Engaging the Private Sector in Public–Private Partnerships
Public–private partnerships are a valuable vehicle for governments to secure financing and expertise for infrastructure development. However, it will require a clear and stable environment of policies, regulations, and institutions.
Infrastructure needs in Asia are enormous. Governments can mobilize additional financial resources and gain access to valuable expertise by structuring projects as public–private partnerships (PPPs). However, enticing the private sector into infrastructure requires good policies, expertise in developing well-structured projects, and supportive institutions. Negotiating agreements with a clear allocation of risks and responsibilities across various stakeholders is key to a successful partnership.
- Private finance can help reduce the huge infrastructure deficits in Asia.
- PPPs also bring technical and management expertise to public service provision.
- A central challenge of structuring a PPP project is allocating risks.
- Accurately estimating cost and revenue streams requires realistic demand analysis.
- Governments should reduce the expectation that contracts will be renegotiated.
Policy Brief 2015-4