Practice briefing : Is BOT the best financing model to procure infrastructure projects? A case study of the Hong Kong-Shuhai-Macau Bridge

Abstract: Purpose – Several major infrastructure projects in the Hong Kong Special Administrative Region (HKSAR) have been delivered by the build-operate-transfer (BOT) model since the 1960s. Although the benefits of using BOT have been reported abundantly in the contemporary literature, some BOT projects were less successful than the others. This paper aims to find out why this is so and to explore whether BOT is the best financing model to procure major infrastructure projects. Design/methodology/approach – The benefits of BOT will first be reviewed. Some completed BOT projects in Hong Kong will be examined to ascertain how far the perceived benefits of BOT have been materialized in these projects. A highly profiled project, the Hong Kong-Zhuhai-Macau Bridge, which has long been promoted by the governments of the People's Republic of China, Macau Special Administrative Region and the HKSAR that BOT is the preferred financing model, but suddenly reverted back to the traditional financing model to be funded primarily by the three governments with public money instead, will be studied to explore the true value of the BOT financial model. Findings – Six main reasons for this radical change are derived from the analysis: shorter take-off time for the project; difference in legal systems causing difficulties in drafting BOT agreements; more government control on tolls; private sector uninterested due to unattractive economic package; avoid allegation of collusion between business and the governments; and a comfortable financial reserve possessed by the host governments. Originality/value – The findings from this paper are believed to provide a better understanding to the real benefits of BOT and the governments' main decision criteria in delivering major infrastructure projects.

Carbon financing and the Australian emissions trading scheme : less emissions, more opportunities?

The introduction by the Australian federal government of its Carbon Pollution Reduction Scheme was a decisive step in the transformation of Australia into a low carbon economy. Since the release of the Scheme, however, political discourse relating to environmental sustainability and climate change in Australia has focused primarily on political, scientific and economic issues. Insufficient attention has been paid to the financial opportunities which commoditisation of the carbon market may offer, and little emphasis has been placed on the legal implications for the creation of a "new" asset and market. This article seeks to shed some light on the discernable opportunities which the Scheme should provide to participants in the Australian and international debt markets.

Islamic project financing implementation for sustainable infrastructure development in Indonesia

Islamic financing in Indonesia infrastructure projects development has not been optimally implemented. Therefore this paper serves as a catalyst to explore alternative financial scheme such as Islamic financing for infrastructure development. The purpose of this paper is to explore the enablers and barriers in implementing Islamic project financing for public infrastructure development. The findings are then culminated into enablers and barriers in the implementation of Islamic project financing. The two main enablers are the readily availability of huge fund that can be used to support infrastructure projects; and the acceptability of the concept of shariah-compliant financing. On the other hand, the barriers include: high cost of funding; lack of financial institution capability; lack of government policy and regulation; insufficient government support and commitment; conflict between infrastructure and Islamic finance business practices; profit oriented mindset; lack of understanding of Islamic project financing knowledge in infrastructure; and insufficient project preparation.

Reforming the procurement of construction and financing of Australian infrastructure : advancing capacity, competition and investment

Funded by an Australian Research Council (ARC) Linkage grant over four years (2009–13), the Major Infrastructure Procurement project sought to find more effective and efficient ways of procuring and delivering the nation’s social and economic infrastructure by investigating constraints relating to construction capacity, competition, and finance in new public sector major infrastructure.1 The research team comprised researchers in construction economics and finance from Queensland University of Technology (QUT), Griffith University (GU), The University of Hong Kong (UHK), and The University of Newcastle (UoN). Project partners included state government departments and agencies responsible for infrastructure procurement and delivery from all Australian mainland states, and private sector companies and peak bodies in the infrastructure sector (see “Introduction” for complete list). There are a number of major outcomes from this research project. The first of these is a scientifically developed decisionmaking model for procurement of infrastructure that deploys a novel and state-of-the-art integration of dominant microeconomic theory (including theories developed by two Nobel Prize winners). The model has been established through empirical testing and substantial experiential evidence as a valid and reliable guide to configuring procurement of new major and mega infrastructure projects in pursuance of superior Valuefor- Money (VfM). The model specifically addresses issues of project size, bundling of contracts, and exchange relationships. In so doing, the model determines the suitability of adopting a Public-Private Partnership (PPP) mode.

Islamic project financing in Indonesian infrastructure development

It is reasonable to expect that Islamic project financing may be a suitable option of infrastructure financing in Indonesia. This research explored the conditions necessary for the implementation of Islamic project financing for Indonesian infrastructure development. It is important that all infrastructure project stakeholders understand the concept comprehensively. This study identified reforms through which the government could more directly support the implementation of Islamic project financing. This research has led to the realisation that Islamic project financing can be implemented in all sectors, in both public and private sector domains, and across Muslim and non-Muslim communities.

The opportunity for implementing Islamic project financing to the Indonesian infrastructure development

Purpose: This chapter discusses the opportunity of Islamic project financing implementation for public infrastructure development in Indonesia. Design/Methodology/Approach: This chapter, firstly, reviewed existing literature on Islamic finance to explore the applicability of Islamic financing in infrastructure development. Interviews were conducted as the first stage of Delphi method approach. This was then followed by reviewing Indonesia’s government policies and regulations in infrastructure industry and Islamic financing. Findings: This chapter enlightens the implementation of Islamic financing on infrastructure project financing in Indonesia. The findings indicate that the government policies and regulations on both infrastructure investment and Islamic financing support the implementation of Islamic project financing, whereas, an improvement is still needed in order to overarch infrastructure business and Islamic financing investment. Research: Financing framework development for Indonesia infrastructure projects. Limitations/Implications: The result reported comprises the preliminary study of Islamic project paper written based on published research papers and interviews. Furthermore, the data collected for the study are limited to the case of Indonesian infrastructure projects. Practical Implication: Islamic financing in Indonesia infrastructure projects development has not been optimally implemented. Therefore, this chapter serves as a catalyst to explore alternative financial scheme such as Islamic financing for infrastructure development. Originality/Value: This chapter highlights possibilities and obstacles in applying Islamic scheme to infrastructure project financing. This provides a framework to analyse the steps to implement Islamic financing successfully in infrastructure development.

Using performance measurement models for benefit realization with enterprise systems: The Queensland Government approach (Case Study)

A range of influences, technical and organizational, has encouraged the wide spread adaption of Enterprise Systems (ES). Nevertheless, there is a growing consensus that Enterprise Systems have in the many cases failed to provide the expected benefits to organizations. This paper presents ongoing research, which analyzes the benefits realization approach of the Queensland Government. This approach applies a modified Balance Scorecard. First, history and background of Queensland Government’s Enterprise Systems initiative is introduced. Second, the most common reasons for ES under performance are related. Third, relevant performance measurement models and the Balanced Scorecard in particular are discussed. Finally, the Queensland Government initiative is evaluated in light of this overview of current work in the area. In the current and future work, the authors aim to use their active involvement in Queensland Government’s benefits realization initiative for an Action Research based project investigating the appropriateness of the Balanced Scorecard for the purposes of Enterprise Systems benefits realization.