Legal Literacy - This article discusses some of the objectives of implementing government and business entity cooperation (PPP), such as realizing the provision of quality, effective and efficient infrastructure.

Government and Business Entity Cooperation in Indonesia (PPP)

The legal basis for Government Cooperation with Business Entities (PPP) is Presidential Regulation Number 38 of 2015 concerning Government Cooperation with Business Entities in Infrastructure Provision and contained on the website of the Government Cooperation with Business Entities of the Ministry of Finance of the Republic of Indonesia, it is known that there are several objectives for implementing Government and Business Entity Cooperation (PPP), such as realizing the provision of quality, effective, efficient, on-target, and timely infrastructure;

then be able to create an investment climate that encourages Business Entities to participate in Infrastructure Provision based on healthy business principles; meet sustainable funding needs in infrastructure provision through private funding mobilization; encourage the use of the user-pays principle for services provided, or in certain cases consider the user's ability to pay; and/or provide certainty of return on Business Entity investment in infrastructure provision through periodic payment mechanisms by the Government to Business Entities.

To reduce the risks that arise in Government and Business Entity Cooperation, risk management needs to be carried out. Risk management is an activity to identify risks, analyze risks, handle risks, and monitor risks. Risk management aims to provide the greatest possible financial benefits through a risk management process that includes eliminating, minimizing, transferring, and absorbing/accepting these risks. As explained in Article 1 number 6 of Presidential Regulation Number 38 of 2015 concerning Government Cooperation with Business Entities in Infrastructure Provision, one of the elements of Government and Business Entity Cooperation (PPP) is the division of risks between the parties, namely the Government and Business Entities.

Thus, one of the main characteristics of PPP is the allocation of risk. The involvement of Business Entities in PPP does not mean transferring all risks to the Business Entity, but rather a division as stated in the agreement agreed upon by the parties. For example, risks related to changes in laws or regulations during the term of the agreement are risks that originate from the Government, so the Government is the most appropriate party to bear these risks. Meanwhile, regarding project financial risk, Business Entities have more flexibility to mitigate risk, for example with insurance or hedging, so Business Entities can be said to be the right party to bear these risks.