Ppp in Asean_fauziahzen

Recent Development on PPP in ASEAN and East Asia

Fauziah Zen

PPP Conference sponsored by JETRODusit Thani Manila, 17 February 2012

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Various models of PPP

Need of Public- Sector Involvement

High

Privatization

TraditionalPublic Sector

Operation

ＰＦＩ

ＰＰＰ

Joint-VentureＰＦＩ

Outsourcing

Concession

Affermage

Profitability

Low/Nil

WeakStrong

ＢＯＴ

Service- Provision ＰＦＩ

Self-SustainingＰＦＩ

UK-based PFI can be applied to projects, which had been traditionally served by the public sector, due to low profitability and need of public sector involvementAdopted from Nikkei and other sources

PPP Types

Source: Modified from UK National Audit Office

State Provision

Market Provision

State Ownership of Assets

Private Ownership of Assets Wider market

initiatives

Privatization

Concession

Franchise

Privately financed project

Retention of

minority share

Market testing

Service improvement

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PPP in “Asian style”

• Indonesia refers PPP to certain infrastructure types, even though the partnership between government and private sectors do exist in various forms (services, contracting out, etc.).

• Philippines and Thailand maintain wide range of definition and characteristics of projects under PPP

• Malaysia also maintain wide range of PPP coverage; it is driven not by limited fiscal space but to promote private participation (maximizing national resources) and gain the benefit from private sector efficiency and innovation.

• Vietnam is still developing her PPP regulatory framework.

• The rest of ASEAN countries with exception of Singapore (Brunei, Cambodia, Laos, Myanmar) are not yet placing PPP in significant role in the country development.

Private Participation in Infrastructure in East Asia and Pacific Area

The following section is benefited from PPIAF Database

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Investment in Infrastructure

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

2000

4000

6000

8000

10000

12000

Total Investment Commitment: East Asia and Pacific (US$ million)

Energy Moving average (Energy) Transport Moving average (Transport)

Investment commitments to infrastructure projects with private participation in developing countries, by sector or region, 2000–10

(2010 US$ billions)

Note: Includes annual investment commitments to projects reaching closure in 1990-2010.Source: World Bank and PPIAF, PPI Project Database.

Private Participation in Infrastructure (PPI): Global Update

• The top five recipient countries of investment in PPI projects: Brazil, China, India, Russian Federation and Turkey. In 2010 PPP was highly concentrated only in India.

• India has been: a top recipient of PPI activity since 2006, implemented 95 new projects and attracted total investment of US$74.4 billion in

2010, doubling its level of activity from 2009. the largest market for PPI in the developing world in 2010.

• Private activity outside India was less vibrant. Excluding India, total PPI investment to developing countries would have fallen by 18% in 2010 compared with 2009. In terms of the number of countries with new PPI projects, the lowest number since 1990s is 41, happened in 2009

• In East Asia and Pacific (EAP), investment declined by 9% compared with 2009. The slowdown was driven by lower investment in both new projects and previously implemented projects.

• Energy had 18 projects in six countries and investment of US$10.3 billion in 2010. This represents a 26% increase from the level in 2009. Energy accounted for 68% of regional investment in 2010

PPI in East Asia & Pacific (1)

• Between 2000 and 2010, 17 countries out of the 23 in EAP have implemented 908 PPI projects with investment of US$154 billion and with additional investment in existing projects brought the total in the region to US$209 billion. With this, East Asia and Pacific accounted for 33% of the activity in developing countries by number of projects and 16% by investment.

• PPI in the EAP region was concentrated on four countries: China, (37% of regional investment and 692 projects), Indonesia (14% of investment and 35 projects), Malaysia (15% of investment and 37 projects), and the Philippines (14% of investment and 51 projects).

• Annual investment in the region was in the range of US$21-23 billion in 2005–07, but fell to a range of US$15-17 billion in 2008–10.

PPI in East Asia & Pacific (2)

• Private activity in infrastructure in East Asia and Pacific declined for third consecutive year in 2010: 36 PPI projects reached financial or contractual closing in seven low and middle-income

countries, involving investment commitments of US$10.9 billion. Infrastructure projects implemented in the 1990–2009 period attracted new investment of US$4.3 billion, bringing total investment commitments to infrastructure in the region to US$15.2 billion in 2010.

The activity in 2010 represents a 9% decline by investment and 45% drop by number of projects compared with 2009. China was the major contributor of the large decline in activity by number of projects (60% drop). Investments in new projects fell by 9% and in projects implemented in previous years by 10% compared with 2009.

Investment in the region was concentrated in the 1,470 MW Hongsa coal-fired power plant, which will export electricity from Lao PDR to Thailand (24% of regional investment in 2010), as well as in Indonesia (22%) and the Philippines (19%). China saw private activity decline significantly in 2010, accounting for just 6% of regional investment and 47% of the projects.

By type of private participation, activity was concentrated on greenfield projects (BOT and BOO), which attracted 87% of regional investment and 30 of the 36 new projects. Concessions followed with 3% of investment and five projects. Divestitures accounted for the remaining 10% of the investment and one new project.

