THAILAND

The Public Private Partnership Act BE2535 needs to be revised in many areas, and perhaps Thailand may need to draft a completely new law to entice more private funding for government investment projects, said Deputy Finance Minister Pradit Pataraprasit.

In his speech to the Thailand Infrastructure Forum yesterday, he said the current law makes it too long and slow a process to get a project off the ground. There are far too many steps involved. The net effect of this has been to deter worthwhile projects. The best programmes look on government participation as a 'last resort', and it offers an incentive for only the less-interesting programmes to undertake the arduous, multi-year journey to consideration and approval.

"The complex and long drawn-out process also means that we are losing the opportunity for smaller projects to take an interest in PPPs. What I would like to see is a new law that reduces the steps in the approval process," he said.

Under the new law, the definition of infrastructure will need to be changed. Now, it concerns only large-scale projects like roads and railways. Pradit is of the view that it should encompass smaller projects covering health or educational services. He said the Korean model should be considered.

He said that to attract private investment into the national development process, investors should be allowed to expect a direct return on investment.

"We should not begrudge a profit to the private sector. That is what attracts them to put up their money. That's what will motivate them to do more, and do it better in terms of the products and services that will be provided to the public.

"But, we also need to be alert to creating concessions or semi-private monopolies that allow both private and public-sector partners to secure attractive returns, but, in the process cheat citizens with overpriced goods and poor-quality goods and services through excessive protection from competition, or other means."

Meanwhile, policy-makers and civil servants need to strike the right balance between the interests of the private investors and the public at large.

To ensure fairness, he said the government must be clear what the private sector will gain from the partnership and multiplier benefits to the public. "These are frequently missed or understated in narrow cost-benefit analyses."

"Very often, these narrow cost-benefit analyses lead to decisions that win us pennies, but lose us pounds. Personally, I believe, this is one of the biggest areas of lost opportunity in such programmes," he said.

Aside from legal revision, he said that stalling the PPPs was the absence of champion projects. Previously, individual government agencies were selected for the good candidates. The "input" approach must be changed. Agencies responsible for planning, public debt and budget are being invited to align on candidate projects right up front.

The National Economic and Social Development Board, the Public Debt Management Office, and the Budget Bureau should review projects and indicate their position on projects before the project makes its way around the multiple government departments and committees for clearance.

"I believe getting this alignment up front will help make it easier for other agencies to review the projects, because they will already know the position of these key agencies which are responsible for the fundamentals of a projectω If we want to leverage PPPs, I believe the government is going to have to do more than just endorse the policy."