PPP draft law revisited, no certainty yet

Gerald Flynn

As experts pore over the draft legislation, matters of transparency and accountability remain unanswered, along with the question of its implementation date

As experts pore over the draft legislation, matters of transparency and accountability remain unanswered, along with the question of its implementation date

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Phnom Penh’s business and legal community met with representatives of the Ministry of Economy and Finance (MEF) last Wednesday to further scrutinise new legislation aimed at regulating public-private partnerships (PPPs).

The workshop sought input from the community regarding how private sector financing could be harnessed to deliver wide-reaching public infrastructure projects, and also how it should be governed.

“The economy has put a big demand on development, especially public services,” Permanent Secretary of State Vongsey Vissoth told the audience.

“To make Cambodia a medium-high income country by 2030, we need to ease the burden on the national budget and the participation of the private sector is very important in this.”

Noting that Cambodia’s consistent economic growth has seen a reduction in Official Development Assistance (ODA), which peaked in 2012 according to the World Bank, Vissoth praised the proposed law on PPPs as “an efficient use of the nation’s resources” and welcomed the collaborative opportunities it offers to both the public and private sector.

Building on the 2007 Law on Concessions, the new PPP legislation, in its second draft form, aims to attract more private sector investment in public sector infrastructure projects.

For context, PPPs are not a new concept. The use of private finance to fund public infrastructure has been witnessed throughout history; with the introduction of toll roads in Roman times, the privately financed canals of 17th century Britain, and a whole range of transportation networks across the US throughout the early 1800s.

However, the formalisation of this method for getting things done is more recent, with the adoption of PPP as public policy in the early 1990s across Europe.

In recent years, a trend has emerged, with a growing number of nations worldwide seeking to introduce legislation that promotes and regulates PPP contracts as a means of getting the best out of both public and private expertise.

The general assumption behind such laws being that private sector investment and expertise will ensure public projects are completed to satisfaction, on budget, and on schedule, freeing the government from taking on large financial risks in order to provide necessary infrastructure.

While it is difficult to say comprehensively whether this assumption will ring true in Cambodia, the potential for regulated private investment is huge, as is the potential for lucrative government contracts.

The workshop saw a range of policymakers, lawyers, and business leaders give their input to Sam Vongsy, head of Central PPP Unit, MEF, who hoped the delegates would help “further refine the draft law” and shape the future of the nation’s social development.

Stating that the MEF considers “PPP a public investment for the benefit of the economic and social development of Cambodia” Vongsy went on to detail the framework that will govern private sector bidding on PPP projects.

After establishing the roles and responsibilities of relevant actors involved in the new legislation, Vongsy, and Prakash Rao, an Asian Development Bank consultant and international PPP specialist, detailed the need for overhauling the 2007 Law on Concessions in favour of more robust legislation.

“The Law on Concessions’ scope is applicable to limited types of PPP projects,” Vissoth explains. “It overlaps with the draft law on PPP, which provides the operational procedures and guidelines needed to support the implementation of the law and ensure that PPP projects are properly selected, prepared, procured, and implemented.”

Despite an exhaustive explanation of the 46 relevant articles that make up the draft law, both Prakash and Vongsy fielded a wide range of questions, critiques, and suggestions from the crowd.

Ranging from the technical to the linguistic, the queries provided by guests applied pressure, bringing each of their own expertise to bear on the potential game changer of a law.

Under this flurry of questioning, Vongsy reiterated the fact that this remains a draft law and that many of the finer points raised by the audience would be addressed in subsequent drafts.

“The law is allowing for a lot of sub-decrees,” Vongsy says. It seemed clear that many aspects of the proposed says about the would appear that the law has yet to be clarified, particularly with regards to accountability, transparency, and responsibility.

Such repeated responses led some to question when the law would, if ever, be ready for implementation.

Vongsy says he hopes to see the bill passed by the end of the year but further rewrites could see it pushed back to early 2020. However, with the support of ADB and insights by experts, the Law on PPP looks set to bring major changes to the nation’s economic landscape.

 

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