ppp trends and initiatives in the asia- pacific region. ppp trends in asia-pacific.pdf · ppp...

22
PPP trends and initiatives in the Asia- Pacific region PPP National Workshop in Bhutan Organized by UN ESCAP 19-20 August 2014

Upload: ngokhuong

Post on 30-Mar-2018

215 views

Category:

Documents


1 download

TRANSCRIPT

PPP trends and initiatives in the Asia-Pacific region

PPP National Workshop in Bhutan

Organized by UN ESCAP

19-20 August 2014

Page 2

Agenda

Infrastructure Assessment of Asia-Pacific Region 1

Emergence of PPPs in Asia-Pacific Region

India’s experience so far 3

Comparative assessment of PPPs in Asia-Pacific region 4

2

Challenges and Way Ahead for PPPs in Asia-Pacific Region 5

Page 3

Asia-Pacific region lags behind in infrastructure development…

Key points:

►Very few countries in top 10 infrastructure ranking (Singapore and Japan)

►Huge infrastructure gap in most of the countries of Asia-Pacific region

Source: The Global Competitiveness Report 2013–2014

Infrastructure Ranking/ Gap

9

85

132

29

82

47 61

87

48

96

18 2

Page 4

…hence, the region requires $15-20 trillion of investment by 2030…

Key points:

►Investment to a tune of USD 15-20 trillion required between 2010 and 2030 to

bridge the gap

Americas

$16–17 trillion

Europe

$8–10 trillion Asia/Oceania

$15-20 trillion

Africa/Middle-East

$2–3 trillion

US / Canada

~$6-6.5 trillion

China ~$6.5-7 trillion

India ~$3-3.5 trillion WORLD TOTAL

$40 – 50 trillion

Source: BCG report – The Global Infrastructure Challenge 2010, Secondary research, EY Analysis

Infrastructure Investment Requirement

Page 5

Public sector spending alone wouldn’t suffice $15-20 trillion investment requirement…1/2

-8.2

-5.7

-4.9

-4.4

-4.2

-4.0

-3.3

-2.4

-2.1

-1.8

-1.3

1.3

-10 -8 -6 -4 -2 0 2

Japan

India

Bangladesh

Malaysia

Vietnam

Thailand

Indonesia

Bhutan

China

Philippines

Australia

Singapore

Budget Surplus/Deficit (% of GDP)

Source: www.cia.gov, EY Analysis

Key points:

►Huge budget deficit has put substantial constraints on scarce public resources

Page 6

Public sector spending alone wouldn’t suffice $15-20 trillion investment requirement…2/2

Source: www.cia.gov, EY Analysis

226.1

51.8

30.9

54.6

48.2

45.9

24.2

38.9

22.4

50.2

32.6

105.5

0 50 100 150 200 250

Japan

India

Bangladesh

Malaysia

Vietnam

Thailand

Indonesia

Bhutan

China

Philippines

Australia

Singapore

Public Debt (as % of GDP)

Key points:

►Huge public debt puts further constraints on scarce public resources

►Major share of USD 15-20 trillion of investment to come from the private sector

Page 7

…therefore PPPs in infrastructure have been gaining momentum in the region since 1990…

12 9 19

51

80 60

96 111

48 44 47

72 87

104 85

106 109 129

84 78 62

116

86 86

3 2 4 6 10

33 31 17 24 25

14 23 21

36 34 35

84 72

62 70

117 129

142

34

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Number of PPP Projects (Financial Closure Achieved)

East Asia & Pacific

South Asia

Source: http://ppi.worldbank.org/ , EY Analysis

Early Days Kick-off Phase (1994-2001) PPP Boom (2002 onwards)

South Asia surpassing East Asia & Pacific

Region

► Total 106 projects worth USD 26.7 billion

► Only 15 projects in South Asia

► 44 projects in Energy sector and 37 projects in Transport sector

► Total 735 projects worth USD 181.5 billion

► Only 177 projects in South Asia

► 333 projects in Energy sector and 240 projects in Transport sector

► Total 1,968 projects worth USD 548.8 billion

► About 50% projects in South Asia (836 projects)

