Q1、What is the benefit of PPP?
In recent years, the budget of public infrastructure is getting less due to the expanding of other budget. At this moment, promoting private participation in infrastructure projects can not only help continuing the construction of public infrastructure, satisfying people’s need and request for public infrastructure, provide more job openings and also stimulate economic growth when the taxation is limited. In addition to save government expenditure in construction stage, it also saves the operation and personnel expenses during the operation stage because the private sectors takes charge of it. Moreover, if the private investor operates the infrastructure, they will be more concerned about how to operate it well. Their creativity of building infrastructure can also help bring new life to unused space and avoid having completed public properties left to waste. To sum up, PPP can offer better service to people and avert government from wasting resources.
Q2、What is PPP? What is the difference between PPP and BOT?
PPP is short for “Public-Private Partnerships”. It allows the private sector to build and operate infrastructure, which was implemented by the government in the past. With the capital, creativity and management skills from the private sector, the quality of public services will be improved.
According to the Act for PPP, which was promulgated in 2000, there are many different models of private participation. The commonly known BOT (Build-Operate-Transfer) is only one of them. Its essence is that the government allows a private institution to invest in the building and operation of an infrastructure project and upon expiration of the operation period, the ownership of the infrastructure is transferred to the government. For existing infrastructure, the government may commission the private institution to operate it by way of OT (Operate-Transfer). Furthermore, private institutions may use BTO, BOO and ROT to participate in PPP projects, according to the characteristics of the infrastructure respectively.
Q3、Do other countries also let private sector participate in public infrastructure?
PPP first started from the Channel Tunnel case in 1984. It is one of the most important methods how governments provide public service. Take England for example, there are one third of the new public infrastructure projects that are built through Public-Private Partnerships. In Asia, besides Taiwan, countries such as Japan, South Korea, Hong Kong, Singapore, Thailand, the Philippines and even China are all adopting this method. Therefore, PPP is the trend of the world. It is not created by Taiwan. Under the pressure of globalization, PPP contributes a lot to improving the competitiveness of countries.
Q4、Most public infrastructure is built by government, why does government promote private sector to participate?
Government and private sectors are good at different areas. Through PPP, public and private sectors can build partnerships. PPP could also lower and balance the risk of designing, constructing, and also the legal changes. To use the funding, operation efficiency and managerial expert from the private sector in PPP is more effective than by the government or private sector alone. According to the experience of England, 80% of the infrastructure wholly operated by the government had side effect like delaying the finishing date and adding budget. However, those problems are lower to 20% when it was done through PPP. PPP helps saving 17% of the budget in government expenditure, which means it makes every penny count and worthy.
Q5、If I am interested in PPP, where can I obtain information about PPP?
Investors who are interested in PPP projects can contact the MOF by email:bot@mail.mof.gov.tw.