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Post-Crisis Growth and Poverty Reduction in Low-Income Asia

Post-Crisis Growth and Poverty Reduction in Low-Income Asia. Experiences with Public-Private Partnerships. Mark Johnson Hanoi, 22 March 2010. Attractions of PPP. On time / on budget delivery Efficient operating performance Supplement public sector capital. Presentation Roadmap.

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Post-Crisis Growth and Poverty Reduction in Low-Income Asia

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  1. Post-Crisis Growth and Poverty Reduction in Low-Income Asia Experiences with Public-Private Partnerships Mark Johnson Hanoi, 22 March 2010

  2. Attractions of PPP • On time / on budget delivery • Efficient operating performance • Supplement public sector capital

  3. Presentation Roadmap • Framework for successful PPPs • Big issues in financing PPPs

  4. I. Successful PPP Framework • Public sector needs clear objectives • why PPP? • clearly stated • over long term • Examples • value for money versus cost minimization • connectivity to network

  5. Key Success factors - continued • PPP contracts long and the future is unknown • contract compliance (black and white) • collaboration (grey) • Public sector must set frameworks and behaviors

  6. Key Success Factors - continued Private Sector Public Sector Framework Scrutiny by lenders Scrutiny by sponsors Procurement Other experience Administration • Not win / lose • Balance – enduring relationship • Reduces optimism bias • Better for large, complex projects

  7. Case studies – Australia1 Note: 85% - 90% infrastructure in Australia Public Financed 1. Study conducted by Allen Consulting Group with University of Melbourne 2. Later than budgeted on a cost weighted basis

  8. II. Infrastructure – Financing PPPs • Long life – long time frame for concessions • Capital intensive • Earns revenue in local currency • Optimum financing – long term local currency

  9. PPP’s: The ideal outcome Pension Funds Life & Health Insurance Banks 0…………………………………………Maturities…………………………..…20/30+years Equity markets Banking markets Bond markets Currency markets PPP Financing Government bonds

  10. PPP’s – in the interim • Efficiency benefits of PPPs available • lowest cost • on time delivery • efficient operation • Financing not optimum • long term dong not available • exchange risk on foreign currency • Probably, maturity risks

  11. Interim measures • Establish strength of public covenant • transparency • legal framework • commitment over time • Establish best practice in structuring • ADB and World Bank expertise • APEC initiative

  12. Interim measures (continued) • Work with private sector to understand terms and risks • ADB Infrastructure Initiative • APIP – public/private forum • Work with IFI’s to improve financing structures • exchange rate cover • refinancing cover • Build domestic financial system and long term savings institutions • “Asian Savings financing Asian Infrastructure”

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