► India major contributor; 2010 saw a shift in pattern with South Asia overtaking East Asia & Pacific region

► 1,005 projects in Energy sector and 513 projects in Transport sector

Page 8

India and China are leading the way for PPP projects in the region…

Bangladesh Bhutan

China

India

Indonesia

Malaysia Philippines

Thailand

Vietnam Japan

0

50

100

150

200

250

300

350

0 200 400 600 800 1000 1200 1400

To

tal In

ve

stm

en

t in

US

D b

illio

n

Total Number of PPP Projects

Country wise PPP projects and investments till 2013 ► India and China front runner in PPP projects; Combined, they have achieved financial closure for 1,928 projects amounting to USD 450 billion

► Out of USD 450 billion investment from India and China, India’s contribution is more than two-third

► Energy and Transport sectors have been the focus of private sector participations in the Asia-Pacific region with 50% and 20% share of the total number of projects respectively

Key points:

►India and China are front runners in terms of numbers and PPP investments

►Malaysia, Philippines and Indonesia also have major market for PPP investments

Source: http://ppi.worldbank.org/ , http://www8.cao.go.jp/pfi, EY Analysis

Page 9

India’s PPP story so far 50% of infrastructure investment to come from private

22%

37%

48%

Tenth FYP Eleventh FYP Twelfth FYP (P)

Infrastructure investment

Private

Public

Source: Twelfth Five Year Plan and Eleventh Five Year

Plan, Planning Commission

0123456789

20

02

-03

20

03

-04

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

*

Investment (as %age of GDP)

Private Public Total

Tenth FYP Eleventh FYP

* Estimated, Source: Gajendra Haldea, “Building Infrastructure: Challenges and

Opportunities,” 7 July 2010; Twelfth Five Year Plan 2012-2017, Planning

Commission

Key points:

►Private sector participation has continuously increased with 12th FYP envisaging

around 50% of infrastructure investment to come from private sector

Page 10

India’s PPP story so far Significant increase in PPPs since 2003-04

- Few notable PPPs could be found as early as 19th century: 1) The Great Indian Peninsular Railway Company (1853), 2) The Bombay Tramway Company's tramway services in Mumbai (1874)

- PPP models were there in power generation and distribution in Mumbai and Kolkata in the early 20th century.

- Only 86 PPP projects worth USD 5.7 billion were awarded till 2004 (World bank study of 13 states in 2005)

- Most of the projects were in bridges and roads sector

- Large-scale private financing has been limited to Vishakapatnam and Tirupur

- Increasing acceptance of PPP model due to favorable policy reforms and innovative PPP structures

- As on March 2013, 693 PPP projects worth USD 26.9 billion were completed across sectors at national and state level

- In addition, 794 PPP projects were under implementation and another 1,076 PPP projects were in pipeline

Early Phase

Kick-off Phase

(1991 – 2004)

PPP Boom

Source: Planning Commission

Page 11

India’s PPP story so far Score on Critical Success Factors (CSFs) encouraging…1/3

Weak

Moderate

Strong

*Scoring is based on our perception

PPP Projects in India

Robust Risk

Allocation

Framework

Economic &

Financial

Viability

Adequate

Government

Support

Strong &

Matured

Private Sector

Stakeholders

Participation &

Interactions

Stable Political

Situation & Will

Transparent &

Fair

Procurement

Process

Well

developed

Financial

Market

Strong Legal/

Regulatory

Framework

Page 12

India’s PPP story so far Score on Critical Success Factors (CSFs) encouraging…2/3

CSFs Description Score

Strong Legal/

Regulatory

Framework

• Sector specific acts/ regulations and agencies at National level

for key sectors (Airports, Roads, Power, Ports, Railways);

