Under Strategy 2020, ADB will expand work with the private sector to generate greater economic growth in the region. Public-private partnership (PPP) is seen as an important modality to achieve this objective, and Strategy 2020 emphasizes the promotion of PPPs in all of ADB's core operations. This approach is aligned with the Group of 20 perspective that multilateral development banks need to promote project financing in cooperation with the private sector, especially where partial or full cost recovery is possible.
The Asia and Pacific region requires infrastructure investment of at least $8 trillion until 2020. Available funding from traditional sources falls far short of the investment need. To address the massive infrastructure requirements, countries have three principal options: (i) review traditional sources of funds and explore additional funding from them, (ii) investigate mechanisms for generating more resources from off-budget sources, and (iii) consider a greater role for PPPs in procuring infrastructure and identifying and addressing impediments to the development of PPP transactions.
Keeping in view the operating environment and varying economic profiles of ADB developing member countries (DMCs), ADB bases its PPP operations on four pillars: advocacy and capacity development, enabling environment, project development, and project financing. Under pillar 1, regional departments will play a leadership role in advocating for PPPs within their DMCs; under pillar 2, regional departments will strengthen assistance to DMCs to develop the overall enabling environment for PPPs; under pillar 3, regional departments will actively encourage PPP and enhance DMCs' abilities to carry out project identification and meet subsequent development needs; and under pillar 4, ADB's Private Sector Operations Department will enhance its nonsovereign products and their application, and commercial cofinancing to enable it to leverage assistance and catalyze change through greater private investment in the DMCs. Regional departments may offer sovereign products to support PPP financing.