Public-Private Partnerships

Almost fifty senior officials representing infrastructure and related ministries from 23 of ADB's developing member countries, and a number of observers from development agencies based in Tokyo, participated in the Strengthening Private Sector Participation and Investment in Physical Infrastructure workshop held at ADBI in Tokyo from 19-22 November 2007. ADBI designed and developed the workshop in close collaboration with ADB headquarters and ADBI development partners—the Commonwealth Fund for Technical Cooperation, the Public-Private Infrastructure Advisory Facility, UNESCAP, the World Bank and the World Bank Institute. Collaborators also included a number of partners representing private sector investor interests. Private sector partners included international and regional investment banks and rating agencies, as well as legal, financial, and technical publicprivate partnership (PPP) experts.

The workshop was programmed to enhance senior government officials' understanding of the main challenges to attract private sector investment and achieve greater PPPs for infrastructure development across the Asia-Pacific region. In his opening address, Masahiro Kawai, Dean of ADBI, noted that the private sector was an important partner for infrastructure development in the region before the onset of the 1997 Asian financial crisis. Mr. Kawai emphasized the need to further intensify policy reform efforts—underway by many countries in the region—to create a more positive business climate to restore investor confidence. Robert Bestani, Director General of ADB's Private Sector Operations Department, during his keynote speech highlighted the high savings rate in developing member countries and the availability of a large amount of surplus funds in capital markets. Mr. Bestani described the keen interest of the private sector but noted that while there is an increasing flow of investment to the Asia-Pacific region, infrastructure development has yet to attract much of the investment to date.

Participants were updated on Asia's economic performance in the global context and the impact it has had in terms of new flows to Asian capital markets. Participants were then briefed on experiences with PPPs in the region and introduced to innovative approaches that have evolved for financing of public infrastructure, and improving the risk management and bankability of infrastructure projects. Following a number of group sessions and extensive dialogue between public sector officials and those that represented private sector investor interests, the participants identified a number of priority policy actions that need to be addressed by their governments to encourage greater private sector participation and investment in infrastructure investment programs in their countries.

In closing the workshop, Worapot Manupipatpong, Director of ADBI's Capacity Building and Training Department, concluded that establishing the right risk/return profile is key to promoting private sector partnerships in infrastructure projects in the region. He stated that this can be achieved by mitigating project risks through creating an enabling macroeconomic, regulatory, and legal environment as well as through innovative risk sharing schemes.

During group sessions and discussions, participants identified policy recommendations for their governments to encourage private sector participation and investment in infrastructure-related programs in their countries.