• In addition, few states have enacted infrastructure legislations;

however no PPP specific policy or law

Strong

Robust Risk

Allocation

Framework

• All MCAs have in-built risk allocation framework which is robust

enough and has been developed based on learnings from past

projects and views of experts;

• Risks generally includes Land acquisition, Sponsors’ credit,

Revenue, Political and Financing risks

Strong

Economic &

Financial

Viability

• Huge demand supply gap;

• However, Value for money analysis not a mandatory task and

Relatively lower willing of user to pay

Moderate

Adequate

Government

Support

• Existence of Viability Gap Funding and other fiscal support;

• But decision making & approval granting processes are slow Moderate

Page 13

India’s PPP story so far Score on Critical Success Factors (CSFs) encouraging…3/3

CSFs Description Score

Strong &

Matured

Private Sector

• Large number of private firms with sufficient technical and

financial capabilities;

• Presence of Enabling environment for Consortium

Strong

Stakeholders

Participation &

Interactions

• Absence of any platform for interaction between Authority,

Private players and End users Week

Stable Political

Situation & Will

• Existence of several policies and Vision Documents;

• However, fluctuation of Government and Awareness amongst

political leaders is major concern

Moderate

Transparent &

Fair

Procurement

Process

• Model RFQ/RFP to streamline and expedite decision-making by

the authorities in a manner that is fair, transparent and

competitive

Strong

Well developed

Financial

Market

• Large number of commercial banks, Support from Multilaterals,

Foreign Direct Investment (FDI), Specialized lending institutions

(IIFCL, IDFs, etc.);

• Limited involvement of Pension and Insurance funds

Moderate

Page 14

1

India’s PPP story so far But still lot to be achieved

Policy / Regulatory Reforms ► Preparation and implementation of dedicated PPP policy and rule

► Creation of an Independent PPP Regulator and Dispute resolution courts

► Making Value-for-money (VFM) mandatory for each project in the PPP policy/ rule

2 Institutional Reforms

► Development of institutional capacity at state and local body level

► Improvement of PPP database management at national and state level

3 Financing Reforms

► Development of long term lending financial markets in the country

► Development of new financial products such as take-out financing and refinancing

Page 15

Key PPP initiatives/ support in the Asia-Pacific region Comparative assessment of countries…1/5

Country

Name

Legal

Framework

Institutional

Framework Financial Support Land Acquisition

Indonesia

Strong

regulatory

framework

including

Presidential

regulation 67

(2005) on

PPPs

National

Development

Planning Agency

(BAPPENAS),

Investment

Coordinating Board

and Ministry of

Finance are key

agencies

Financial support via

Indonesia Infrastructure

Guarantee Fund, VGF

and Land Funds; Project

development fund

through PT SMI (PT

Sarana Multi

Infrastruktur)

Specific

regulations on

land acquisition

and specific fund

for it

Malaysia

No specific

PPP rule; but

PPP

Guidelines

(2009) and

Privatization

Master Plan

(1991) exist

PPP Unit under

Prime Minister’s

department is the

responsible authority

No direct incentives /

financial support to PPP

projects; However,

project facilitation fund

exist

Land Acquisition

Act exist;

Facilitation Fund

have separate

budget for land

acquisition for

highway projects

Page 16

Key PPP initiatives/ support in the Asia-Pacific region Comparative assessment of countries…2/5

Country

Name

Legal

Framework

Institutional

Framework Financial Support

Land

Acquisition

Myanmar

No specific

PPP law/

regulation

Ministry of National

Planning and

Economic

Development is the

nodal agency

No direct incentives /

financial support to PPP

projects

There is no

Land

acquisition

framework

Philippines

Presence of

specific BOT

Law

PPP center under

National Economic

and Development

Authority (NEDA) is

the nodal agency

Financial support to PPP

projects on case to case

basis; Project

Development and

Monitoring Facility

(PDMF) is dedicated fund

Act to facilitate

for acquisition

of right of way;

