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Failure reasons of PPP infrastructure projects: case study of Kuala Lumpur LRT Project

Abdul Rahman, Ismail and Memon, Aftab Hameed and Mohd Zulkifli, Nora Sheda (2014) Failure reasons of PPP infrastructure projects: case study of Kuala Lumpur LRT Project. Life Science Journal, 11 (7). pp. 238-246. ISSN 1097-8135

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Abstract

PPP is an alternative procurement method being adopted for public infrastructure development worldwide. In PPP method, public sector invites private agencies to bring their capital and technical assets for executing public projects. PPP is being popularized worldwide for its potential benefits. However, a number of projects with PPP process are failed in achieving the target in many countries. In Malaysia also, nowadays, Public-private partnership (PPP) has been widely used in large scale infrastructure projects. PPP is considered as derivative of privatization concept in Malaysian context. The success and failure of PPP project depends on the performance of both public and private sectors. Thus, in order to achieve successful projects, it is very imperative that the role and performance of the two sectors be clearly identified and studied. Further, for achieving successful PPP projects, it is also very essential to learn the lesson from the past fail projects. Hence, this paper presents a case study of LRT project of Malaysia to understand the reason of failure. Study highlighted that Kuala Lumpur LRT project was failed during the operation phase. Key reason of the failure was the financial crisis of 1997 where inflation rate increased from 8% to over 40%. This financial crisis resulted to the less profit rate, and the concessionaires were not able to repay the loan to the banks which they had taken for LRT construction works. Finally, through undergoing a legal process in 2002, Syarikat Prasana Negara Berhad took over PUTRA-LRT and STAR-LRT on the behalf of the government of Malaysia.

Item Type: Article
Uncontrolled Keywords: public private partnership; infrastructure projects; Malaysia; LRT; failure in PPP
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions: Faculty of Civil and Environmental Engineering > Department of Construction Engineering and Architecture
Depositing User: Normajihan Abd. Rahman
Date Deposited: 22 Jan 2015 07:35
Last Modified: 22 Jan 2015 07:35
URI: http://eprints.uthm.edu.my/id/eprint/6264
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