Public Private Partnership as a Path to Development for Myanmar: A Review of the International Experience

Neealm Bhusal

2016

January 2016

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Author Information Neealm Bhusal graduated from the University of Warwick, United Kingdom in 2013 with Honors in Economics. At the university, she was the President at Warwick Buddhist Society and volunteered in humanitarian and development projects. After university, she has worked as an Economist at the Mekong Economics, Myanmar where she specialized in international development. She has published a number of articles in Myanmar medias including Child labor Crises to Education reform. She is a co-founder of Impact Skill Development Center. This paper is part of a series of Myanmar foreign policy analysis papers and the full version can

be downloaded from www.myanmarisis.org . This is part of the Foreign Policy Research Capacity

building project jointly carry out by Myanmar Institute of Strategic and International Studies

(MISIS) and the Norwegian Institute of International Affairs (NUPI). The project is kindly

supported and funded by the Norwegian Foreign Ministry. The opinions expressed in this article

are the author's own and do not necessarily reflect the views of Myanmar ISIS or the Ministry of

Foreign Affairs of Myanmar. (January, 2016)

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Table of Contents

EXECUTIVE SUMMARY 3

INTRODUCTION 4

1: PUBLIC PRIVATE PARTNERSHIP 5

2: LITERATURE REVIEW 7

2.1 INFRASTRUCTURE 7 2.2 EDUCATION SECTOR 8

3: PUBLIC-PRIVATE PARTNERSHIP FOR MYANMAR 8

3.1 CURRENT SITUATION OF PUBLIC-PRIVATE PARTNERSHIP IN MYANMAR 9

4: HARD INFRASTRUCTURE PPP IN MYANMAR 10

4.1 BACKGROUND ON HARD INFRASTRUCTURE PROVISION IN MYANMAR 10 4.2 RELEVANCE OF PPP IN THE INFRASTRUCTURE DEVELOPMENT 11 4.3 RECOMMENDATIONS 12

SOURCE: EFFICIENCY GAINS: THE CASE OF WATER SERVICES IN MANILA, MATHIEU VEROUGSTRAETE AND ISABELLE ENDERS, 2014 14

5: PPP IN THE EDUCATION SECTOR 15

5.1 BACKGROUND ON EXISTING FRAMEWORK OF MYANMAR’S EDUCATION SYSTEM 15 5.2 RELEVANCE OF PPP IN THE EDUCATION SECTOR 15 5.3 RECOMMENDATIONS 17

6: CONCLUSION 20

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Executive Summary This paper pinpoints existing gaps in infrastructure and in education sector in Myanmar and closely examines how Public-Private Partnership could be a solution to speed up Myanmar’s development. The paper learns from international experience and suggests solutions that are unique to Myanmar. Although hard infrastructure and soft infrastructure are assessed separately, the paper highlights the fact that, Myanmar’s growth will not be sustainable unless soft infrastructure develops in line with hard infrastructure. Key recommendations from the paper on what Myanmar needs are highlighted below:

Concrete set of PPP Laws to protect investors from potential political risks PPP unit/Centralized PPP Center which could act as a key actor in conducting

PPP related research, training, drafting laws and effectively monitoring PPP projects

Establishment Education Foundation which can improve coordination between monastic schools and government schools to strengthen the education system in Myanmar

Education Development Center that can train teacher and conduct research on curricula development to improve the education system and reduce dropout rates.

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Introduction After around half a decade of economic stagnation, Myanmar opened up to the world again for business in 2010. Its historic general election in 2015 also gave positive signals for investors around the world. But one might ask, does Myanmar have the right infrastructure and skilled workforce to accommodate the needs of these investors? Myanmar is still behind many of its ASEAN counterparts in terms of infrastructure development. Lack of consistent electricity provision, limited in country and regional infrastructure and connectivity has disappointed many existing and potential investors. In the World Bank’s Doing Business Index 2016, which includes indicators such as “Getting Electricity” and “Trading Across Borders”, Myanmar is ranked 167 out of 189 countries. Currently, foreign actors have made a significant contribution in bridging the infrastructure gap. For example, bilateral and multilateral donors are working together with the government in the following areas:

1. Hanthawaddy International Airport 2. Myanmar Railway Modernization Project 3. Korea – Myanmar Friendship (Dala) Bridge 4. Upgrade of Yangon- Mandalay Highway 5. The development of Thilawa Special Economic Zone (SEZ) 6. Asian Highway Project.

