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How public-private partnerships can work

The recent saga of the Sports Hub, which saw an open exchange of grievances between SportsHub Pte Ltd and the Government, as well as the slow response from the private transport entities to improve bus and train services, which seems to have prompted the restructuring of the public transport model, have trained the spotlight on the public-private partnership (PPP) model ("Time to alter the Sports Hub model"; Dec 20, 2015).

It may appear that the model is more of a bane than a boon. Notwithstanding that, given the fundamental objective of leveraging best practices of the commercial sector to improve efficiency while avoiding cost overruns, the value propositions of the PPP model are promising.

To ensure the success of the PPP model, however, valuable lessons need to be drawn from past cases.

In retrospect, the essence of a successful PPP can be distilled into four key areas.

First, roles and potential risks among stakeholders must be clearly defined and highlighted prior to inking the PPP agreement. The corollary of a lack of clarity is endless disputes and paralysis of business operations.

A case in point is the restructured bus model, which sees the Government taking over and maintaining the infrastructure and assets while private entities run the bus services. This model looks set to be applied to the rail sector, too.

Second, avoid zero-sum games. It is not uncommon to see private entities placing their commercial interests above those of public entities, and vice versa. Hence, it is imperative for both parties to state their core interests and goals up front, so as to find common ground for both parties to enter the PPP deal on the basis of mutual benefits.

Third, channels of communication should always stay open for both parties to resolve their differences behind closed doors. Pouring out grievances in the public domain may cause irreversible damage to the business image.

Fourth, a strong and trusting relationship between private and public sectors ensures enduring success of the PPP, especially in times of exigencies, during which private entities may have to give up their commercial interests for the collective good of the nation.

Given Singapore's aspirations to become Asia's infrastructure and project financing hub, the mechanism and nuances of the PPP model should be further studied to bring its true benefits to the fore.

Lim Ming Yen

A version of this article appeared in the print edition of The Sunday Times on January 10, 2016, with the headline 'How public-private partnerships can work'. Print Edition | Subscribe