Governments around the world have long recognized the important role private businesses play, not only in terms of helping curb employment and payment of taxes but in nation building in a literal sense. Although there already have been projects undertaken wholly by the private sector for the government of a particular nation in the past, the concept of Public-Private Partnership programs was fully adopted by many only during the late 20th and early 21st centuries. During this time, a more structured form of PPP or 3P was being adopted by governments all over the world. In Asia, the new framework of the 3P was caught by many countries in the region during the early 21st century. Today, 3P projects are electrifying the whole of Asia and adding fuel to its economic growth.
What Exactly Is Public-Private Partnership?
Public-private partnership projects are oftentimes infrastructure-related ventures between a government agency and a private business. Many of such projects include rehabilitation or building of transportation and road networks, railways, government buildings, convention centers and parks. Not all public-private partnership projects, however, are infrastructure-related. They may also include non-civil works projects like management and operating agreements. Normally, the private business will be the one that will finance the project of the government and based on the terms of the agreement or contract, the government will pay the private entity within a fixed period of time. In some cases, the private company will lease to the government its finished project, like in the case of a government building.
Why does the 3P Project Excite the Business Sector and Governments in Asia?
The rapid economic growth of some countries in Asia has increased the demand for more infrastructures. This prompted various governments in the region to go on a mad scramble in partnering with the private sector to answer the demand. The move further improved their respective economies and also reduced the unemployment rate due to the jobs such projects generated. In some countries like Indonesia and Philippines, however, 3P projects were slow in picking up as the regulatory structure for such development has not been fully established yet. In order for these countries to engage the private sector to take on large-scale infrastructure projects like ports, railways and other major projects, there is a need for a regulatory system that is coherent and tailored specifically for this purpose. Since such regulatory policy entails a lot of negotiations, it is becoming more a challenge for policy makers in these countries.
What Are The Remedial Measures To Resolve The Issues Hounding 3P?
Aside from the much required coherent regulatory system that would allow greater participation from the private sector, there is also the question of infrastructure financing. While capital may be flowing abundantly in the global market and in other countries in the Asian region, not enough of it is circulating in developing countries like the Philippines and Indonesia. In order to tackle these two major issues, policy makers in both countries are now in the process of enacting policy measures that would answer the need for coherent regulatory system and at the same time, mitigate or reduce risks associated with this type of investment. Among the measures being looked into at the moment is the revenue-based loan modality. Prominent experts from the academe and international organizations have been invited by policy makers in both countries to give an insight on the issues so that the government can come up with doable solutions that would permanently address the issues. Case studies on infrastructure development, project financing and regulatory reforms have been shared by these experts, which proved to be a great help in guiding policy makers on how to approach the issues.
Despite the issues that continue to beset 3P programs in some of the countries in the Asian region, the huge benefits that these projects present are enough to electrify Asian countries. Aside from answering the demand for more infrastructures, the trickle-down effects that this program creates are enough to galvanize their respective governments into action.