These are a limited number of infrastructure projects planned for Myanmar. But, these projects are not enough for a country, which have stayed closed for half a century without much development in terms of infrastructure, education and in the health sector. For a country that is running on a budget deficit and that has a weak tax system, financing all these new projects would be a major challenge. Would Public-Private Partnership (PPP) be a path Myanmar could take to secure the rapid expansion of infrastructure and in upgrading its deteriorating education sector? What are the challenges and what could be the expected outcomes? This paper will examine and analyze the existing literature on the topic and look at case studies to answer these questions progressively. The rest of the paper is structured as follows. Section 1 of the paper will explain briefly what public-private partnership is and why it is a suitable model for the development of infrastructure (roads and power) and in upgrading the education sector. Next, the literature review in Section 2 will study existing literature surrounding PPP issues and describe how this paper will attempt to contribute to the existing literature.

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While Section 3 of the paper will highlight why PPP is a solution for Myanmar, Section 4 and 5 describes in detail the needs of private sector involvement to develop infrastructure and education and provides constructive recommendations. Finally, Section 6 ends with the concluding remarks.

1: Public Private Partnership Public Private Partnership has been defined differently by scholars but generally it is referred to as a long-term contract and partnership between the public sector and the private sector to deliver public goods efficiently. Some scholars however, have criticized PPPs are not always “partnerships” and in fact, a language game played by politicians as PPP in many cases just involves “contracting out” a public entity and does not involve partnership (Tiesman and Klijn 2002: 197-198) or just a way of avoiding terms such as “privatization” (Linder, 1999: 250) Despite these distinctive views of numerous scholars, 134 developing countries over the past two decades have been using PPP, contributing about 15-20 percent of total infrastructure development (The World Bank, Independent Evaluation Group, 2015: 10). This paper defines Public-Private Partnerships as: a systematic collaboration between the public and private partners to provide public goods efficiently and benefit from mutual gain. The private sector comes in two forms: private enterprises and non-state actors such as NGOs and INGOs. Commercial projects such as toll roads, tunnels, water provision, power etc. are normally conducted in partnership with multilateral organizations while projects involving improvements in soft infrastructure such as educational development, due to it’s non-commercial interest, naturally attract more non-state actor partners. However, in order to gain from the potential benefits of PPP projects, a sound legal framework, fair procurement process, stakeholder consultations and effective evaluation procedures are a must. Hence, PPP will not be the best in the following situations: Lack of investment enabling environment PPP will only be successful if pursued under a good investment environment, as private investors should be protected under good PPP laws. In addition, to attract competent multinational firms, the process will have to be transparent and clean. In developing countries, where corruption remains an important issue, PPP may create chances for corruption (World Bank; Asian Development Bank; Inter-American Development Bank, 2014:41). Selection of private partners will be biased and

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influenced by corruption. Projects won in such manner will not reap good result as the public partner will be lenient during project evaluation and while performing quality checks.

High Transaction Costs Small projects are less likely to be benefit from a PPP contract due to intense logistical requirements during procurement, construction and operation. The efficiency gains in small projects will not be high enough to offset the high transaction costs incurred under PPP. Stakeholder Consultation Governments in developing countries where PPP are practiced the most tend to ignore the importance of stakeholder consultation. However, this could be a make or break situation for a successful PPP project in many cases. Myanmar has seen two cases so far: The Myintsone Dam Project and The Dagon City Real-estate Development Project, in which the project was either terminated or postponed due to public discontent. The Myintsone Dam project was to be constructed at Kachin state’s most symbolic image: the confluence of the Mali and N’mai rivers and the source of Ayewaddy river. The construction of the dam, although might have brought a lot of benefits for the local people, it also meant relocation of many houses and churches in the area as well as other environmental threats (International Rivers: https://www.internationalrivers.org/campaigns/irrawaddy-myitsone-dam-0) . The project is now halted until the end of President Thein Sein’s term in 2016. Similarly, 5 big real estate projects under Dagon City group, which was meant to be a luxury apartment overlooking the most spiritual Shwe Dagon Pagoda, brought a lot of public discontent and eventually lead to termination of the project. Nevertheless, countries such as the UK and South Korea have demonstrated that, when done correctly, the benefits of PPP is enormous. Chart 1.1 below highlights the benefits gained from choosing PPP instead of pure public sector or pure private sector driven projects.

