Download xx - OECD

Public Private Partnership
in
Infrastructure Development
Kiichiro Fukasaku
Development Centre
Japan-OECD-Vietnam Public Private Partnership Forum
H a n o i  3 rd M a r c h 2 0 0 8
Slide 2
1
Introduction
2
PPP in Infrastructure
3
Opportunities for Asia
4
Challenges and Best Practice
5
OECD Policy Support
Introduction
• Financing fails to meet infrastructure needs
people lack access to infrastructure worldwide
1
1.2
2.3
2.4
4
Slide 3
billion people without access to roads
billion without safe drinking water,
billion without reliable energy
billion without sanitation
billion without modern communication
(Source: Promoting Pro-Poor Growth, OECD 2007)
Outlook:
Annual World Infrastructure Expenditure
Estimated averages in US$ billion and %
2010-20
% of
World GDP
2020-30
% of
World GDP
0.38
245
0.32
292
0.29
49
0.09
54
0.07
58
0.06
Telecoms1
654
1.14
646
0.85
171
0.17
Electricity2
127
0.22
180
0.24
241
0.24
Water1,3
576
1.01
772
1.01
1 037
1.03
1 626
2.84
1 897
2.49
1 799
1.79
Road
Rail
Total
1.
2.
3.
Slide 4
2000-10
% of
World GDP
220
Estimates apply to the years 2005, 2015 and 2025.
Transmission and distribution only.
Only OECD countries, Russia, China, India and Brazil are considered here.
(Source: Infrastructure to 2030, OECD 2007)
Challenges
• Globalisation and impact on infrastructure
• Urbanisation
• Growing interdependence between
infrastructure systems
• Meeting future financial needs
• Infrastructure vital for growth and vice versa
Slide 5
Slide 6
1
Introduction
2
PPP in Infrastructure
3
Opportunities for Asia
4
Challenges and Best Practice
5
OECD Policy Support
Infrastructure
•
•
•
•
•
•
Efficiency vs. equity
High up-front costs, late returns on investment
High multi-faceted risks and uncertainty
Political dimension
Public good character
Limited access to financial markets
How to raise incentives for private
sector involvement?
Slide 7
Investment Commitments 1990 – 2006
PPP in Infrastructure in Developing Countries
160
142.9
140
114.3
120
100
80
60
40
2006 US$ billions
20
0
1990
Slide 8
1995
2000
2005
(Source: World Bank PPI Project Database)
Investment Commitments by Sector
160
2006 US$ billions
140
120
Total
100
80
Telecoms
60
40
Transport
Energy
20
Water
0
1990
Slide 9
1995
2000
2005
(Source: World Bank PPI Project Database)
Investment Commitments by Region
90
2006 US$ billions
80
East Asia and Pacific
70
60
South Asia
50
Latin America and the
Caribbean
40
Europe and Central Asia
30
Sub-Saharan Africa
20
10
Middle East and North
Africa
0
1990
Slide 10
1995
2000
2005
(Source: World Bank PPI Project Database)
Slide 11
1
Introduction
2
PPP in Infrastructure
3
Opportunities for Asia
4
Challenges and Best Practice
5
OECD Policy Support
Global Competitiveness Report
World Economic Forum, 2007-2008
Vietnam
2.8
av. ASEAN-4
3.9
Malaysia
5.29
Thailand
4.85
Indonesia
2.74
Philippines
2.7
India
score out of
China
3.97
0
Slide 12
Infrastructure
3.45
1
2
3
4
5
7
6
(based on: World Economic Forum, The Global Competitiveness Report 2007-2008)
7
Asia: the Private Sector
Re-engaging in Infrastructure Development
90
2006 US$ billions
Asia and Pacific
80
70
Latin America and the
Caribbean
60
50
40
Europe and Central
Asia
30
Sub-Saharan Africa
20
Middle East and North
Africa
10
0
1990
Slide 13
1995
2000
2005
(Source: World Bank PPI Project Database)
Private sector investment in infrastructure
1984-2005
$ billion
cumulative
Asia
- East Asia / Pacific
- Southeast Asia
- South Asia
- Central Asia
284.0
75.0
136.6
67.5
7.5
Estimated infrastructure needs
2006-2010
$ billion
per year
Slide 14
Asia
- East Asia / Pacific
- South Asia
- Central Asia
248.8
178.9
63.1
6.8
(Source: ADB‘s Infrastructure Operations, ADB 2007)
Asia: Regional Imbalance
25
22.88
2006 US$ billions
20
17.18
15
India
China
13.22
10
8.82
8.29
Total ASEAN-4
Average ASEAN-4
5
2.20
Vietnam
0.26
0
1990
Slide 15
1995
2000
2005
(Source: World Bank PPI Project Database)
Asia: Regional Imbalance
East Asia and Pacific
Population
In millions
South Asia
1823
1378
Poverty
% living on less than US$ 1/day
15
31
Urbanisation
% urban population
43
28
Electricity
% with access to electricity
88
43
Water
% access to improved water sources
78
84
Sanitation
% access to improved sanitation
49
35
Transport
% of rural population living
within 2 km of all-season roads
95
65
Communication
% fixed/mobile phone subscribers
36
6
Slide 16
(Based on: Nataraj, Infrastructure Challenges in South Asia, ADB Institute 2007)
Vietnam
Status of infrastructure development ─ ranking among 131 countries
1st (best)
64
73
99
97
90
106
131th
port
infrastructure
Slide 17
electricity
supply
roads
air
transportation
railroads
telephone lines
(based on: World Economic Forum, The Global Competitiveness Report 2007-2008)
Vietnam
• “Vietnam serves as an excellent example of
how infrastructure can foster a sharing of
the benefits of growth … Economic
development has been remarkably propoor, lifting around 20 million people out
of poverty.”
