FINANCIAL FEASIBILITY STUDY IN MARKET REVITALIZATION PROJECT USING PUBLIC-PRIVATE PARTNERSHIP (PPP) SCHEME

• Main Author: Akmal Ramadhan, Hafidh
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/50893
• Institution: Institut Teknologi Bandung

The market is an important place in economic activity in Indonesia. In City X, The Market functions as a regional scale market that functions as a wholesale market that serves its surroundings. High population growth encourage the government to revitalize The Market to accommodate with the increasing of goods and service. But due to the limited government budget and capabilities, this project is done with Public-Private Partnership (PPP) scheme to find the suitable business entity as the representation of private sector to help with the success of the project. The revitalization project of The Market in City X needs a capital investment of Rp. 233,758,070,018. On that basis, it is necessary to test the feasibility of which financial feasibility is one of them. In recognition of this need, on the basis of Presidential Decree No.38/2015, the Government supports for the PPP project in Indonesia are Viability Gap Fund (VGF), Availability Payment (AP) and also guarantee through PT PII. Through this research, author analyze the feasibility of this investment plan by calculating the project’s revenue and the required operational cost and other expenses. The feasibility of an Investment plan can be financially analyzed by using Discounted Cash Flow (DCF) parameters which are Net Present Value (NPV), Internal Rate of Return (IRR): and Payback Period (PP). The result of the analysis is that this project is not feasible without the help of government’s Viable Gap Funding (VGF) with negative NPV and IRR below projected WACC. With maximum VGF, the project still financially unfeasible with NPV of -4,463,505,266 with IRR smaller than projected WACC of 12.29%. The project can also be feasible if the government raise the tariff by 153% from the initial projected tariff.