AID EFFECTIVENESS AND PUBLICPRIVATE PARTNERSHIP: THAILAND’S
DEVELOPMENT ASSISTANCE IN LAO
PDR AND CAMBODIA
SIRIPORN WAJJWALKU
THAMMASAT UNIVERSITY
2014 AUSTRALASIAN AID AND
INTERNATIONAL DEVELOPMENT POLICY WORKSHOP
13-14 FEBRUARY, 2014
CANBERRA, AUSTRALIA
THAILAND’S INTERNATIONAL
DEVELOPMENT COOPERATION
POLICY AND INSTITUTIONS
Thailand as an emerging donor
1. Policy of being donor since 2003
2. Institutions
- Thailand International Development Cooperation
Agency (TICA)
- The Neighboring Countries Economic Development
Agency (NEDA)
OUTLINE OF THE PRESENTATION
1. Introduction
2. NEDA’s projects in Lao PDR and Cambodia: Some
observations
3. NEDA and involvement of private sector in aid process
4. NEDA and PPPs: The possibility?
INTRODUCTION
The research project titled “Institutional Arrangement and
Aid Effectiveness: The relations between government agency
and private sector”
• to examine NEDA’s existing aid process in Lao PDR and
Cambodia focusing on the involvement of for-profit private
sector
• to explore the possibility to promote PPPs as a tool to
involve for-profit private sector in aid process
NEDA’S PROJECTS IN
LAO PDR AND CAMBODIA
1. Amount of projects
1. Lao PDR: 6 projects
2. Cambodia: 1 project
2. Sector : infrastructure
1. Road
2. Railway
3. Airport
4. Drainage pipeline
3. Type of aid: tied loan
4. Modality : bilateral and demand driven
NEDA PROJECTS IN LAOS (1)
Projects
Responsible institutions in the
recipient countries
-
Consulting Companies and
their nationality
TEAM Consulting Engineering
and Management Co., Ltd. (Thai)
Construction Companies
and their nationality
Railroad
construction project
from Nong Khai
Province,
Northeastern
Thailand, to Ban
Thanaleng in Laos,
PDR
SPL Consultant Group
1. STS Engineering Consultant
Co., Ltd.
2. Pacific Consultant
International (Thailand) Co.,
Ltd. and
3. Lao Transport Engineering
Consult Company
STS Engineering Consultant Co.,
Ltd. Is the main company.
Sermsageung Construction Co., Lao Railway Authority: LRA
Ltd.
The Road
construction project
from Chiang Rai
Province-Kunming,
through Laos PDR
(R3)
Southeast Asia Technology Co.,
Phrae Thamrongwit Co., Ltd.
Ltd. (SEATEC) in association with (Thai) and Namtha Road and
Pacific Consultant International
Bridge Construction Co., Ltd.
(Thailand) Co., Ltd. (PCIT)
Drainage pipeline
construction and T2
road improvement
Projects in
Vientiane, Laos PDR
Thaiwat Engineering Co., Ltd.
(Thai)
(Thai)
Ministry of Public Works and
Transportation (Laos)
NEDA PROJECTS IN LAOS (2)
Projects
Pakse Airport
Improvement
Project
The Road
construction
project from Houi
Kon / Muang
Nguen to Pak Beng
in Laos
The Road
improvement
project in
Vientiane
Capital to serve
the 9th ASEAM
Summit
Consulting Companies and
their nationality
Department of Civil Aviation
(Thailand)
Construction Companies
and their nationality
Italian-Thai Development
Public Company Limited (Thai)
Responsible institutions in
the recipient countries
Department of Civil
Aviation (Laos)
Asian Engineering Consultants
Cooperation Limited (AEC)
(Thai)
Phrae Thamrongwit Co., Ltd.
(Thai) and Namtha Road and
Bridge Construction Co., Ltd.
Ministry of Finance (Laos)
and Ministry of Public
Works and Transportation
(Department of Highways)
(Laos)
TEAM Consulting Engineering and
Management Co., Ltd. (Thai)
Thaiwat Engineering Co., Ltd.
