PublicPrivate Infrastructure Investment in East Asia

1
Public-Private Infrastructure Investment in East
Asia

• Rafaelita M. Aldaba
• Philippine Institute for Development Studies
• NEAT Working Group Meeting on Investment
• 10 May 2008 Beijing, China

2
Agenda

• Modalities for public-private partnerships
• in infrastructure
• Trends in private participation in
  infrastructure investment
• Infrastructure challenge in East Asia

3
Models for private participation in infrastructure

• Management lease contracts private entity
  takes over management for a fixed period but
  ownership investment decisions remains with the
  state
• Concessions private entity takes over
  management for a given period assumes
  significant investment risk
• - Rehabilitate, operate transfer (ROT)
• - Rehabilitate, lease/rent transfer (BLT)
• - Build, rehabilitate, operate transfer (BROT)

4
Models for private participation in
infrastructure (contd)

• Greenfield projects a private entity or
  public-private joint venture builds or operates a
  new facility for a period specified in contract
  facility may return to the state at end of
  concession period East Asia
• - Build, lease, transfer (BLT)
• - Build, operate, transfer (BOT)
• - Build, own, operate (BOO)
• Divestitures buy equity stake through asset
  sale, public offering, or mass privatization
  program Latin America

5
Private sector infrastructure investment in East
Asia
US billions
Latin America the Caribbean
Europe Central Asia
East Asia Pacific
South Asia
East Asia has attracted significant levels of
private sector investment in infrastructure
6
Canceled or distressed PPI projects in developing
countries 1990-2006
Source World Bank and PPIAF, PPI Project
Database.
7
Investment commitments to PPI projects in
developing countries
Total US509 billion (2006 US)
Total US782 billion (2006 US)
2001-06
1990-2000
Source World Bank and PPIAF, PPI Project
Database,
8
Private Investment type
2006 US billions
2006 US billions
9
ASEAN 4 China a closer look
US million
10
ASEAN 4 China (contd)
11
Infrastructure Performance
ADB, JBIC, World Bank (2005), Connecting East
Asia
12
Infrastructure Performance (contd)
ADB, JBIC, World Bank (2005), Connecting East
Asia
13
Infrastructure challenge in East Asia
Investment Maintenance Needs in East Asia,
2006-2010, US GDP
ADB, JBIC, World Bank (2005), Connecting East
Asia
14
Infrastructure challenge in East Asia(contd)
Investment Maintenance Needs in China,
2006-2010, US GDP
ADB, JBIC, World Bank (2005), Connecting East
Asia
15
Sourcing funding requirements to address
infrastructure challenge

• economic crisis is now over, private sector
  returning only very cautiously can we still rely
  on private sector investment in infrastructure?
• perception survey (ADB-JBIC-WB) majority of the
  investors keen to invest in East Asia if correct
  policies evolve
• investors will come back .more predictable
  policies, better regulation, more competitive
  markets