EEC to test effectiveness of new PPP law, says ADB


THE ASIAN Development Bank has urged Asian governments to |tap into private funds to finance huge infrastructure projects in |their countries, adding that the effectiveness of the new public-private partnership (PPP) law in Thailand hinges on how it is implemented. 

Public-private partnership has the potential to fill the infrastructure gap as institutional investors have large assets under management, Hideaki Iwasaki, country director of ADB Thailand Resident Mission told a press conference in Bangkok yesterday.

ADB has estimated that Asia needs US$1.7 trillion annually |for investment in infrastruc-|ture projects in four key sectors- energy, transportation, Information technology and water, through 2030.

Governments may not be able to finance these projects, thus institutional investors such as pension funds, mutual funds, insurance funds and sovereign wealth funds can fill the gap, according to ADB.

ADB estimated that the total of underutilised funds managed by institutional investors could amount to US$100 trillion globally.


To attract private funds, governments have to introduce effective PPP law, but governments must balance risk allocation between public and private sectors. The bidding process must be transparent and enforcement of contracts must be effective whle the revenue projection from infrastructure projects must also be credible, it said.

Iwasaki said ADB had assisted the Thai government in drafting the new PPP law which came into effect recently.

“The effectiveness of the new law would depend on the whole process, including how it is implemented,” said Iwasaki.

The Thai government plans to attract private investors in many infrastructure projects, including high speed rail, double-track rail, airports, seaports and motorways in the Eastern Economic Corridor.


Luxmon Attapich, country senior economist at ADB, says foreign investors have shown great interest in the EEC and are awaiting for the approval of the EEC laws and progress of some infrastructure projects.

Investors expect the new laws would streamline investments, making it easier for them to do |business there, she said.

The comments from the ADB officials came as the mulilateral lender upgraded its forecast for economic growth in developing Asia to 5.9 per cent this year due to increasing of exports, but it is maintaining its projection of Thai economic growth at 3.5 per cent.

The revision of gross domestic product (GDP) projection for developing Asia to 5.9 per cent is up from 5.7 per cent previously estimated, Luxmon Attapich, senior economist at ADB’s Bangkok office said yesterday.

Growth across developing Asia is buoyed by a revival in trade . The dollar value of the region’s exports surged by 11 per cent in the first five months of this year over the same period last year, she said.

The bank says GDP growth in China, Malaysia, the Philippines and Singapore would be higher |than previously projected.

However, the bank did not revise up its forecast of Thai economic growth due to decelerating public investment, although exports expanded more than expected. The ADB forecasts GDP in Thailand will expand 3.5 per cent and 3.6 per cent this year and next respectively.

The ADB has also revised its GDP growth forecast for developing Asia next year to 5.8 per cent, up from 5.7 per cent previously projected.

The bank has also revised up its projection of China economic growth to 6.7 per cent and 6.4 per cent for this year and next respectively.

But the bank revised downward its projection of India economic growth to 7 per cent and 7.4 per cent this year and next respectively, from previous projection of 7.4 per cent and 7.6 per cent respectively.

Source : NationMultiMedia


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