Written by, H.E Samheng Boros
Public-private partnerships (PPPs) are becoming a more popular approach to fund significant infrastructure projects. Compared to standard procurement options, these arrangements have a substantially higher level of private-sector participation, with the purpose of increasing the project’s efficiency and effectiveness across its entire life cycle, from development to the end of the operational phase.
PPPs can also stretch the cost of a project over a longer time period, freeing up public funding for investment in areas where private involvement is either impossible or inappropriate.
PPP is not a new concept; it has existed for centuries, particularly in France throughout the 16th and 17th centuries. However, over the last two decades, several governments have initiated PPPs in order to delegate responsibility for infrastructure development and delivery of public services to the private sector.
Since the 1990s, PPP has grown in popularity in a number of countries. PPP has been a common method for governments to engage private actors in the delivery of government infrastructure and services in order to improve quality and provide better value for money.
As governments seek to upgrade infrastructure and address the difficulties of climate change, among other objectives, the necessity for private-sector participation has grown. Governments can tap the genuine knowledge of private enterprises by considering and pricing risk in a comprehensive and transparent manner.
Setting the optimal level of private-sector engagement and risk transfer will result in more projects being completed on time and on budget, better use of government resources, and benefits to the constituency of end users for these project, society at large.
PPP in Cambodia
Infrastructure development is a critical factor in Cambodia’s ability to sustain and leverage economic growth. Cambodia has invested in infrastructure using funds from three main sources: the national budget, the budgets of development partners, and a small portion of the budget from the private sector.
Cambodia prioritises private participation because the private sector is a growth engine, and has recently chosen an alternative method of financing public infrastructure investment, the so-called PPP mechanism—which is neither privatisation nor public traditional sourcing.
Cambodia has promoted and encouraged the private sector to participate in public infrastructure investments since the first mandate of the national assembly was legislated in 1993, by establishing necessary policies—triangle strategy, rectangular strategy, national strategic development plan, public financial law, and Cambodian industrial development policy—and legal instruments, as well as other necessary measures to strengthen and broaden partnerships with all partners.
PPP projects in the energy, road, and airport sectors have been implemented in Cambodia since the 1990s using the BOO, BOT, and Maintenance-Operate-Transfer (MOT) models.
For Cambodia, the PPP investment regime has resulted in the construction of the Siem Reap Angkor International Airport ($1 billion), the Orussei Hydroelectric Power Plant ($558 million), and the Stung Tatay Hydroelectric Power Plant ($540 million), to name a few.
Public and Private Partnership Regulations
Furthermore, in order to establish clear mechanisms for successful PPP project implementation, Cambodia developed its Policy Paper on PPP in 2016. Since then, PPP in Cambodia has been implemented under the Public-Private Partnerships for Public Investment Project Management investment framework.
The new Law on Public and Private Partnership (the “PPP Law”) was enacted in Cambodia on November 18, 2021, to replace the 2007 Law on Concession. This Law aims to promote just management and implementation of public-private partnership (“PPP”) projects in a way that is effective, efficient, long-term, transparent, and responsible.
Cambodia’s government is actively working with organisations such as the Global Alliance for Trade Facilitation (GATF), Swiss Contact, and UNCTAD to improve PPP standards.
GATF-directed projects are intended to leverage private sector expertise to assist governments in implementing the World Trade Organization’s Trade Facilitation Agreement. It will provide a more conducive trade environment for private sector enterprises to improve domestic and cross-border operations, demonstrating how successful PPP can assist developing countries.
Invest in Cambodia for greater benefits and growth
Cambodia’s economy is one of the fastest growing in the world. The government has implemented programmes to mitigate the negative impact of COVID-19 on businesses and people’s incomes, as well as to assist the economy’s recovery. Growth is expected to reach 5% in 2022 and 6.3% in 2023. Cambodia has seen significant development over the last two decades, reaching lower middle-income status in 2015 and aiming towards upper middle-income status by 2030, according to the World Bank.
H.E Samheng Boros is Minister attached to the Prime Minister , Royal Government of Cambodia and Chairman of National Social Assistance Fund Board (NSAF) and Secretary of State at the Ministry of Social Affairs, Veterans and Youth Rehabilitation (MoSVY).