WB, APEC see huge potential of PPP in AsPac infrastructure development

By Ted P. Torres (The Philippine Star) Updated July 21, 2011 12:00 AM

MANILA, Philippines - World Bank and Asia Pacific Economic Cooperation (APEC) officials have stressed the huge potential of Public-Private Partnership (PPP) projects in developing infrastructure in the Asia-Pacific region.

Infrastructure projects are crucial in achieving a seamless regional economy and rebalancing the sources of economic growth in the Asia-Pacific region they noted.

However, the World Bank and APEC finance ministers agreed that funding infrastructure projects “doesd not come cheap” and that the process must be seamless.

“Building the road, bridges, power plants, and rails that will drive growth in this region over the next decade will require trillions of dollars in the new investments including from the private sector,” US Treasury Assistant Secretary for International Finance Charles Collyns said in a recent forum in Washington.

The biggest challenges for infrastructure financing is tapping into increasingly large sources of long-term capital and finding solutions that are applicable to the unique conditions of each country, he said.

He noted that key to raising long-term capital is through public-private partnerships in developing infrastructure in the APEC region.

In a report released by the Asian Development Bank (ADB), it cited the potential of the Philippines’ PPP program but pointed out it was generally perceived by investors as reflecting unclear policies and burdened by cumbersome approval processes.

“To encourage partnerships, the government should improve transparency in PPP project selection, provide better accounting of revenues and expenditures, and have a higher-profile anti-corruption drive,” ADB said in the report. “The success of reforms in both rules and administrative processes and infrastructure support is expected to result in higher foreign direct investments and an increase in fixed capital.”

In the forum, the finance officials explored the growth in the infrastructure financial asset class; how to strengthen public investment programs in infrastructure; whether to pursue public or private financing for infrastructure projects, and how to create a solid pipeline of well prepared PPP projects; how to manage fiscal risks of PPPs; leveraging capital markets for infrastructure finance; and investor perspectives on participation in infrastructure.

The APEC finance ministers agreed that accelerating investment in infrastrcture and improving service delivery is critical for Asia-Pacific as the region continues to recover from the global financial crisis and seeks to expand prosperity more broadly.

“Inter-regional trade is a component of the recovery, meaning improvements to supply chains and production networks are key issues for all APEC economies,” the finance heads said.

The World Bank also stressed the need to make public investment programs more effective and launch PPP schemes that work.

The two-day gathering included presentations and panel discussions by senior experts from APEC economies on both sides of the Pacific, private sector asset managers, academics, and experts of the multilateral development banks and the International Monetary Fund (IMF).

APEC finance ministers will meet again in November to review the results of the conference.