Public–Private Partnerships in Developing Asian Countries: Practical Suggestions for Future Development Assistance
Publication | September 2021
Public–private partnerships, especially in the context of infrastructure development, have gained in popularity over the past decades and are now largely accepted both in developed and developing countries.
Public-private partnerships (PPPs) are often defined as long-term infrastructure contracts that bundle the components of delivery to efficiently manage and assign risks between the public and the private sector.
- Substantial increases in development institutions’ assistance for PPPs from the 2010s created an enabling environment to mobilize private funds, especially in Asian developing countries with relatively higher incomes.
- Success in implementing PPPs is still limited to a few Asian developing countries and sectors.
- Rather than waiting for business opportunities to arise, development institutions are promoting transaction advisory services to developing countries to create their own bankable PPP projects.
- Other possible finance mechanisms to fill the demand of infrastructure development include utilizing spillover tax revenues, since PPPs have not always worked even in countries with advanced PPPs.
- To increase the share of PPPs in the projects supported by development institutions using transaction advisory services, we recommend (i) developing trust from all stakeholders, especially from the recipient countries, through close communication; and (ii) utilizing their concessional loans effectively for PPP projects and raising awareness of the benefits of PPPs so that developing countries are willing to share project risk.