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In summary, projects under PPP are more efficient since the private sector ensures that during the concession years, profit is maximized and customers are satisfied. Under PPP, the private sector is involved in both the building and the operation of the project, which means that, the quality of construction during the building process will not be compromised. Sharing risks brings mutual benefit for both the public and the private sector and finally, PPP leads of a more efficient allocation of the government’s limited resources.

2: Literature Review PPP is perceived to be highly useful and efficient by policy makers and multilateral donor organizations like the World Bank and ADB. But, the literature on PPP has shown mixed results.

2.1 Infrastructure The success of PPP is very hard to measure since it is impossible to know in many cases whether the out would have been different if the government continued to operate. Nevertheless, Jamali (2007): 370-385, analyzed the success of PPP through customer satisfaction and found that, in Lebanon, a large number of people, especially senior citizens were satisfied with the new postal service. Azar (2014): 994-1010, on the other hand, examined the impact of PPP on economic growth using PPP data on Brazil, China, and India. The paper produced robust evidence of PPP having a positive impact on economic growth.

1. Efficiency Gains

• PPP projects focus more on obtaining certain outcomes than outputs. Therefore, PPP allows private investors to come up with innovative ways to produce an output that would complete the outcome in an efficient manner. Moreover, PPP contracts create incentives for private investors to develop ideas to steer consumer spending. When transferred back to the government, this would be extremely beneficial in making extra revenue that would cover the maintenance of the public infrastructure.

2. Reduced Overall Costs

• PPP solves the issue of conflicting interests between builders and implementers. Thus, instead of choosing building techniques that might be cheaper but have high maintenance, private investors will alternatively choose to invest more on quality infrastructure that has low maintenance since in most cases, the partner will be involved in the operation side of the project.

3. Risk Transfer

• Doing projects under PPP allows the government to share risks of construction and operation with more experienced private sector partners. Similarly, the private sector will benefit from the support of the pubic sector in dealing with legal risks such as getting construction permits and land acquiring issues.

Effective use of Limited Budget

• PPP allows the government to plan its budget effectively. Since most PPP projects pay for itself, the government will not have to think about budget issues at least in the short-run. Through PPP, the government can development many sectors at once without compromising the quality of it's output.

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However, Koppenjan and Enserink (2009): 288 have argued that, “Governments often tend go great lengths to convince private parties to invest in public infrastructures which could result in the creation of monopolies, causing affordability problems, excluding of user groups from public services, and long-term indebtedness of local governments”

2.2 Education Sector Private sector/non-state actor involvement in the education sector have resulted in higher quality education (Archer,David, 2010:611-618), better academic performance and are 10% more likely to finish 8th grade (Angrist, Joshua et al.., 2002: 1535-1558). Similarly, H.A. Patrinos, F. Barrera-Osorip, J.Guàqueta (2009) laid out several case studies across Latin America and Asia where public private partnerships of different kinds have been highly successful in the provision of quality education, especially in rural areas. However, not all PPP programmes are a universal success. For instance, voucher provision in Chile has had a larger impact on wealthier communities and there was no evidence of improved education outcomes in terms of test scores and years of schoolings in these students (Hsieh and Urquiola, 2006: 1477-1503).

Although there are increasing amount of literature surrounding the topic of public private partnerships in ASEAN countries, literature on the needs and the potential of public-private partnership projects in Myanmar remain non-existent. This paper will contribute to the limited literature available on the prospects of PPP in Myanmar in helping the country rejuvenate its hard infrastructure and education sector in its pursuit for sustainable growth.

