP laws and regulations. However, thisreminded us once again the difficulties to promote the wider concept of PPP in Indonesia.

4) APPPI Open Seminars (May and December, 2018 and January 2019):
We conducted three open seminars in May, December 2018 and January 2019. For the
1st open seminar, we invited Mr. Jun Nozawa, a visiting researcher at the Institute forInternational Trade and Investment (ITI) and who has in-depth knowledge about

13Malaysia. He explained his views on the presidential election result and the future
relationship between Japan and Malaysia after Dr. Mahathir, one of APPPI honorary
advisors was elected as the forth Prime Minister in May 2018.
In the 2nd open seminar, Prof. Tabuchi gave a lecture on the “one belt one road”
initiative of China and its relation with the UN’s SDGs from the viewpoints of how topromote the private sector oriented PPP in China as well as how to promote Japanese“quality infrastructure” initiatives overseas in December 2018. For the 3rd open seminar,
we invited Mr. Robert Orr, one of APPPI Evaluation Committee members and theformer US Ambassador to ADB. We organized a small round-table discussion to learn
about the role of the US in ADB, different
functions between ADB and AIIB and his
insights and suggestions of the “one belt one
road” initiative of China. We will continue toorganize several seminars about the latest
topics in and around Asia.

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III.

Comments and Advises from APPPI Evaluation Committee Members

The following three experts kindly accepted to be members of the APPPI Evaluation
Committee, which was planned to be established at the beginning of FY2018.
Dr. Robert Orr, the former US Ambassador to ADB
Dr. Frank Schnidman, the former professor at FAU in the US
Dr. Khairuddin Abdul Rashid, the former professor at IIUM in Malaysia
We received the following comments from the evaluation committee members. APPPI willconsider to implement the advice to improve its activities and structure.
Following information should be collected as the white paper seriesComparison of PPP regulations and systems of different countries
PPP project case studies
The UN’s PPP guidelines
It is expected that APPPI will clearly show its vision, mission and objectives on its
websiteAPPPI tries to increase its publicity by nominating well known figures as its
advisors. On the other hand, actual working members are rather limited.
It is desirable for APPPI to continue its effort to disseminate PPP knowledge andinformation through conducting PPP seminars and training. It is important to
conduct frequent field visits, especially for students and government officials inorder to gather best & failed PPP case studies.
It is recommended that APPPI should cooperate with non-profit organizations,such as NGOs/NPOs, which are active in certain areas. It is important not only forthe promotion of volunteerism, but also for human resource development,
especially among young generations.

IV.

APPPI Activity Plan in 2019 and onward

The table below shows activity plans from April 2019 to March 2020. Based on thecomments from APPPI evaluation committee members described earlier, we will plan todevelop a white paper regarding PPP case studies and/or PPP regulations and systems ofdifferent countries.

Date

APPPI Research/Study

APPPI Activity- the UNECE International PPP
Forum in Geneva

May 2018

June- JICA SDGs business researchon earthquake resilient housesin Indonesia

July- Pre-RDAP field visit to Luang
Namtha Province, Laos

August- PPP Applicability Study field visit
to Saudi Arabia

September- RDAP in Luang Namtha
Province, Laos

- APPPI Open Seminar- ULI PPP conference in the US- APPPI Open Seminar

October- International PPP Forum (ToyoUniversity)

December- the UNECE PPP Forum in Geneva

January
2019- APPPI Open Seminar

February- JICA SDGs business researchon earthquake resilient housesin Indonesia

March- Final report for JICA SDGs
business research on
earthquake resilient houses inIndonesia

16- Development of Annual ReportAppendix 1: Major Activities from September 2011 to March 2019
Date

APPPI Activity
2011

September

RDAP/PPP Applicability Study in Butuan City, the Philippines

November- Establishment of APPPI- Dr. Mahathir and Chancellor Shiokawa inaugurated as APPPI honorable
advisors
2012

January

PPP seminar held in International Islamic University Malaysia (IIUM) andKarjasama Awam Swasta (UKAS) in Malaysia

February

Prof. Tabuchi named Vice Chair of the Executive Board to UN PPP Team ofSpecialists

March

PPP seminar held in Butuan, the Philippnes

August

RDAP/PPP Applicability Study in the Republic of Kyrgyz

September

RDAP/PPP Applicability Study in Mandaue City, the Philippines
2013

February

PPP seminar held in Manila, the Philippines

April

PPP research conducted for rehabilitation of Palais des Nation (PdN)

September

PPP seminars held in the MPI and NUCE in Hanoi, Vietnam

November

PPP seminars held in Bandung and Surabaya, Indonesia
2014

February

TOYO PPP held International Academic Competition for TOUHOKU recovery

September

PPP seminar held in Japan for government officials from the Republic ofKyrgyz2015

February

RDAP/PPP Applicability Study in Cebu Province, the Philippines

March

PPP seminar held in Hanoi, Vietnam (MPI and NUCE)

August

RDAP/PPP Applicability Study in Surigao del Norte, the Philippines

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2016
February- RDAP/PPP Applicability Study in the State of Kedah, Malaysia- PPP seminar held in Ho Chi Minh, Vietnam

May

PPP seminar held for the officials of the Ministry of Finance, South Africa

June

RDAP/PPP Applicability Study findings reported to the State of Kedah officials
at the 34th JAMECA-MAJECA Joint Conference

AugustThe 1st field visit to Indonesia on JICA Policy Recommendation Research2017

February

PPP seminar held in Pretoria and Cape Town, South Africa

March- RDAP/PPP Applicability Study in Iriga City, the Philippines- The 2nd field visit to Indonesia on JICA Policy Recommendation Research

June- Meeting between Dr. Mahathir bin Mohamad and Mr. Yasuko Fukuda, APPPI
Honorary Advisors

September- The 3rd field visit to Indonesia on JICA Policy Recommendation Research

December- PPP training and site visits for the government officials from Indonesia in
Japan
2018

February- The 4th field visit to Indonesia on JICA Policy Recommendation Research

March- Follow up visit of RDAP/PPP Applicability Study in Cebu province andMandaue city, the PhilippinesMay- The 5th field visit to Indonesia on JICA Policy Recommendation Research

June- PPP seminar held for South African central government officials in Tokyo

August- PPP seminar held for local government officials in Cebu, the Philippines

September- The 6th field visit to Indonesia on JICA Policy Recommendation Research

November- The director of APPPI, Prof. Sam Tabuchi, became the co-chair of UNECEInternational PPP Forum- The 7th field visit to Indonesia on JICA Policy Recommendation Research2019

February- The 8th field visit to Indonesia on JICA Policy Recommendation Research18March- Submission of the final report for JICA Policy Recommendation Research

Appendix 2: APPPI’s Network

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