The institutional and legal frameworks for PPPs are heavily influenced by the fact that governments lead these partnerships. Legal frameworks define the rules for and the role of public sector and private entities participating in PPPs. The government agencies responsible for the process of implementing PPPs determine the efficiency and effectiveness of these rules. A poor performance will not only affect the direct costs for private entities participating in a PPP but also indirect and intangible costs, such as investor confidence and risk perceptions.
Ismail and Haris (2014) show the constraints hindering PPPs in Malaysia are lengthy delays in negotiations, political debates on a project, lack of government guidelines and procedures, high user charges, confusion over government objectives and evaluation criteria, and unsolicited proposals not being regulated within a PPP legal framework. All these problems center on incomplete legal frameworks, inefficient procedures, and the political economy.
Indonesia is reforming its legal framework for PPPs to speed up processes. Since 2010, revised regulations have been issued on the scope of PPPs, land acquisition, and government support for these partnerships by providing viability gap funding, guarantees and availability payments, and setting up the Project Development Facility, which helps the government to prepare infrastructure projects and make them bankable. These measures have enabled some long-delayed projects to reach financial close, and sped up bidding and negotiation procedures. Despite the revised regulations, the number of PPP projects in Indonesia remains low, mostly because of inconsistent actions by public agencies.
In 2013, Thailand enacted the Private Investment in State Undertaking Act, which replaced the 1992 act, to promote PPP investments by institutionalizing the Public-Private Partnership Master Plan and the Public-Private Partnership Committee, the highest authority for PPP strategies, and the Public-Private Partnership Unit, which streamlines PPP procedures, sets timelines for PPP steps, and provides a Project Development Facility. The act also set guidelines for the value-for-money concept for PPPs, small infrastructure projects eligible for these partnerships, and for creating a PPP database.
The Philippines has several notable strong points in its legal and regulatory frameworks for PPPs. The country has clear guidelines on cost-benefit analyses for PPPs, risk assessments, comparative modalities, and directions to structure PPP projects.