Using PPPs for social infrastructure is a relatively new concept in Southeast Asia. But this is an attractive solution to help close the supply-demand gap for social infrastructure, especially given the increasing demand for hospitals, schools, training centers, and other social infrastructure, and the limited public funds and capacity to build these facilities. Governments hope that, if the private sector can finance, design, build, and operate infrastructure efficiently, they will be able to devote more resources to areas that cannot be delegated to the private sector. The efficiency argument for PPPs is valid in advanced economies since these partnerships require well-developed policies for their implementation. In Southeast Asia and other emerging regions, PPPs are mainly used to fill financing gaps in infrastructure demand, and their use for social infrastructure is still limited.
Indeed, the only social infrastructure PPP projects that have been successfully implemented in the region seems to have been in the Philippines, where schools and other education facilities have been built using this modality. Malaysia offered the Umum Sarawak Hospital Project as a PPP in 2012, though this was more a partial privatization through a management contract than a regular PPP with a life-cycle contract. No information at the time of writing was available on the project's status. In 2017, Indonesia was considering PPPs for upgrading 12 hospitals, and four of these projects were listed in the country's 2018 PPP book as being "under preparation." Thailand is also trying to use PPP for its health sector.
PPP for social infrastructure can have many configurations. But whatever the configuration, the most important elements are output-based service delivery, private sector participants taking on some risks, and partnerships that cover a project's life cycle. Social infrastructure PPPs are typically medium-sized. Because education and health care are usually local responsibilities, the public agency in charge of them tends to be subnational. This is an opportunity to develop PPPs at the local level, though these projects can be difficult because they require capacities that subnational governments may find difficult to provide.
Medium-sized social infrastructure PPPs are generally held to be simpler to implement than large-scale ones, though this is not always the case. PPPs regardless of size require complex procedures, including legal processing and technical requirements. High administrative and legal costs mean that drafting PPP contracts cannot be justified for projects below a certain size. Because of these constraints, interest is growing in "lite PPPs," which simplify procedures without sacrificing prudent action (Zen and Regan 2015).