Investment in PPI projects in East Asia and Pacific, by type of PPI, 1990‒2010

PPP Development in ASEAN state members

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Malaysia

Line Ministry UKAS Cabinet Process

Source: Malaysian Economic Report 2011/12

PPP achievement 1983-2010

Total projects signed 513

Existing projects as at 31st December 2010 348

New projects as at 31st December 2010 165

Jobs eliminated from government payroll 113,487

Savings

Capital expenditure (RM billion) 163.8

Operating expenditure (RM billion) 9.0

Proceeds from sales of government equity and assets (RM billion) 6.5

Market capitalization as at 31st December 2010 (RM billion) 208.3

% of total Bursa Malaysia Capitalization (Malaysia Stock Market) 16.3

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Malaysia (2)

Energy

Telecom

Transport

Water and sewerage

2500 7500 12500 17500 22500 27500Energy Telecom Transport Water and sewerage

Concession 0 0 3626 9422

Divestiture 3805 3184 383 16

Greenfield project 10689 8608 12796 706

Management and lease contract 0 3805 10689 0

Total Investment in Projects by Type and Primary Sector (US$ mil-lion)

Philippines

• Take into account the SNGs’ authority, only projects amounted above PhP 200 million (±USD4.8millions) belong to NEDA’s approval.

Energy

Telecom

Transport

Water and sewerage

2,500 7,500 12,500 17,500 22,500 27,500Energy Telecom Transport Water and sewerage

Concession 3974 0 2080 8096

Divestiture 7924 923 0 0



Total Investment in Projects by Type and Primary Sector (US$ million)

Vietnam (1)

• Relatively new comer in formalizing PPP (2009: the regulation, 2010: pilot project)

• MPI set inter-branch WG to help PPP implementation in each ministry• Closed list of PPP in the beginning of fiscal year. No room for unsolicited

projects.• Total projects: 2 projects in the beginning of implementation.• Continuing amendments to improve the implementation.

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Vietnam (2)

Energy

Telecom

Transport

Water and sewerage

250 750 1250 1750 2250 2750 3250Energy Telecom Transport Water and sewerage





Total Investment in Projects by Type and Primary Sector (US$ mil-lion)

Indonesia

• Good macroeconomic condition: high growth, controlled inflation, stable exchange rate.

• Narrow fiscal space, lacking infrastructure spending call for private participation.

• Need to smooth and improve inter-agency coordination.

• Increasing committed spending for infrastructure, direct and indirect.

• Setting up institutions to push the process.

• Unclear link between national targets and prioritized projects.

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Indonesia (2)

Energy

Telecom

Transport

Water and sewerage

2500 7500 12500 17500 22500 27500Energy Telecom Transport Water and sewerage

Concession 0 4825 2150 897





Thailand (1)

• Rigid procedure to prevent corruption.

Total Investment in Projects by Primary Sector (US$ million)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Energy 859 890 0 1336 0 1609 197 0 2341 0 4300 192

Telecom 511 1672 1198 664 613 945 1130 1031 406 539 420 0

Transport 0 455 0 45 439 0 0 0 0 0 0 0

Water and sewage 9 240 0 34 0 242 19 0 0 0 0 0

250

750

1250

1750

2250

2750

3250

3750

4250

4750

Source: Modified from http://ppi.worldbank.org

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Thailand (2)

Energy

Telecom

Transport

Water and sewerage

2500 7500 12500 17500 22500Energy Telecom Transport Water and sewer-

age







Cambodia


Energy

Telecom

Transport

Water and sewerage

250 750 1250 1750 2250 2750Energy Telecom Transport Water and sewer-

age


Divestiture 0 0 0 0




Lao PDR


Energy

Telecom

Transport

Water and sewerage

500 1500 2500 3500 4500 5500 6500 7500Energy Telecom Transport Water and sewer-

age


Divestiture 0 0 0 0




Myanmar


Energy

Telecom

Transport

Water and sewerage

0.5 1.5 2.5 3.5 4.5Energy Telecom Transport Water and sewer-

age

Concession 0 0 0 0

Divestiture 0 0 0 0




ERIA Support for PPP development

• Working Group: study of 5 countries on PPP in general and 3 infrastructure sectors

• EAIC Advisory Team: updating the progress of (potential) PPP projects in Asia.

• Project Meister Program: specialized in Project Manager for infrastructure project under PPP.

• To pursue “Deepening Economic Integration and Narrowing DevelopmentGaps”, ERIA with ADB and ASEAN Sec has completed the CADP (Comprehensive Asia Development Plan) and support the Study on MPAC (Master Plan on ASEAN Connectivity) in 2010. Both studies provide insights and estimations of economic impact of new developed corridor connecting parts of East Asia, and how ASEAN shall be connected each other.

Trend of PPP

• Increasing attention from governments in Asia.• Increasing attention from private and financial sector around the world:

– Half of Australian private investment in infrastructure during the period of 1995-2010 is located in East Asia and Pacific, dominated by energy and transport sectors.

– 17% of UK sponsor investment is located in East Asia, dominated by telecom and energy sectors.

– 78% of Korean sponsor investment is located in East Asia, dominated by energy sector.

• Since infrastructure projects are usually big and PPP scheme is complex, the speed of implementation is rather slow.

• Small scale projects are usually less complex but also less pursued by the government in PPP. Governments prefer to use tax money and adopt traditional model.

Issues and Challenges

• Large projects: requires complex arrangement and costly pre-FS.

• Small projects: doable but less attractive.

• Leadership is a key factor.

• Land acquisition and resettlement are critical issues.

• Risk allocation (guarantee): different interpretation in few areas. Needs to resolve case by case.

• Transparency: public know the consequences of the PPP Project.

Ppp in Asean_fauziahzen

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