3: Public-Private Partnership for Myanmar

Years of isolation, sanctions, lack of a proper system to tax and a sound

development plan has left Myanmar years behind its South East Asian counterparts

like Thailand. To catch up and boost its performance, Myanmar will have to invest in

better soft and hard infrastructures. According to Mckinsey (2013: 42-43),

Myanmar will need to invest around $320bn between 2010 to 2030 on

infrastructure development specifically in real estate, power plants, rail and road

networks. In doing so, it is the responsibility of the government to make sure that

the development is inclusive of low-income earners. The education sector exhibits a

similar story. Quality of education has suffered over the years due to its rusting

curricula, lack of qualified teachers and inadequate infrastructure. Until 2008,

spending on education as a percentage of GDP has been as low as 0.1% in 2007-

2008 up to 2.1% of GDP in 2013/2014 (Education for All National Review Report:

Myanmar, 2015: 3).

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But, long lagged and closed Myanmar now has a chance to improve its hard and soft infrastructures in three different ways:

1. Privatization; 2. Increasing public sector spending; 3. Engaging in public-private partnerships.

Pure private sector driven projects could cause threats to universal provision of infrastructure as the profit motivated private sector is more attracted to developing infrastructure of urban cities areas, which gives higher returns. Additionally, infrastructure development through the private sector alone will give the private sector a monopolistic advantage, threating the quality of service provision. Public sector driven projects on the other hand, are prone to corruption, lack efficiency and are exposed to budget constraints that could eventually cause debt issues in the future. The use of PPP will therefore be a balanced approach for a country like Myanmar where 25.6%i of the population lives below the poverty line. Involvement of the private sector in service provision would reduce corruption and increase efficiency and experience of partnering local firms. If implemented well, PPP is therefore a solution today to many problems and issues faced by many developing countries in the delivery of public goods. In addition, PPP allows the government to be more organized in its allocation of resources. For instance, from a set of projects that needs to be implemented over a limited time frame, the government could choose to take on projects that are less attractive to private investors and outsource projects, which are more attractive to these investors through a competitive procurement process under PPP laws. Nevertheless, PPP is also used extensively by developed nations to attract private investors, make the provision of public goods innovative and efficient while ensuring a better quality output.

3.1 Current Situation of Public-Private Partnership in Myanmar Myanmar has implemented projects in various sectors including power, energy, road, water etc. through public-private partnership. In fact, 14% of the paved road is constructed using some form of PPP. Previously, the ministry has worked with 28 different companies (mostly local) to build 64 roads (http://www.unescap.org/sites/default/files/Myanmar.pdf). Yet, the process of undertaking PPP projects is far from perfect. Bellow is a summary of current constraints in Myanmar’s PPP projects. Policy Framework A sound policy framework is key to attract private investors. Currently, Myanmar does not have PPP laws to protect the private sector for any possible political risk. This high risk involved may discourage risk-neutral or risk-averse high quality investors, especially in a lesser-known terrain like Myanmar.

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Transparent Bidding Process Most PPP projects in Myanmar are unsolicited (http://www.unescap.org/sites/default/files/9.%20PPP%20in%20Myanmar%20-%20ADB%20support.pdf) which means that the projects arise from a private sector proposal rather than a competitive bidding process. As the project is not won through a competitive bidding, the private sector may have less incentive to lower cost, reducing efficiency gains from the partnership. Due to this lack of transparency, it is widely believed by the people that government prefer to work with cronies for infrastructure development, which also creates a lot of public discontent and may lead to cancellation of potentially good projects. Information Constraint Data collection has been minimal in Myanmar and research is mainly conduced by the private sector. Lack of information not only prevents the government from understanding the infrastructure needs in the country but also will make procurement for projects weak. Government will have to make wild guesses on what projects needs to be done and how. Similarly, while bidding for proposals, the private sector will have little information about costs, the current situation and the needs in the country. These information constraints will increase the risk burden on the private sector. Qualified and Dedicated Team To ensure the success of a PPP project, a constant and in-depth monitoring system is necessary. Only when the private partners are closely watched, they will have incentives to consistently perform well. However, none of the ministries currently have the institutional capacity to follow PPP projects in a professional manner, giving less incentives and obligations for the private partner to perform well. There is a need for an institution to safe guard the PPP policy framework and associated laws where the participants can be from both public and private entity.

