Embracing PPP in ASEAN Member States

Economic Research Institute for ASEAN and East Asia (ERIA) and Prime Ministers Office, Brunei Darussalam

Fauziah Zen ERIA Economist

The 2nd ERIA EDITORS ROUNDTABLE 10 11th September, 2013 Radisson Hotel, Brunei Darussalam

Outline
Infrastructure as key of growth Funding: Demand vs Capacity Call for PPP: Benefits vs Challenges Findings on PPP progress in AMS Way Forward

Infrastructure as key of growth

Providing basic human needs and supporting people activities Boosting productivity and growth Improving quality of life Connecting people Facilitating trade

Infrastructure as key of growth

Quality of Infrastructure Score, ASEAN Member States

Source: World Economic Forum, Global Competitiveness Report 2012-2013

Financing Infrastructure

Call for PPP

PPP is not a panacea for infrastructure problems PPP has been adopted in developing economies at various degrees

PPP

Provide additional financing sources

Improve governments efficiency

Improve public services delivery

Fee for use

Project financing

Equity financing

Focus on public function

Encourage competition

Reliability

Continuity

Standardized

Challenges
PPP requires a set of regulatory system that emerging economies may not be familiar with PPP requires strong government leadership and skills to assess optimum benefits and risks sharing. Private finance only follows business rule: profit-seeking with manageable risks.

Critical aspects of PPP stages

Project Prioritization: Consistent with National Development Priority Managing fiscal issues (support vs. liabilities) Transparent process Market sounding Project Preparation: Work timely Economies of scale Adequate funds, human resources, and time

Addressing the Challenges (2)

Tender and Selection Process: Transparency and time consistency Contestable market Awarding Project: Clear and comprehensive contract (output, dispute resolution, timeline, ownership, etc.) Sufficient fiscal and political support Project Execution: Monitoring and Evaluation Warning system and addressing problems Promoting successful stories

How do AMS embrace PPP?

Singapore: adopting PPP to complement her already strong public sector and adequate public funds to improve efficiency Brunei: limited PPP projects due to her unique size and adequate public funds Indonesia, Malaysia, Thailand, Philippines: advancing PPP system towards more significant role of Public Sector Participation (PSP)

How do AMS embrace PPP?

Vietnam: A newcomer in PPP system Cambodia, Lao PDR, Myanmar: Increasing role of PSP and eagerness for adopting PPP Different situations require different types of support from international community

Way Forward
ASEAN helps one another Developing and strengthening members PPP Unit Enhancing regional cooperation: PPP Centre of Excellence ERIAs commitment to support PPP development in the region.

Enhancing Regional Cooperation

Non-optimal individual countrys effort

Improve existing efforts and enhance cooperation

Establishment of a Regional PPP Centre:

Capacity Building Technical Assistance Intra and Inter Regional Cooperation Promotion

Regulatory Framework

Thank You!

Contact: fauziah.zen@eria.org