(Thai)
Ministry of Finance (Laos)
and Vientiane Capital
NEDA PROJECT IN CAMBODIA
Projects
Koh Kong – Sre
Ambel Road
Improvement
Project (R48)
Consulting Companies and
their nationality
Construction
Companies and their
nationality
TEAM Consulting Engineering
Sahakarn Wisavakorn Co.,
and Management Co., Ltd. (Thai) Ltd. (Thai)
And Planning and Research
Consultant Co., Ltd. (Thai)
Responsible institutions in
the recipient countries
Ministry of Public Works
and Transportation
(Cambodia)
NEDA’S PROJECT IN LAO
PDR AND CAMBODIA:
BUDGET
The name of the projects
The amount of budget
for consultancy
The amount of budget
for construction
The total amount of
budget
THB 7,489,700
THB 150,510,300
THB 158 million
THB 9 million
THB 186 million
THB 195 million
THB 110 million
THB 910 million
THB 1,020 million
Pakse Airport Improvement Project
THB 8 million
THB 292 million
THB 300 million
The Road construction project from Houi Kon /
Muang Nguen to Pak Beng in Laos
THB 30 million
THB 740 million
THB 770 million
The Road improvement project in Vientiane
Capital to serve the 9th ASEAM Summit
THB 3.7 million
THB 185 million
THB 188.7 million
Koh Kong – Sre Ambel Road Improvement Project
(R48)
THB 17 million
THB 485 million
THB 502 million
Drainage pipeline construction and T2 road
improvement Projects in Vientiane, Laos PDR
Railroad construction project from Nong Khai
Province, Northeastern Thailand, to Ban Thanaleng
in Laos, PDR
The Road construction project from Chiang Rai
Province-Kunming, through Laos PDR (R3)
Note: The exchange rate is $ 1 = 33.0 Bht
(as of 10/02/14)
NEDA’S PROJECTS: PROPORTION OF BUDGET
SPENT FOR THAI GOODS AND SERVICES
(CONTRACTOR FOR CONSTRUCTION)
Projects
Drainage pipeline construction and T2 road improvement Projects
in Vientiane, Laos PDR
Proportion of budget (%)
80.63%
Railroad construction project from Nong Khai Province,
Northeastern Thailand, to Ban Thanaleng in Laos, PDR
65%
The Road construction project from Chiang Rai Province-Kunming,
through Laos PDR (R3)
93%
Pakse Airport Improvement Project
84.80%
The Road construction project from Houi Kon / Muang Nguen to
Pak Beng in Laos
76%
The Road improvement project in Vientiane Capital to serve the
9th ASEAM Summit
65.04%
Koh Kong – Sre Ambel Road Improvement Project (R48)
58%
NEDA’S PROJECTS: PROPORTION OF BUDGET
SPENT FOR THAI GOODS AND SERVICES
(CONTRACTOR FOR CONSULTANCY)
Projects
Drainage pipeline construction and T2 road improvement
Projects in Vientiane, Laos PDR
Proportion of budget (%)
70%
Railroad construction project from Nong Khai Province,
Northeastern Thailand, to Ban Thanaleng in Laos, PDR
Unavailable
The Road construction project from Chiang Rai ProvinceKunming, through Laos PDR (R3)
90%
Pakse Airport Improvement Project
100%
The Road construction project from Houi Kon / Muang Nguen
to Pak Beng in Laos
61%
The Road improvement project in Vientiane Capital to serve
the 9th ASEAM Summit
71%
Koh Kong – Sre Ambel Road Improvement Project (R48)
100%
NEDA’S PROJECTS AND
OBSERVATIONS
1. Purposes: economic cooperation, mutual benefits, and
cordial relations
2. Size: small-scale in terms of budget and project size
3. Sector: infrastructure (not public services)
4. Highly concentration in terms of private sector (company)
involvement
5. Highly economic beneficial to donor in terms of
consultancy and construction
6. Highly dependence on donor in terms of consultancy and
construction
NEDA’S AID PROCESS
AND CHALLENGES
1. Unbalance between demand and supply  bigger
demand
2. Not enough incentive for private sector due to noneconomic scale of project in terms of budget and size
3. Lack of coordination between public-private sectors in
aid process
4. Limited capacity of private sector in developing partners,
particularly the procurement
PROPOSED
ALTERNATIVE
NEDA’s main challenges
1. Budget size
2. Efficiency and Transparency
Proposed alternative
- the involvement of for-profit private sector
- the promotion of PPPs
“PPP” DEFINED BY
INTERNATIONAL ORGANIZATION
(A POLICY GUIDELINE)
Organization for Economic Co-operation and Development (OECD)
Public-Private Partnerships (PPPs) are long term agreements between
the government and a private partner whereby the private partner delivers
and funds public services using a capital asset, sharing the associated
risks. PPPs may deliver public services both with regards to infrastructure
assets (such as bridges, roads) and social assets (such as hospitals,
utilities, prisons).
