aid effectiveness and public- private partnership: thailands development assistance in lao pdr and...
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AID EFFECTIVENESS AND PUBLIC-PRIVATE PARTNERSHIP: THAILAND’S DEVELOPMENT ASSISTANCE IN LAO PDR AND CAMBODIA
SIRIPORN WAJJWALKU
THAMMASAT UNIVERSITY
2014 AUSTRALASIAN AID AND
INTERNATIONAL DEVELOPMENT POLICY WORKSHOP
13-14 FEBRUARY, 2014
CANBERRA, AUSTRALIA
THAILAND’S INTERNATIONAL DEVELOPMENT COOPERATION POLICY AND INSTITUTIONS
Thailand as an emerging donor
1. Policy of being donor since 2003
2. Institutions
- Thailand International Development Cooperation Agency (TICA)
- The Neighboring Countries Economic Development
Agency (NEDA)
OUTLINE OF THE PRESENTATION
1. Introduction
2. NEDA’s projects in Lao PDR and Cambodia: Some observations
3. NEDA and involvement of private sector in aid process
4. NEDA and PPPs: The possibility?
INTRODUCTION
The research project titled “Institutional Arrangement and Aid Effectiveness: The relations between government agency and private sector”
• to examine NEDA’s existing aid process in Lao PDR and Cambodia focusing on the involvement of for-profit private sector
• to explore the possibility to promote PPPs as a tool to involve for-profit private sector in aid process
NEDA’S PROJECTS IN LAO PDR AND CAMBODIA
1. Amount of projects
1. Lao PDR: 6 projects
2. Cambodia: 1 project
2. Sector : infrastructure
1. Road
2. Railway
3. Airport
4. Drainage pipeline
3. Type of aid: tied loan
4. Modality : bilateral and demand driven
NEDA PROJECTS IN LAOS (1) Projects Consulting Companies and
their nationality Construction Companies and their nationality
Responsible institutions in the recipient countries
Drainage pipeline construction and T2 road improvement Projects in Vientiane, Laos PDR
TEAM Consulting Engineering and Management Co., Ltd. (Thai)
Thaiwat Engineering Co., Ltd. (Thai)
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Railroad construction project from Nong Khai Province, Northeastern Thailand, to Ban Thanaleng in Laos, PDR
SPL Consultant Group1. STS Engineering Consultant
Co., Ltd.2. Pacific Consultant
International (Thailand) Co., Ltd. and
3. Lao Transport Engineering Consult Company
STS Engineering Consultant Co., Ltd. Is the main company.
Sermsageung Construction Co., Ltd. (Thai)
Lao Railway Authority: LRA
The Road construction project from Chiang Rai Province-Kunming, through Laos PDR (R3)
Southeast Asia Technology Co., Ltd. (SEATEC) in association with Pacific Consultant International (Thailand) Co., Ltd. (PCIT)
Phrae Thamrongwit Co., Ltd. (Thai) and Namtha Road and Bridge Construction Co., Ltd.
Ministry of Public Works and Transportation (Laos)
NEDA PROJECTS IN LAOS (2)
Projects Consulting Companies and their nationality
Construction Companies and their nationality
Responsible institutions in the recipient countries
Pakse Airport Improvement Project
Department of Civil Aviation (Thailand)
Italian-Thai Development Public Company Limited (Thai)
Department of Civil Aviation (Laos)
The Road construction project from Houi Kon / Muang Nguen to Pak Beng in Laos
Asian Engineering Consultants Cooperation Limited (AEC) (Thai)
Phrae Thamrongwit Co., Ltd. (Thai) and Namtha Road and Bridge Construction Co., Ltd.