PPP Strategic

Support Fund

provides fund

for acquisition

of land

Page 17

Key PPP initiatives/ support in the Asia-Pacific region Comparative assessment of countries…3/5

Country

Name

Legal

Framework

Institutional

Framework Financial Support Land Acquisition

Singapore

PPP projects

follow general

laws together

with guidance

provided in

PPP

Handbook

Ministry of Finance

through its PPP

Advisory Council

plays the central

coordinating role

No direct incentives /

financial support to

PPP projects; Private

Investment Promotion

Fund is to be

established under the

revised PPP Act

Land Acquisition

Act exist

India

Sector specific

acts; however

no PPP

specific policy

or law

PPP cell at national

level, Ministry of

Economic Affairs

nodal agency for

national level PPP

projects

Viability Gap Funding

(VGF), Infrastructure

development fund,

Long term lending

support

Land acquisition

act exist but

needs

improvement

Page 18

Key PPP initiatives/ support in the Asia-Pacific region Comparative assessment of countries…4/5

Country

Name

Legal

Framework

Institutional

Framework Financial Support

Land

Acquisition

Thailand

Presence of

dedicated PPP

Act

PPP Policy

Committee and State

Enterprise Policy

Office (SEPO) are

responsible

authorities

Financial support to PPP

projects on case to case

basis; Private Investment

Promotion Fund is to be

established under the

revised PPP Act

Few

legislations

related to land

acquisition

exist

Vietnam

Few legislations

on PPP exist;

Unified PPP

decree /

legislation under

preparation

Ministry of Planning

and Investment is

the responsible

authority

Financial support to PPP

projects on case to case

basis; Government is

planning to establish the

Project Development

Fund

No dedicated

Land

Acquisition

Policy or Act

Page 19

Key PPP initiatives/ support in the Asia-Pacific region Comparative assessment of countries…5/5

Country

Name

Legal

Framework

Institutional

Framework Financial Support

Land

Acquisition

Australia

Sector specific

acts; National

Public Private

Partnership

Policy and

Guidelines in

2008

Australian PPP unit

and National PPP

forum has

institutionalized and

gave structure to the

PPP activities

Equity/ debt contribution

from government up to

50% of equity/ debt

Land

acquisition act

exists and

supports

infrastructure

development

Page 20

PPP projects in the Asia-Pacific region face multi-facet challenges…

Weak Legal/ Regulatory Framework

Poorly Prepared/ Structured Projects

Lack of Capacities

Weak Financial Environment

► Only few country

such as Indonesia,

Philippines and

Thailand have

dedicated

legislation on PPP

► Absence of sector

specific regulators

in many countries

except few

countries such as

India

► Only few countries

have Model

Concession

Agreements

(MCAs) with robust

risk allocation

framework

► Dispute resolution

mechanism is a

major area of

concern

► Value for money

analysis not given

much priority

► Except for

countries such as

India, China and

Australia, most

countries in the

region significantly

lack in capacities,

both in public and

private sector

► Lack of dedicated

financial

institutions in most

countries

► Limited

involvement of

insurance/ pension

funds

► Lack or

underdeveloped

financial products

such as long term

loans, take-out

finance, etc.

Page 21

To foster infrastructure investment and thus growth, the Region needs to overcome existing challenges by…

►Regional co-operation on knowledge sharing, improvement of financial

climate, and capacity building of both private and public sector

►Strengthening the regulatory and legal framework

►Putting more emphasis on project preparation including value for money

analysis

►Development of robust risk allocation framework and dispute resolution

mechanism

►Development of local infrastructure bond markets, long term lending

institutions, and innovative products such as take-out financing and

refinancing

Page 22

Thank You Abhaya Agarwal Partner - Infrastructure and PPP

Ernst & Young LLP 6th Floor, Hindustan Times House, 18-20, Kasturba Gandhi Marg, New Delhi, Delhi 110 001, India

Phone: +91 11 4363 3000 Email: [email protected]