The challenge of implementing public-private partnerships - A transaction costs perspective on waste to energy projects in Indonesia - Abstract and findings

Oct 21, 2026

Uploaded by dhado

The study examines why a single public-private partnership (PPP) project in Indonesia experienced lengthy delays in completion and how transaction costs significantly hinder project success. Using transaction cost theory, the authors conduct a single-case qualitative approach grounded in 16 semi-structured interviews with stakeholders involved in the PPP’s initiation, design, and execution. Findings highlight political and economic transaction cost issues, including agency capability gaps, coordination failures across complex governance, and financial and political risks that raise uncertainty and public distrust.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages22

Reading Time55 min

AccessFree to download

Abstract

Introduction

PPP as procurement alternative

Reported causes of PPP failure

Keywords

The current issue and full text archive of this journal is available on Emerald Insight at: [https://www.emerald.com/insight/1366-4387.htm](https://www.emerald.com/insight/1366-4387.htm) The challenge of implementing public-private partnerships: a transaction costs perspective on waste to energy projects in Indonesia Azelia Machsari Haqq Master of Economic Planning and Development Policy, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, and Yohanna M.L. Gultom Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia and Institutional Economics and Governance Research Cluster, Department of Economics, Universitas Indonesia, Jakarta, Indonesia Abstract Purpose – This study aims to explore the reasons behind the lengthy delays in completing a single publicprivate partnership (PPP) project in Indonesia and investigates how the transaction costs play a signiﬁcant role in hindering the project’s success. Design/methodology/approach – To broaden insight into the transaction cost theory, the authors used a single case study approach to provide a more in-depth analysis of a context whose complexity can be fully explored. As the primary data sources, 16 face-to-face semi-structured interviews were conducted with the stakeholders directly involved in the project’s initiation, design and execution. Findings – This case study demonstrates that transaction cost issues, both political and economic, play asigniﬁcant role. This study has identiﬁed four main problems associated with transaction costs hindering project success, namely, executing agencies’ lack of knowledge and experience, lack of coordination for such a complex governance structure that links too many stakeholders and the ﬁnancial and political risk that increase the uncertainty and public distrust. Research limitations/implications – This study contributes mainly to the PPP and transaction costs economics literature, providing empirical evidence on why major PPP projects may fail to be procured. The Greater Bandung waste to energy (WTE) Project case demonstrates that transaction costs, both political and economic, have played a signiﬁcant role in the lengthy delay of the PPP project. Practical implications – As the project involves many transaction cost issues, mapping the failure factors at the project sites can signiﬁcantly contribute to the practitioners/stakeholders involved in the PPP WTE projects. Therefore, this study provides a lesson to the policymakers at all levels interested in PPPs to consider the issues of transaction costs related to the PPP projects. It can be used as guidance as well as a reference for future PPP WTE projects in Indonesia. Social implications – Mapping the failure factors also signifying the response of the public in the PPP WTE projects undertaken. As the citizens become more rule-conscious and rights-conscious, they demand the opportunity to participate in creating rules and project plans. If the project failed to consult with affected communities and undermined democratic accountability, the angry citizens will confront the government to cancel the project. Therefore, political and economic inﬂuences for public attitude play signiﬁcant roles in making the PPP WTE projects successful. Originality/value – This study provides insight into the transaction cost issues that have hindered the completion of Indonesia’s PPP WTE project over the past 15 years. Additionally, the Perspective on waste to energy projects 365 Received 8 September 2020 Revised 21 June 2021 27 September 2021 Accepted 1 November 2021 Journal of Financial Management of Property and Construction Vol. 27 No. 3, 2022 pp. 365-386 © EmeraldPublishingLimited 1366-4387 DOI 10.1108/JFMPC-09-2020-0058 JFMPC project feasibility analysis should include an understanding of transaction costs for partnering 27,3 in PPP. Keywords Indonesia, Public-private partnership,

FAQs

What is the purpose of the study?

The study explores the reasons for lengthy delays in completing a PPP project in Indonesia and investigates how transaction costs hinder project success.

How was the research conducted?

It uses a single case study approach and relies on 16 face-to-face semi-structured interviews with stakeholders involved in the PPP’s initiation, design, and execution.

What transaction-cost related problems were identified?

The study identifies four main problems: limited knowledge and experience of executing agencies, lack of coordination within complex governance linking many stakeholders, and financial and political risks that increase uncertainty and public distrust.

Oct 21, 2026

Uploaded by dhado