Catalog

Public-Private Partnerships

An effective partnership between the public and private sectors can increase private sector participation. ADB seeks to harness the partnership between the public and private sectors to promote development, and minimize costs and enhance efficiency in meeting its strategic objectives, particularly in reducing poverty. More private sector investment can be expected in a country if the government creates an effective macroeconomic, regulatory, contractual and institutional environment.

ADB has a comparative advantage among development banks in creating public-private partnerships. It provides both public sector policy and private sector finance. It can discuss policy and regulatory issues with governments and, at the same time, catalyze resources for specific private sector projects.

ADB’s Private Sector Development Strategy articulates the importance of public-private partnerships, allowing scrutiny of public sector activities to identify potential areas of private sector operations. ADB assists governments in moving from owner-producer to facilitator-regulator of certain industries. It also provides help in various government initiatives—upgrading public sector accounting and reporting systems, encouraging corporatization, introducing structural sector reforms, establishing independent regulatory bodies, privatizating public sector bodies, designing concessions for developing new infrastructure, and establishing agencies that help promote small- and medium-sized enterprises.

MDB Harmonization

As a member of the working group on harmonization of financial management practices among the multilateral development banks (MDBs), which was endorsed by the presidents of the MDBs in 2001, ADB joined the Inter-American Development Bank, European Bank for Reconstruction and Development, World Bank, and others in developing good practice papers on financial reporting. The three areas studied for possible harmonization were affordability, tariffs, and subsidies; financial management assessment, reporting, and auditing; and financial covenants and ratios. Based on the summary reports prepared in 2002 for each area, the MDBs are expected to determine the policy and procedural changes necessary to implement these recommendations. Also, in 2002 there was positive progress in the ongoing pilot-testing of the Viet Nam country harmonization activities involving ADB, World Bank, the Japan Bank for International Cooperation, and the Government.

Financial Initiatives

ADB undertook several initiatives in 2002 to support improved financial management and governance arrangements both internally and externally.

In 2002, ADB carried out 34 technical assistance projects totaling nearly $19.5 million, involving financial management activities. The significant outputs of these projects include the development of the accounting profession, training in accounting and auditing, development of accounting regulations/procedures/policies, establishment of common accounting and auditing standards, and support for the implementation of anti- money laundering legislation. Nine technical assistance projects totaling $2.8 million were for regional activities. The rest were country-focused on 11 developing member countries.

For example, a project in Cambodia will strengthen public financial management, and another in the People’s Republic of China aimed to strengthen the government auditing system. In the Lao People’s Democratic Republic, a project enhanced government accounting regulations and procedures; and in the Philippines, a project strengthened regulatory and market governance.

The GMS Summit

“Our most important achievement has been the growing trust and confidence among our countries, which has provided a favorable environment for trade, investment, economic growth, and social well-being.”

This joint declaration was made at the first-ever GMS Summit, held in Phnom Penh, Cambodia, in November 2002. The summit, which marked 10 years of successful regional cooperation (see http://www.adb.org/GMS/), was attended by leaders of the six Greater Mekong Subregion (GMS) countries—Cambodia, People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand, and Viet Nam.

Pledging to work more closely to reduce poverty and promote greater subregional integration, the GMS leaders adopted a five-pronged strategy to realize their shared vision. The strategy aims to

• strengthen infrastructure linkages through a multisectoral approach
• facilitate cross-border trade and investment
• enhance private sector participation in development and improve its competitiveness
• develop human resources and skills competencies
• protect the environment and promote sustainable use of shared natural resources

The leaders agreed to flagship programs in 11 key areas to support the strategy: transportation/econ- omic corridors, telecommunications and energy interchanges, cross-border trade and investment, greater private sector participation in development, human resource development, joint initiatives for managing the subregion’s shared environment and natural resources, and tourism development.

ADB President Tadao Chino expressed ADB’s continued support and commitment to regional cooperation and the shared development aspirations of the GMS leaders. He also announced ADB’s approval of technical assistance for developing the subregion’s human resource potential (see http://www.adb.org/Media/Articles/2002/733_ Cambodia_Phnom_Penh_Scholarship_Program/).

SASEC Initiatives

A strong and dynamic private sector is crucial to long-term and rapid economic development. For many years, ADB has provided support to private sector initiatives in South Asia, a subregion that has the economic potential to become an important high-growth area. The South Asia Subregional Economic Cooperation (SASEC) initiative (see http://www.adb.org/SASEC/)—comprised of Bangladesh, Bhutan, India, and Nepal—is home to the highest concentration of the world’s poor. Cross-border trade and investment promotion can be instrumental in promoting employment and increasing incomes, and private sector initiatives can play a significant role in driving trade and investment.

The importance of the private sector to SASEC was highlighted in 2002 at the Second Meeting of the SASEC Trade, Investment, and Private Sector Cooperation Working Group (TIPWG) and at the First Annual Meeting of the South Asia Business Forum (SABF). Considered a milestone in developing subregional business-to-business cooperation, the annual meeting provided the venue for the secretaries of commerce of the four countries to express their support for the establishment of the SABF, and to urge the SABF to develop measures that would accelerate the growth of trade and investment in the region.

Other SABF activities in 2002 included establishing business facilitation cells in the four countries; and launching the SABF web site.

At the request of the participating countries, ADB approved in December 2002 a small-scale regional technical assistance to undertake a comprehensive study of trade facilitation in the subregion. The study is expected to identify measures to encourage intra-regional trade and identify and remove nontrade barriers. Sector studies will support private sector cooperation in human resource development, information and communication technology, tourism, audiovisual industry, and agribusiness.

In addition to the TIPWG, ADB has also supported SASEC cooperation initiatives in several sectors, including energy, transport, tourism, and environment.