Institutional Prerequisites for 3Ps in

Developing Countries

Submitted to
I2ED Research Team – 2nd Seminar

By
Aung Kyaw Oo
Ph.D. Student

September 28, 2006.

Outline

Experiences Gained

Institutional Obstacles

Reforming and improving the

institutional framework
Experiences gained

Success of trade and industrial policies in East Asia
region depends critically on the existence of certain
types of institutions and, therefore, that these policies
cannot be easily transferred to other countries which do
not have such institutional prerequisites.

In the report of the World Bank, it argued that the
selective trade and industrial policies (of the kinds used
in Northeast Asia) require a range of highly developed
institutions and cannot be successfully replicated in other
developing economies with poor institutional
infrastructure.
Experiences ( Cont’d)

In contrast, some Southeast Asian economies, namely
Thailand, Indonesia, and Malaysia, achieved high growth
without using very much selective industrial and trade
policies and, therefore, provide a better role model for
other developing economies.

Policies do not operate in an institutional vacuum and,
therefore, it is only natural that the success or otherwise
of a particular policy depends on the institutions that
enable or constrain it.
Experiences ( Cont’d)

For example, it was only after the extensive civil service
reform of the 1960s and the 1970s that Korea was
regarded as having a high-quality bureaucracy — in any
case, it was sending its bureaucrats to Pakistan and the
Philippines for bureaucratic training until the late 1960s.

Cambodia

Czech & Slovak

Institutional Obstacles

The absence of a unified strategic vision at the
central level to deal with the private sector's
involvement in financing and operating
infrastructure facilities. There are many
institutions responsible for organizing this
involvement. Investors are required to obtain
several approvals and licenses. These
procedures have created contractual
complications and prevented the implementation
of many projects. Investors received
contradicting messages concerning the
government stance on private investments in
infrastructure facilities.
Obstacles ( Cont’d)

Many economic sectors lack the technical,
financial and legal experience necessary to offer
infrastructure projects to the private sector and
organize private participation. These sectors lack
strategic planning skills to determine needs and
priorities and the ability to judge the social and
economic feasibility of these projects.

The poor economic feasibility and considerable
commercial risk involved in operating a number
of the projects offered. This has led the private
sector to become ill-disposed to investment in
these projects with the consequent of fewer
projects that were planned being implemented.
Reforming and improving the
institutional framework

Political commitment and good governance

are prerequisites for success. The Private
sector needs to know that politicians are
committed to private involvement and that
the government is fair in its dealing with the
private sector and will meet the
commitments it makes under PPPs.
Reforming and improving ( Cont’d)

Establishing a central unit to organize the private
sector's participation in financing and operating
infrastructure facilities removing institutional obstacles.
This unit will aim to:
• Create the State's unified vision for organizing private
involvement in infrastructure projects.
• Create mechanisms and provide qualified technical,
financial and administrative staff to organize private
investments in public facilities and infrastructure projects
through different stages.
• Support and promote private investments in
infrastructure facilities.
• Support economic development.
• Support the structural reform of infrastructure
facilities.
Thank You

Q & A
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