• Geographical bundling in PPP is a new policy for financing transport projects. • Geographical bundling potentially enhances regional economic development equality. • Geographical bundling achieves more efficient transaction costs. • Geographical bundling fails to gain equality in regional economic development. • Geographical bundling requires partnerships between different government levels. Public-Private Partnerships (PPPs) matter in providing transport infrastructure. International literature offers various perspectives on bundling projects through PPPs, e.g., bundling of project stages, supply chains, multiple sectors, and similar infrastructure projects. This paper takes a different approach by exploring cases of a new transport policy notion: geographical bundling. Geographical bundling was introduced by the Indonesian Government for the development of toll-roads in Java (a high GRDP per-capita region) and Sumatera (a low GRDP per-capita region), so as to enhance equality in regional economic development. Geographical bundling involves combining projects at different locations—that have varying economic, physical, and governance characteristics—in one PPP contract. This paper aims to clarify the perceived benefits and challenges of geographical bundling through contractual and relational governance perspectives, using a qualitative study based on document analysis and interviews. Our results indicate the importance of integrating project management, governance, geographical context, and economic equality aspects. The benefits include lower transaction costs for improving physical integration and regional interaction. However, due to a lack of interaction and sharing knowledge between government levels, the implementation of geographical bundling falls short of achieving equality in regional economic development. In the Indonesian case, this is indicated by imbalanced local transport improvement and insufficient local resources. The findings show that geographical bundling has the potential to enhance equality in regional economic development. However, a strong partnership between different government levels is key to integrate local capacity in the formulation and implementation of transport policies. Further research could focus on aligning public–private and public-public partnerships, specifically inter- and multi-level government collaborations.
Novianingsih et al. (Sun,) studied this question.