Drivers for Adopting Public Private Partnerships—Empirical Comparison between China and Hong Kong Special Administrative Region

Abstract

The private sector has long been involved in delivering public sector projects, whether its role has been as a partner or just as a contractor for the government. Over recent years the interest in adopting public private partnerships (PPPs) has increased internationally. Many research studies have presented positive reasons for the governments and the private sector to welcome this form of procurement, rather than continue adopting the traditional options. This paper aims to explore and compare the key drivers for adopting PPP in China and the Hong Kong Special Administrative Region (referred to as Hong Kong from here onwards). An empirical questionnaire survey was conducted in both of these administrative systems and survey respondents were invited to rate their perceptions on the importance of 15 different drivers identified. Eighty-seven completed survey questionnaires were returned for analysis. The findings indicated that respondents from China rated economy-related drivers higher, whereas Hong Kong respondents tended to rate efficiency-related drivers higher. China’s demand for more public infrastructure and services has imposed great pressure on the government’s budget, and therefore economic drivers were rated higher. On the other hand, with adequate financial reserve in hand and budget surplus over recent years, Hong Kong has tended to prefer paying for projects upfront, and hence efficiency was regarded more significantly. Among the 15 drivers, both of the respondents from China and Hong Kong selected, “provide an integrated solution (for public infrastructure/services)” and “solve the problem of public sector budget restraint” to be within the top three drivers. Despite the general agreement on the ranking pattern, the results of independent two-sample t-test showed that China and Hong Kong shared very different views on the driver “reduce the total project cost.” This driver was ranked rather high by the mainland Chinese respondents, but much lower by the Hong Kong respondents. This finding can be construed that economic drivers are in general rated higher in China as compared to that in Hong Kong.