In practice, the Public-Private Partnership (PPP) scheme in infrastructure financing is more commonly applied in the development of large-scale infrastructure, encompassing extensive service coverage, management scope, and investment value. This decision reflects on the considerations of both the Government and Business Entities, which tend to focus on large and complex infrastructure transactions, especially given the substantial funds required for the development and maintenance of such projects. Some of these large-scale projects include the Krian– Legundi–Manyar Toll Road PPP Project, valued at IDR 12.2 trillion, and the Serpong– Balaraja Toll Road PPP Project, valued at IDR 14.37 trillion.

Preparation and Transaction Costs Relative to Project Value Small-scale PPPs typically have lower project values compared to the standard PPP projects. Given that the preparation and transaction processes are generally similar to those of larger PPP projects, the percentage of the initial costs required for the preparation and transaction phases can be quite high for projects with smaller scales. As a result, both the Government and Business Entities often consider expanding the scope of the project to justify these costs.

Fiscal Capacity and Capabilities of Local Governments Small-scale PPPs are likely to involve Government Contracting Authority (GCA) from local governments. Despite the smaller scope, the fiscal readiness and institutional capacity of local governments remain key obstacles that could hinder the smooth execution of the PPP process.

An example of a small-scale PPP project is the Public Street Lighting Project in Madiun, a collaboration between the Madiun Regency Government and PT Tritunggal Madiun Terang (TTMT). Although this project was prepared before the issuance of Minister of National Development Planning/Bappenas Regulation No. 7 of 2023, it still qualifies as a small-scale PPP in terms of scope and project value. The Madiun Street Lighting project includes 7,459 streetlight with an investment value of IDR 100 billion. The project was planned in Q1 of 2020 and began operations in 2023. This project is a significant achievement for the local government in successfully implementing a small-scale PPP, demonstrating the higher likelihood of success for smaller-scale projects.

The implementation of small-scale PPPs holds great potential for creative financing practices in Indonesia. However, robust support from the regulator is needed, both in terms of regulation and institutional capacity. Since small-scale projects are often the responsibility of local governments, there is a pressing need to enhance their capabilities to effectively serve as GCAs. In its study, the World Bank also recommends granting more autonomy to decision-making for small-scale PPPs in order to accelerate the approval process, which in turn will help realize the quick-win concept of small-scale PPPs compared to traditional PPP processes. Moving forward, it is crucial to develop more comprehensive guidelines and regulations to maximize the potential of small-scale PPPs in Indonesia.