4: Hard Infrastructure PPP in Myanmar

4.1 Background on hard infrastructure provision in Myanmar Hard infrastructure includes tangible outputs that are essential in today’s world such as roads, bridges, power stations etc. Having sufficient established hard infrastructure in a developing economy is vital to facilitate trade and improve the livelihoods of the people in the economy (Lokshi and Yemtsov, 2005: 324-326). In Myanmar, only 13% of the population has access to the national electricity gridii, while many still do not have regular access. The quality of paved roads are generally poor, many cities are disconnected and have had little gain from the country’s recent

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development process. Lack of sufficient infrastructure have not only kept many rural children from school but have also caused hindrance in speeding up they country’s development process.

4.2 Relevance of PPP in the Infrastructure Development Budget Constraints Many state owned enterprises in Myanmar are badly managed, and have not caught up to the use of latest technologies or best practices that increase efficiency and saftey. However, due to lack of fiscal capabilities, the government has little choice but to bare the losses than invest a large amount to bring a total change. Partnering with the private sector to improve such unprofitable enterprises will help the government escape from such trap. A good example is the recent partnership of Myanmar Posts and Telecommunications (MPT) and Japan’s KDDI and Sumitomo Group to improve the telecommunication system in Myanmar and increase mobile phone penetration. Although MPT was not making a loss due to it’s monopoly power in the past, calls were unreliable and expensive. Since the partnership, MPT has successfully reduced 3G data network congestion by 20%, the capacity to make successful calls increase by 20% and reduced calling costs for customers by almost 50%iii. Lack of Technical Capabilities The public sector has limited capabilities due to decades of inactivity and limitations in its local partners to undertake complicated infrastructure projects. Therefore, most PPP projects in the past, which are mainly unsolicited projects, have looked at short-term fixes. Roads are built but quality has not been maintained. Bridging infrastructure gaps through a systematic and competitive PPP could encourage competent local and foreign firms to bid. As a result, the private sector which may involve both local and international firms will be able to bring best and successful practices from the region and avoid failed practices already tested in other countries. Promote Inclusiveness Unlike private sector driven projects, which are mostly in the urban areas, were profit could be maximized, PPP allow for private sector involvement even in the rural areas. This involvement would increase the quality of roads built in rural areas, making villages more accessible, leading to more trade and opportunities in the region. Therefore, in remote areas, a different kind of PPP could be used. In particular, instead of letting the private sector regain its investment by charging locals, “availability payments” could be used where the public partner pays to the private partner depending on the performance and irrespective of the demand.

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4.3 Recommendations PPP Laws Stable and strong concession laws as well as laws defining the conditions of service delivery are necessary to make it easier and convenient for investors to understand about the project they are bidding for. Weak laws will attract many risk-loving investors and naturally disqualify a better risk-averse investor. Laws are needed to permit the private sector to charge user fees and to set limitations on such charges. Laws are also essential in protecting the private party from regulatory changes, changes in the conditions of the project and sometimes in the case of project termination. Disputes and problems normally arise with many infrastructure projects as they involve land acquisition and resettlements. The government should have clear policy & laws to deal with such disputes. The disputes caused in the Myit-sone Dam project as well as the Dagon City project as previously mentioned in Section 1 have clearly indicated the gaps and limited ability in the government of Myanmar to deal with such disputes. Such bad practices could prevent potential investments and bring a negative investment climate into the country, risking further essential PPP projects. PPP Unit/Centralized PPP Center “An effective public-private partnership (PPP) framework can help to ensure a strong private sector response” (Farquharson, Edward,et al.., 1962). A centralized PPP center will therefore make sure that projects are conducted smoothly and transparently in a timely manner. The center could bridge all the existing gaps in implementing PPP projects by undertaking complex but necessary tasks such as:

1. Conducting ground research on potential PPP environment in each sector 2. Producing a strong and concrete PPP agenda and determining priority

sectors 3. Training ministries to produce detailed call for proposals and in monitoring

and evaluating on-going PPP projects 4. Providing guidance in drafting PPP laws 5. Development of contracts for projects and 6. Monitoring and collecting data during the life of the project.

Having a PPP center to manage projects, train staff and promote PPP activities have become an important part of ensuring successful PPP projects today. In fact, Myanmar, Laos and Cambodia are the only countries left in ASEAN to develop sound PPP policies and have a centralized unit to conduct PPP projects.