The interest in PPPs has been growing in recent years and the need for
fiscal restraint in most OECD Member countries is expected to further
increase their usage. This presents policy makers with particular
challenges that should be met with prudent institutional answers.
“PPP” DEFINED BY A
MULTILATERAL DONOR
Asian Development Bank (ADB)
The term “public-private partnership” describes a range of possible
relationships among public and private entities in the context of
infrastructure and other services. Other terms used for this type of activity
include private sector participation (PSP) and privatization. While the three
terms have often been used interchangeably, there are differences. PPPs
can follow a variety of structures and contractual formats. However, all
PPPs incorporate three key characteristics:
•
A contractual agreement defining the roles and responsibilities of the
parties
•
Sensible risk-sharing among the public and the private sector partner,
and
•
Financial rewards to the private party commensurate with the
achievement of pre-specified outputs.
“PPP” DEFINED BY BILATERAL
DONOR
Japan International Cooperation Agency (JICA)
Utilizing the private sector for the provision of public services, PPP is a
method of implementing programs through the coordination of the
public and private sectors. It includes a wide range of schemes which
are tailored to the level of participation of the private business, ranging
from a simple consignment of a project to build-operate-transfer (BOT)
and full privatization. “PPP infrastructure project” refers to
infrastructure projects implemented through PPP.
“PPP” DEFINED BY BILATERAL
DONOR
AusAID
The term describes a range of possible relationships among public and private
entities in the context of infrastructure and other services. The public partners in a
public-private partnership are government entities, including ministries,
departments, municipalities, or state-owned enterprises. The private partners can
be local or international and may include businesses or investors with technical or
financial expertise relevant to the project. The government’s contribution to a
public-private partnership may take the form of capital for investment (available
through tax revenue), a transfer of assets, or other commitments or in-kind
contributions that support the partnership. The government also provides social
responsibility, environmental awareness, local knowledge, and an ability to
mobilize political support. The private sector’s role in the partnership is to make
use of its expertise in commerce, management, operations, and innovation to run
the business efficiently. The private partner may also contribute investment capital
depending on the form of contact.
MERITS OF PPP
1. Utilization of the private sector for the provision of public
services  enlargement of budget size
2. For-profit private sector’s contribution to aid process
1. Providers of goods and services
2. Implementers or contractors of aid projects
3. Co-investors of aid projects
Private Sector = Partner for development
CONDITIONS FOR
FOR-PROFIT PRIVATE
SECTOR INVOLVEMENT
1. Environment that makes private sector to engage in aid
process
1. Rule of law
2. Effective public sector
3. Tax system
4. Open market and fair competition
2. Incentives for for-profit private sector to engage in aid
process
1. Business opportunities
2. Tapping into emerging markets
NEDA AND PPP:
THE POSSIBILITY ?
NEDA’s Strategy
NEDA’s strategic plan 2012-2014
1. Integration between public – private sectors within
the country, and with those of the recipient countries
2. Promotion of private sector (for-profit private
sector and private organization-civil society) involvement
3. Less dependence on national budget
4. Alternative sources of budget
THANK YOU