– Connecting East Asia, 2005
Slide 18
1
Introduction
2
PPP in Infrastructure
3
Opportunities for Asia
4
Challenges and Best Practice
5
OECD Policy Support
Slide 19
Challenges Ahead
•
•
•
•
•
•
•
Balance public and private engagement
Double imperative: profitability ↔ social ends
Dichotomy of public and private interests
Limited institutional capacity
Specificity of infrastructure market
Commercial risks in developing countries
Political dimension
Slide 20
Connecting East Asia
A New Framework for Infrastructure – ADB, JBIC, World Bank – 2005
•
•
•
•
•
•
Slide 21
Rapid growth yet marked by 1997 crisis
Urbanisation vs. rural development
Regional infrastructure linkages
Environmental protection
Policy, agency & stakeholder coordination
Funding challenge
Connecting East Asia
New framework: Inclusive Development
Poverty
Reduction
Growth
Service
Access
Infrastructure
helps connect
growth to the
sharing of
benefits
Growth
Access
Infrastructure
Determinants
Determinants
Slide 22
(adapted from: ADB/JBIC/World Bank, Connecting East Asia, 2005)
India
Meeting infrastructure investment needs
2006:
$
60 billion
2008:
est.
$ 130 billion
Government investment in infrastructure
2006:
4.7 % of GDP ≈ $
41 billion
2008:
8 % of GDP ≈ $ 100 billion
Slide 23
(Sources: OECD Economic Surveys: India, 2007; IMF World Economic Outlook, 2007;
DEA/MoF/ADB, Facilitating Public-Private Partnership, 2006; Rastogi, India Infrastructure Report, 2006)
India
Viability Gap Funding:
funds up to 20% of cost for state projects implemented by
private sector developer (competitive bidding)
India Infrastructure Finance Company Ltd.:
wholly government-owned company to provide long-term
finance to infrastructure projects; priority for PPP
+
Slide 24
strong government commitment
to PPP in infrastructure
(Sources: OECD Economic Surveys: India, 2007;
DEA/MoF/ADB, Facilitating Public-Private Partnership, 2006; Rastogi, India Infrastructure Report, 2006)
India: Lessons learnt
•
•
•
•
•
•
•
Slide 25
Government commitment
Transparency and communication
Innovative financing schemes
Capacity building
Proper risk allocation (efficiency, capacity)
Consideration of alternatives to PPP
Continuous private sector consultation
1
Introduction
2
PPP in Infrastructure
3
Opportunities for Asia
4
Challenges and Best Practice
5
OECD Policy Support
Slide 26
OECD Contributions
1. Monitoring OECD country policies in
infrastructure development
Infrastructure to 2030
Economic Surveys
International Investment Perspectives
2. Support to public policy-making
OECD Principles for Private Sector Participation in
Infrastructure
3. Support to donors
Promoting Pro-Poor Growth: Four Guiding
Principles for Meeting Infrastructure Challenges
Slide 27
Infrastructure to 2030
• Average annual infrastructure
investment requirements to
2030: 3.5 % of World GDP
• Government budgets tied to
social spending in the future
• New “business models” and
innovative financial solutions
needed
 Analysis by sector
Slide 28
Policy Guidance for Governments
OECD Principles
for Private Sector Participation in Infrastructure
•
•
•
practical implementation tool of 24 principles
aimed at governments and private sector actors
illustrates how to :
1. Design and manage PPP projects in infrastructure
2. Improve the institutional environment
3. Encourage responsible business conduct
Slide 29
OECD Policy Guidance for Donors
Four Guiding Principles
for Meeting Infrastructure Challenges
1. Use partner country-led framework for
coordinated donor support
2. Enhance infrastructure’s impact on poor people
3. Improved management of infrastructure
investment for sustainable outcomes
4. Increased and efficient infrastructure financing
Slide 30
(Source: Promoting Pro-Poor Growth: Policy Guidance for Donors, OECD 2007)
Thank you!
Kiichiro Fukasaku
Development Centre