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PPP Plan for Infrastructure Development As highlighted in Section 3.1, Myanmar currently has had more unsolicited projects in the past which encourages corruption practices and reduces efficiency gains. To prevent such cases, a strong public infrastructure development plan is necessary as it allows the government to take leading role in determining which PPP projects should be prioritized. Similarly, it will make it easier for international donors to assist Myanmar in achieving its goals rather than investing mainly in urban infrastructure projects.

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Source: Efficiency Gains: the Case of Water Services in Manila, Mathieu Verougstraete and Isabelle Enders, 2014

Although hard infrastructure development is highly essential for economic growth, it is important to concurrently develop soft infrastructure such as education to ensure sustainable growth. Projects that have worked in only one direction will not promote as much economic activity as predicted. For instance, the building of the Asian Highway in Myanmar might create a route for human trafficking and other

Case Study: Philippines, Manila Water Project, Manila, Philippines Philippines was one of the very first ASEAN countries to adopt a systemic set of PPP laws to promote private sector involvement in improving roads, power provision and building airports etc. Since the establishment of PPP laws, Philippines has involved in numerous number of PPP projects amongst which, the Manila Water Concession project remained a landmark project. The project emerged after a severe water crisis in Manila in the 1990s where only around 25% of the houses had regular water supply and only around 8% of the houses had regular sewage connection. In addition, the ministry in charge of supplying water was inefficient, over-staffed and had a large amount debt. The project emerged after a severe water crisis in Manila in the 1990s where only around 25% of the houses had regular water supply and only around 8% of the houses had regular sewage connection. In addition, the ministry in charge of supplying water was inefficient, over-staffed and had a large amount debt. When contracting out to establish a PPP, the government came up with two different tenders for different zones: East and West to Manila Water Company and Mayniland Water Service respectively. Aim: 1. To provide regular water supply to the residents within 5 years 2. To provide standardized safe drinking water 3. To provide citywide water coverage within 10 years and to ensure sewage connection to at least

83% of the population in Manila within 25 years. Result: Water coverage surged up from only 25% of the population getting 24-hour water supply to approximately 99% in 2013. Water loss also reduced from 45% to 12% in the east and from 66% to 39% in the west (Cross Ref: MWSS Regulatory Office website). In addition, the basic tariff rate on average decreased from 8.56 pesos per cubic meter before PPP to 2.32 and 4.97 pesos in East and West zones respectively(Wu, X. and Malaluan, N. A. (2008)).

Although the service provided by the water companies without doubt was beyond the level of service that could have been provided by the government, the tariff rate in 2012 was approximately 50-100% higher in real terms than the rate while the service was provided by the ministry (Verougstrate and Enders, 2014). However, it is difficult to conclude if the result would have been similar if the ministry were still under control.

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illegal activities, which could give easy money in the short term. Therefore, while upgrading connections with other countries, it is also important to update the education system and increase knowledge in people on how to use the roads effectively. For this reason, in the next section, the paper will discuss about the needs for soft infrastructure development in Myanmar in achieving long term development goals.

5: PPP in the Education Sector

5.1 Background on existing framework of Myanmar’s education system Education is free on papers in Myanmar but due to hidden costs such as collection of donations for school events and unofficial yet obligatory tuition classes in public schools have forced students out of schools. Only 31% of the students compete upper secondary schools in Myanmar and most dropout rates are due to economic reasons (Education for All National Review Report: Myanmar, 2015: 3). As a result, the reliance on monastic schools, which are registered under ministry of religious affairs but teaches the same curricula as public schools, has increased over the years. Monastic schools remain the only source of low cost, semi-formal non-public school. Now, Myanmar has a total of 1,255 registered monastic schools mainly located in rural areas, teaching approximately 175,090 childreniv. Although most monastic schools are free, some (20%) schools charge their students (Burnet Institute and Monastic Education Development Group, 2014: 4). While monastic schools have helped in keeping literacy rates as high as 95% and 90% for male and females (15-24) respectively, these schools have their limitations. The proportion of students remaining after five years is as low as 50%, schools do not have sufficient classroom furniture or teaching /learning materials (Burnet Institute and Monastic Education Development Group: 3-4). Despite the low performance, many are still hooked to the Monastic Schooling system, highlighting the existing constraints of the public education system in provision of universal education. Non-state actors such as The Burnet Institute Myanmar (BIMM), Myanmar Education Consortium and the Monastic Education Development Group (MEDG) are working closely to improve the standards of monastic education in Myanmar by training teachers and building better infrastructurev. But, this raises the issue of sustainability. As Archer (2010: 614) expressed, it is a challenge for non-state actors to provide Education in developing countries since they do not have the capacity to do it forever.

