Build Operate and Transfer a Type of Arrangement

The establishment of business operation and transfer (BOT), or establishment of its own business operation and transfer (BOOT) is an arrangement in which the private sector establishes and operates infrastructure projects and finally transfers ownership of the project to the government . These project components are single contracts procured from the private sector and funded by public sector warranties. Meanwhile, the private sector is responsible for raising project funds, reserves the right to possess all income generated by the project, is the owner of the facility.

The use of the BOT (construction - operation - transfer) funding model implemented by MCC and the Japanese government in 2012 is important for the success of the project. Under this public-private partnership, financing, design, construction, operation and maintenance of the facility is the subject of the private sector. Upon completion of the 2037 concession period, the facility will be transferred to the Japanese government at no additional cost. This allows the government to use public funds that are highly needed elsewhere in the water sector.

Recently more and more governments in Southeast Asia are beginning to allow private participation in several major public investment, especially infrastructure projects. The private sector employs a procurement system called Construction - Operation - Transfer (BOT) at many large infrastructure projects (roads, power plants, tunnels etc). The Construction - Operation - Transfer (BOT) project was initiated under a contractual agreement between public institutions (government) and private companies. Through this agreement, private sector expertise and assets are used to provide services and facilities to the public. In addition, the risks of providing services and facilities and the possibility of compensation are transferred to the private sector. This approach shifts the government's obligation to traditionally provide goods and services in the government sector to private companies.