There is growing recognition that Public-Private Partnerships (PPPs) have a vital role to play in bridging the infrastructure gap across Asia. Governments across the region are increasingly aware of this – and they are acting to improve the environment for foreign investment.
Governments are reviewing PPP laws and regulations with a view to adapting them to the private sector’s legitimate needs and to facilitate more foreign investment. Project pipelines are increasingly assembled to create more predictable deal flow that justifies the initial cost for new market participants.
Welcomingly, Multilateral Development Banks such as IFC, ADB and AIIB are funding technical and legal consultants to help host governments with feasibility studies and tender preparation. This is to increase the likelihood that infrastructure projects are sufficiently feasible and bankable to attract private sector interest and the limited capital available in the market.
With this COVID-induced momentum in the development of the infrastructure sector in Asia, now is the time to see where each of the key markets are at. Our guides seek to do that in conjunction with local law firms also specialising in the sector.
This development is an evolution for PPPs, historically underutilised in parts of Asia. The use of public-private partnerships (PPPs) as a model for the delivery of infrastructure has constantly evolved, but no more so than in the past few years across all asset classes and sectors.
PPPs have long been the preferred model in mature infrastructure markets such as Australia and the United Kingdom. With some notable exceptions such as Japan and Korea, the PPP model hasn’t been similarly used in Asia for reasons distinctly different in each market. The model has grown gradually in Asia with more participants entering the market, but by and large, the bulk of infrastructure procurement was undertaken using more traditional procurement models (that is, using direct funding from the government).
COVID has been a game changer for the use of PPPs in infrastructure in Asia. Since its outbreak, governments from around the world have focused public expenditure on their health care and social welfare systems to protect people’s lives and economies. The budgets that were allocated to spending on infrastructure (which in many respects were already inadequate due to the perceived infrastructure gap in many Asian countries) have been further curtailed due to expenditure on health care and social welfare and that will continue for the foreseeable future, while the need for infrastructure keeps increasing.
There are limited opportunities in Asia for brownfield asset recycling or privatisations so the resulting funding gap will need to be met by the private sector through PPPs.
Our guides share knowledge on this critical development across the region, including market snapshots, key issues for investors and the way forward.
Please enjoy reading them. We welcome feedback, including if you’d like to see us develop guides for other countries in the region.
Explore KWM's PPP Guide for Asia below:
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