Ministry of Finance (Laos) and Ministry of Public Works and Transportation (Department of Highways) (Laos)
The Road improvement project in Vientiane Capital to serve the 9th ASEAM Summit
TEAM Consulting Engineering and Management Co., Ltd. (Thai)
Thaiwat Engineering Co., Ltd. (Thai)
Ministry of Finance (Laos) and Vientiane Capital
NEDA PROJECT IN CAMBODIAProjects Consulting Companies and
their nationalityConstruction Companies and their nationality
Responsible institutions in the recipient countries
Koh Kong – Sre Ambel Road Improvement Project (R48)
TEAM Consulting Engineering and Management Co., Ltd. (Thai)And Planning and Research Consultant Co., Ltd. (Thai)
Sahakarn Wisavakorn Co., Ltd. (Thai)
Ministry of Public Works and Transportation (Cambodia)
NEDA’S PROJECT IN LAO PDR AND CAMBODIA: BUDGET
The name of the projects The amount of budget for consultancy
The amount of budget for construction
The total amount of budget
Drainage pipeline construction and T2 road improvement Projects in Vientiane, Laos PDR
THB 7,489,700 THB 150,510,300 THB 158 million
Railroad construction project from Nong Khai Province, Northeastern Thailand, to Ban Thanaleng in Laos, PDR
THB 9 million THB 186 million THB 195 million
The Road construction project from Chiang Rai Province-Kunming, through Laos PDR (R3)
THB 110 million THB 910 million THB 1,020 million
Pakse Airport Improvement Project THB 8 million THB 292 million THB 300 million
The Road construction project from Houi Kon / Muang Nguen to Pak Beng in Laos
THB 30 million THB 740 million THB 770 million
The Road improvement project in Vientiane Capital to serve the 9th ASEAM Summit
THB 3.7 million THB 185 million THB 188.7 million
Koh Kong – Sre Ambel Road Improvement Project (R48)
THB 17 million THB 485 million THB 502 million
Note: The exchange rate is $ 1 = 33.0 Bht (as of 10/02/14)
NEDA’S PROJECTS: PROPORTION OF BUDGET SPENT FOR THAI GOODS AND SERVICES (CONTRACTOR FOR CONSTRUCTION)
Projects Proportion of budget (%)Drainage pipeline construction and T2 road improvement Projects in Vientiane, Laos PDR
80.63%
Railroad construction project from Nong Khai Province, Northeastern Thailand, to Ban Thanaleng in Laos, PDR 65%The Road construction project from Chiang Rai Province-Kunming, through Laos PDR (R3) 93%Pakse Airport Improvement Project 84.80%The Road construction project from Houi Kon / Muang Nguen to Pak Beng in Laos 76%The Road improvement project in Vientiane Capital to serve the 9th ASEAM Summit 65.04%Koh Kong – Sre Ambel Road Improvement Project (R48) 58%
NEDA’S PROJECTS: PROPORTION OF BUDGET SPENT FOR THAI GOODS AND SERVICES (CONTRACTOR FOR CONSULTANCY)
Projects Proportion of budget (%)Drainage pipeline construction and T2 road improvement Projects in Vientiane, Laos PDR
70%
Railroad construction project from Nong Khai Province, Northeastern Thailand, to Ban Thanaleng in Laos, PDR Unavailable The Road construction project from Chiang Rai Province-Kunming, through Laos PDR (R3) 90%Pakse Airport Improvement Project 100%The Road construction project from Houi Kon / Muang Nguen to Pak Beng in Laos 61%The Road improvement project in Vientiane Capital to serve the 9th ASEAM Summit 71%Koh Kong – Sre Ambel Road Improvement Project (R48) 100%
NEDA’S PROJECTS AND OBSERVATIONS
1. Purposes: economic cooperation, mutual benefits, and cordial relations
2. Size: small-scale in terms of budget and project size
3. Sector: infrastructure (not public services)
4. Highly concentration in terms of private sector (company) involvement
5. Highly economic beneficial to donor in terms of consultancy and construction
6. Highly dependence on donor in terms of consultancy and construction
NEDA’S AID PROCESS AND CHALLENGES
1. Unbalance between demand and supply bigger demand
2. Not enough incentive for private sector due to non-economic scale of project in terms of budget and size
3. Lack of coordination between public-private sectors in aid process
4. Limited capacity of private sector in developing partners, particularly the procurement
PROPOSED ALTERNATIVE
NEDA’s main challenges
1. Budget size
2. Efficiency and Transparency
Proposed alternative
- the involvement of for-profit private sector
- the promotion of PPPs
“PPP” DEFINED BY INTERNATIONAL ORGANIZATION(A POLICY GUIDELINE)
Organization for Economic Co-operation and Development (OECD)
Public-Private Partnerships (PPPs) are long term agreements between the government and a private partner whereby the private partner delivers and funds public services using a capital asset, sharing the associated risks. PPPs may deliver public services both with regards to infrastructure assets (such as bridges, roads) and social assets (such as hospitals, utilities, prisons).
