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The Office of Markets Development and Public-Private Partnership implements PPPs to tackle Asia's massive $1.7 trillion infrastructure needs. Through these partnerships, private companies undertake and often manage public assets, infusing innovation and operational efficiency under government contracts. This strategic collaboration improves public sector management and advances sustainable development. The Asian Development Bank supports these initiatives, steering projects toward resilient, climate-smart infrastructure that underlies sustainable, inclusive growth throughout the region.
Transcript
A public-private partnership, or PPP, is formed when a government and a company work together to build and run a public asset such as a road, a power station, airport or railway. Not all national infrastructure needs can be met by the public sector. But where there’s a good fit, PPP projects can be offered to the private sector in a fair and transparent manner through bidding. The winning bidder gets to design, build, finance, and often operate the asset usually for a number of years under a contractual agreement with the government.
So, why the need for PPPs? Well, Asia’s overall infrastructure needs are colossal. ADB estimates that the infrastructure needs of Asia and the Pacific amount to over $1.7 trillion each year. Governments can only come up with about 40% of this from their budgets and contributions from multilateral financiers. When structured well, PPP taps into the new technology and efficiency of the private sector to deliver value for money. There are major advantages for all parties. For a start, it helps governments to get the best value and structure, as bidders will compete against each other to build the asset or run the service at the lowest possible cost.
PPPs can be game changers for governments. They offer a smart approach to building a strong and effective legal and regulatory framework, ensuring things run smoothly. By teaming up with the private sector, the government can improve procurement processes, streamline concession agreements and even simplify national planning. Overall, PPPs can help improve public sector management.
The private sector stands to gain significant benefits as well. By participating in PPPs, they secure a stable revenue stream, and get government support to mitigate risks effectively, while also having the bringing innovation to public service delivery. With strong government support and well-defined performance targets, it’s a win-win.
Putting a public-private partnership together is often challenging. With the competition amongst countries for private sector investment, as well as the returns, the financial and regulatory risks must be mitigated enough to be attractive.
As the world faces the growing challenges of climate change, the demand for resilient and sustainable infrastructure has become more crucial. PPPs can be a way to create infrastructure that can withstand the tests of climate-related adversity. These partnerships foster the development of forward-thinking projects that incorporate eco-friendly technologies, adaptive measures, and environmentally conscious practices. By aligning shared goals, PPPs can drive innovation, promote sustainability, and facilitate the implementation of projects that leave a positive impact on the planet.
With extensive experience in developing PPPs, ADB is uniquely placed to help developing economies in Asia and the Pacific to build the infrastructure they need for sustainable and inclusive growth. ADB’s comprehensive support from enabling environment to sovereign and private financing as well as its longstanding commitment to development and strong reputation as an honest broker helps to build support and trust from all parties involved in a PPP project. ADB’s PPP operations are spearheaded by its Office of Markets Development and Public–Private Partnership. ADB’s expertise in PPPs encompasses a diverse range of sectors. We help our developing member countries to deliver high-quality roads and railways, as well as facilities for water, sanitation and district heating, solid waste management, renewable energy, vaccine research and development, elderly care, and information technology.
ADB helps deliver critical, resilient and efficient infrastructure through PPPs that are a win for everyone.
We do this by developing sustainable projects with the right balance of risks and benefits, that attract private sector interest but deliver value for money to the government.
ADB has a portfolio of many successful PPP projects throughout the region. Our projects have reduced congestion on the bustling highways of Dhaka, provided heating solutions in Uzbekistan’s capital Tashkent, helped promote sustainable development in the green New Clark City and establish a digital ID system for citizens in the Philippines, improved public health and environment in Dili by upgrading solid waste management systems, introduced solar energy to the sun-drenched Koror and Babeldaob islands of Palau and delivered cost-efficient solar projects in Asia.
ADB has been with the region since the start of its PPP journey. We’ll keep working with our member countries to develop innovative financing and solutions that provide the infrastructure our developing members need—now and for the long-term.
