Indonesia Becomes Home to APEC's Public Private Partnership Pilot Project
Member countries of the Asia-Pacific Economic Cooperation (APEC) agreed to form a public-private partnership (PPP) center in order to enhance capacity of the APEC member countries to develop bankable PPP projects. It has been decided by the participating countries that Indonesia will become home to the pilot project. This decision was one of the results of the 2013 APEC Finance Ministers' Meeting (AFMM), which ended on 20 September 2013 in Nusa Dua on the island of Bali.
As an initial step of the formation of the PPP center, APEC will form the APEC PPP Experts Advisory Panel. In the future, this panel will not only involve APEC member countries but also multilateral organizations, such as the World Bank and Asian Development Bank (ADB). The panel is expected to stimulate growth of investments in the infrastructure sector, particularly investments from the private sector.
The panel’s is to provide guidance and support to a pilot PPP center, including through mentoring key staff and providing strategic advice. The panel will also assist the development of key, high level organisational aspects of the pilot PPP center, including its structure, responsibilities and governance arrangements.
"We agreed to establish a PPP expert panel in an effort to encourage private sector involvement in financing infrastructure development in the APEC region," said Finance Minister Chatib Basri when closing the AFMM 2013 in Nusa Dua.
In the longer term, the panel can support the emergence of a connected APEC-wide market for infrastructure investment by helping other economies to develop similar capacity, while understanding that economies will tailor their own centres to reflect different institutional arrangements. The APEC PPP Centers can then be linked into a regional network of PPP centers to share good practices, build capacity, and help align standards.
Indonesia is expected to provide a design for the PPP center in 2014 at the AFMM in Hong Kong. Basri said that it has not been decided yet which project will be used for the pilot project, but it is certain that the pilot project will be taken from one of the PPP projects that have already been selected by Bappenas (the government's National Development Planning Agency).
Infrastructure was an important topic in the 2013 AFMM and this topic will be further discussed at the level of the APEC Leaders Summit, which will be held on 7-8 October 2013 in Nusa Dua, Bali.
Indonesia has a number of PPP projects planned, including a steam power plant in Batang (Central Java) and a drinking water supply project in Semarang (Central Java). However, the projects are still constrained by many issues, particularly land acquisition. Although there has been a legal framework since 2007, PPP projects are still not popular as investment vehicle because they are considered risky, while it takes a long time before profits can be generated.
The AFMM 2013 was attended by 194 delegates from 21 member countries and multilateral organizations (including the World Bank, Asian Development Bank and the OECD). Attending the meeting were Finance Minister of China Lou Jiwei, the Australian Treasurer Joe Hockey, and South Korea's Deputy Minister and Minister of Strategy and Finance Hyun-Seok Oh.