The interest in PPPs has been growing in recent years and the need for fiscal restraint in most OECD Member countries is expected to further increase their usage. This presents policy makers with particular challenges that should be met with prudent institutional answers.
“PPP” DEFINED BY A MULTILATERAL DONOR
Asian Development Bank (ADB)
The term “public-private partnership” describes a range of possible relationships among public and private entities in the context of infrastructure and other services. Other terms used for this type of activity include private sector participation (PSP) and privatization. While the three terms have often been used interchangeably, there are differences. PPPs can follow a variety of structures and contractual formats. However, all PPPs incorporate three key characteristics:
• A contractual agreement defining the roles and responsibilities of the parties
• Sensible risk-sharing among the public and the private sector partner, and
• Financial rewards to the private party commensurate with the achievement of pre-specified outputs.
“PPP” DEFINED BY BILATERAL DONOR
Japan International Cooperation Agency (JICA)
Utilizing the private sector for the provision of public services, PPP is a method of implementing programs through the coordination of the public and private sectors. It includes a wide range of schemes which are tailored to the level of participation of the private business, ranging from a simple consignment of a project to build-operate-transfer (BOT) and full privatization. “PPP infrastructure project” refers to infrastructure projects implemented through PPP.
“PPP” DEFINED BY BILATERAL DONOR
AusAID
The term describes a range of possible relationships among public and private entities in the context of infrastructure and other services. The public partners in a public-private partnership are government entities, including ministries, departments, municipalities, or state-owned enterprises. The private partners can be local or international and may include businesses or investors with technical or financial expertise relevant to the project. The government’s contribution to a public-private partnership may take the form of capital for investment (available through tax revenue), a transfer of assets, or other commitments or in-kind contributions that support the partnership. The government also provides social responsibility, environmental awareness, local knowledge, and an ability to mobilize political support. The private sector’s role in the partnership is to make use of its expertise in commerce, management, operations, and innovation to run the business efficiently. The private partner may also contribute investment capital depending on the form of contact.
MERITS OF PPP
1. Utilization of the private sector for the provision of public services enlargement of budget size
2. For-profit private sector’s contribution to aid process
1. Providers of goods and services
2. Implementers or contractors of aid projects
3. Co-investors of aid projects
Private Sector = Partner for development
CONDITIONS FOR FOR-PROFIT PRIVATE SECTOR INVOLVEMENT
1. Environment that makes private sector to engage in aid process
1. Rule of law
2. Effective public sector
3. Tax system
4. Open market and fair competition
2. Incentives for for-profit private sector to engage in aid process
1. Business opportunities
2. Tapping into emerging markets
NEDA AND PPP: THE POSSIBILITY ?
NEDA’s Strategy
NEDA’s strategic plan 2012-2014
1. Integration between public – private sectors within the country, and with those of the recipient countries
2. Promotion of private sector (for-profit private sector and private organization-civil society) involvement
3. Less dependence on national budget
4. Alternative sources of budget
THANK YOU
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