TRADE & FINANCE 31
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“ Once the necessity and priority of projects are confirmed , the government needs to determine how to deliver the investment , and here , value for money is key .”
Across the region , countries are generally trying to improve their infrastructure investment climate and implement significant PPP regulatory and institutional reforms . For example , ASEAN countries such as Philippines , Indonesia , Thailand , and Viet Nam are in the process of revising their existing PPP acts and regulations . Further strengthening PPP units and establishing dedicated project development capacities are also key priorities for many countries , such as Mongolia , Bangladesh , Georgia , Kazakhstan , Kyrgyz Republic and PNG .
Turning to my third point , what are the impediments to more partnerships with the private sector ?
While PPPs are gaining a solid foothold , it is also true that there are a lot of impediments and challenges . Although each country has its specific context and issues , we believe that three key areas will make them even more effective .
First , creating an “ enabling environment ” is essential to attract private investment . Governments with good PPP track records have typically taken measures such as ( i ) development of a solid legal and regulatory framework , ( ii ) establishment of a dedicated PPP unit , ( iii ) strengthening of the government ’ s project development function and capacity , ( iv ) creation of a mechanism for the government to provide financial assistance to PPP projects , and ( v ) ensuring integrity and transparency in the procurement process .
Good coordination among government agencies is also a key to attract private investors . Effective mechanisms for land acquisition , resettlement and compensation can help minimize delays in approvals and implementation .
Second , more PPPs can be implemented if governments deepen their knowledge and capacity , particularly in project preparation . It is important to select the right projects to pursue , and to manage fair and transparent bidding . Many governments are still building up their in-house capacity for PPP project preparation and procurement ; this is encouraging , but it is a challenge . Along with capacity building , governments can create dedicated project development funds , focused on preparing and structuring bankable PPP projects for private investment .
Third , local and regional capital markets need to be deeper and broader to channel Asia ’ s large savings to infrastructure investment . It is also essential to strengthen expertise of local banks in project finance . This is an important technical skill as most PPPs are financed on a standalone basis .
My fourth point is that ADB is very familiar with these challenges . Promoting PPPs is one of ADB ’ s key agendas , and we have solid experience in helping governments plan , build and support sustainable PPP programs .
Between 1998 and 2020 , ADB supported 406 projects with PPP elements ( including sovereign loans , nonsovereign loans , and technical assistance ).
Our operational approach is now based upon our PPP Operational Plan which was developed in 2012 . I strongly encourage you to download it and read it – it shows how our support covers four areas or pillars , namely , ( i ) advocacy and capacity building , ( ii ) enabling environment , ( iii ) project development and preparation , and ( iv ) project financing .
Our regional departments are committed to support PPPs in our developing member countries . They provide capacity development , policy reform support , and financing to governments for PPPs . Our Private Sector Operations Department provides financing to the private sector , including companies that are contracted through PPPs . Aside from financing , we recognize the need to support our clients in facilitating , advising and developing PPP projects .
ADB provides formal transaction advisory services to our government clients . For example , we are working with a consortia of national gas companies in order to prepare and tender the 1,800-kilometer Turkmenistan – Afghanistan – Pakistan – India ( TAPI ) natural gas pipeline project . ADB is the mandated transaction advisor to the consortia , which reached a milestone last year ( November 2014 ) with the incorporation of the TAPI Pipeline Company Limited .
In order to provide this kind of support across the region , ADB is setting up the Asia Pacific Project Preparation Facility or AP3F . This multi-donor trust fund will begin operations sometime during 2015 . It will focus on project preparation work , including studies to cover technical , financial , legal , regulatory , and safeguards in preparing well-designed PPPs . And it will prioritize PPP infrastructure projects with regional cooperation , sustainable development , and climate change elements .
Finally , to further strengthen ADB ’ s PPP operations , we recently established the Office of Public – Private Partnership ( OPPP ). This Office coordinates and supports ADB ’ s PPP operations , and provides independent advisory services to government clients who need assistance in preparing and structuring bankable PPP projects .