5.2 Relevance of PPP in the Education Sector The success of PPP projects in Pakistan, Chile, Malaysia and increasing efforts in other countries such as India, to develop a better quality education through PPP is an indication of increasing popularity of PPP in changing the system of education delivery in developing countries. Myanmar itself has a huge potential for upgrading

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its education sector by promoting low cost private sector investment in education for the following reasons:

1. Lack of low-income private sector providers of education To promote incentive in the public sector to perform well, it is important to have competing private sector in order to increase incentives for the parties to act in the interest of the customers. Encouraging the building of low price private schools and supporting these schools will also create local employment in the region, reduce over crowding problems in classrooms and give the children in disadvantaged households a chance to get out of the vicious cycle of poverty through better education.

2. Efficiency Constraints Involving the private sector in the education sector would also bring revolutionary changes. Private schools are more likely to advocate for better education and are more likely to come up with creative ideas to improve education and attract more students in the future. Private businesses have revolutionized products for the benefits of customers in many ways and the PPP model in education could do similar things. It is important to also address that, instead of the government giving loans to private schools through PPP, if education is fully privatized, there may not be any incentive for investors to invest in low-cost schools. Therefore, government support in the development of low-cost schools to make education inclusive is highly necessary.

3. Structured Policy Plans Developing countries often have vague and general economic policies. The use of PPP model to improve education would force the government to come up with a mechanism to solve this issue in collaboration with the private sector. When partnered with the private sector, the government will make to make sure that the project aim is well defined and necessary regulations are in place.

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5.3 Recommendations Through intense situation analysis on existing system of education as well as a study on the experiences of other countries, which are culturally, economically and politically similar to Myanmar, the paper recommends the following: Establishment of Education Foundation Myanmar needs an Education foundation under the ministry of education to develop a coordination mechanism amongst existing education providers. This needs to be emphasized since currently, monastic schools are registered under the ministry of religion affairs. This coordination should be voluntary in a sense that, no schools should be forced to join the foundation in order to ensure that participating institutions have the same sets of goals and vision to improve the existing system. Through this coordination system, the public sector can fund low price private schools. This program would be very close to the approach taken by the Punjab Education Foundation, which successfully improved the conditions and the quality of education in 1,337 schools across the region. See case study below.

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Case Study: Punjab Education Foundation Source: Public-Private Partnerships in Education: Lessons learnt from Punjab Education Foundation, Asian Development Bank, 2010.

Punjab Education Foundation Education is free till secondary school in Pakistan. However, lack of “quality” education in public schools have led to high drop out rates and search for alternative private schools. Thus, to tackle such problem and walk toward the aim of providing quality education in Punjab, Pakistan, the government through the Punjab Education Foundation worked closely with the private sector as a form of PPP. The partnership fostered the development of four main programs:

1. Foundation Assisted Schools a. This program only accepts application from schools that charge less than

350Rs per month and have minimal infrastructure (eg. Library, Science Laboratory) of a medium quality private school in addition to other mandatory rules such as its location and number of students enrolled.

b. Next, the school receives a financial assistance of Rs.350 per student once the school is accepted to be part of FAS program. Strict rules such as revocation of assistance if students perform less in government set tests is applied and the quality of education provided at these school is monitored in a timely manner.

2. Continuous Professional Development Program a. This program trains teachers at low tuition private schools by highly

trained mentors after an intensive needs assessment of participating teachers.

b. Under this program, school administrators are also trained on a separate event (The School Leadership Development Program) to ensure better coordination and understanding between the teachers and principles/ vice-principles.

3. Teaching in Clusters by Subject Specialists a. Subject Specialists with teaching experience are recruited from the best

universities in the province to introduce new teaching methods, give tests and draw school improvement plans.

