Financial Feasibility Study in Market Revitalization Project Using Public-Private Partnership (PPP) Scheme
| Main Authors: | Ramadhan, Hafidh Akmal; School of Business and Management, Institut Teknologi Bandung, Prasetyo, Ahmad Danu; School of Business and Management, Institut Teknologi Bandung |
|---|---|
| Format: | Article info eJournal |
| Bahasa: | eng |
| Terbitan: |
The Indonesian Journal of Business Administration
, 2022
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| Online Access: |
https://journal.sbm.itb.ac.id/index.php/IJBA/article/view/4384 |
Daftar Isi:
- 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 through Viability Gap Funding (VGF). 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. Keyword: Feasibility Study, Market Revitalization, PPP, Public-Private Partnership