4. Education Voucher Scheme a. The Education Voucher Scheme distributed amongst low-income

households, giving them the choice to attend any private school of their choice registered under the scheme.

The result was as expected: Learning outcomes improved as students started performing better in tests, drop out rates fell and absenteeism amongst teachers was reduced.

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When done systemically, the foundation will reduce the number of students in over crowded public schools, promote competition in the education sector and most importantly, improve the quality of education provided in rural areas. The provision of education will finally be inclusive of the low-income population, giving them a chance to come out of the vicious cycle of poverty. Finally, for the case of Myanmar, where there is very little private sector participation, it will be necessary to add extra elements such as: provision of loans to build private schools in rural regions, tax redemptions and reduce bureaucracy in school registration procedures to encourage private sector participation. One argument against this program however, would be the lack of sufficient budget in the government to execute such projects. But, programs like this could start small. This paper therefore suggests starting the foundation with 10 participating schools in remote villages of Ayawaddy as a pilot project. Once this pilot project is implemented in a systemic order and refined to produce positive results, the government could take proceed to take loans to support the program. Education Development Center Building infrastructure and institutions alone would not bring better quality education unless the qualities of teachers teaching and the school curricula improve concurrently. And yet again, the public sector faces numerous limitations. Thus, the public sector should focus on regulations and financial side of the projects while the private sector should be involved in running the trainings and developing the center. This paper therefore suggests the establishment of an Education Development Center, which would have three main responsibilities:

1. Training school teachers nationwide 2. Conducting Research on curricula developments

1. Nationwide Teachers Training Schools Training centers are key to improving teaching methods. Lack of teacher trainings have brought the long lasting, old system of parrot learning in Myanmar’s education system. Due to lack of their ability to provide explanation, teachers have discouraged questioning and critical thinking. The training centers would be ideally located in cities of every state to guarantee active participation of people in remote regions. The center will then connect teachers from the region with the schools from the same region. Regional teachers play important role in providing consistent quality education since they are more likely to stay longer in the region and in employment, speak the local language and have a better understanding of the culture. It is a challenge however, to retain trained teachers in rural schools. Attractive and innovative measures should be enacted to make sure trained teachers remain. For

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instance, the teachers should be promised a market salary similar to the salary in cities, trained regularly and be allowed to bring creative teaching methods in classrooms. Lack of challenge in small schools could make the teachers less interested and less motivated. It is normally the case that there is over supply of young teachers in the city while there are shortages of teachers in rural areas. Having a training school will also allow the institutions to have a pool of teachers, making it easy for rural schools to reach out for qualified teachers. Most importantly, the training schools could have programs that attach training with work experience. Through such programs, newly trained teachers can be sent to the most needed areas of the country to improve existing systems of education. 2. Conducting Research on curricula developments Like any other training center, it is essential for this Education Development Center to have a separate research institute which works on developing a better curricula and improving the teaching system. Myanmar currently does not have concrete numbers on the dropout rates, teacher absentee rates etc. Being able to collect such data could allow researchers to come up with ideas to directly resolve contagious matters that drag down the quality of educations.

6: Conclusion

For a country like Myanmar, improving the hard infrastructure alone will not be

sufficient. Improving soft infrastructure such as education and health care is a must.

Without skilled labor in the country, the benefit from hard infrastructure growth

will not be maximized and the economic growth will not be sustainable.

Due to lack of sufficient on PPP projects being implemented in Myanmar, however,

this paper has limitations. Further quantitative research could be done on the

success of PPP projects in Myanmar through an intensive survey with ministries and

partner firms.

In addition, PPP is a learning process itself. For the government to avoid failed big

projects, the government will have to start with small successful projects and put in

place sound policies, which Myanmar has already started but still has a long way to

go, especially in the field of improving soft infrastructure services.

While committing to execute PPP projects may sound easy, the challenging aspect

comes during the implementation process. It is important for the government to

plan projects carefully, ensure no corruption during and after the selection process,

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make sure risks are allocated efficiently and finally, monitor projects closely in a

timely manner. Although the expressed task maybe lengthy and complex, it is

critical that these steps are executed accurately to guarantee a success.

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