Development of PPPs in the Lao PDR

Acknowledging that both public and private investment are equally important to the development of Lao’s socio-economy, the Lao Government recognizes the importance of Public-Private Partnerships (PPPs) as a powerful tool in promoting joint development between the government and private sector in the delivery of public goods/infrastructure and services, assurance of social benefits with sustainability, and promotion of transparency and accountability principles.

The Lao Government is developing the framework for PPPs in Lao PDR, led by the Investment Promotion Department of the Ministry of Planning and Investment (MPI) with support of the Asian Development Bank, through Grant 0309, and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) Secretariat.

Interestingly, among other requirements, Grant 3909 from the ADB requires steps to ensure mainstreaming of gender into Lao PDR’s PPP strategies and includes the encouragement of Gender Action Plans within PPPs. The Guidelines for mainstreaming gender in PPP projects are broken down into the planning, promotion, and implementation phases. For example, during the planning phase, the Guidelines recommend engaging a gender specialist in the implementing agency to conduct gender analyses and project planning. In the promotional phase, the Guidelines suggest considering briefing PPP project members on gender issues and including women as members of the external monitoring team, among other suggestions. And during the implementation phase, the Guidelines recommend consultation and participation of local women’s organizations, as well as collection of gender-related data on impact of the project if applicable.

Beyond the gender considerations, the PPP initiative focuses on three main areas, namely (i) institutional capacity building, (ii) policy and legislation framework development, and (iii) demonstration of model/pilot projects in social sectors, particularly education and healthcare. In this blog piece I discuss the first two of these three options.

(i) Institutional Capacity Building: In order to facilitate PPP initiatives, a task force unit called the PPP Unit has been established within the Department of Investment Promotion (IPD). The task force is responsible for initiating policy and legislation development and piloting PPPs on education and healthcare. The task force has worked closely with government agencies, the ADB, international organizations, civil society and the private sector.

(ii) Development of Policy and Legislation Framework: The framework includes the development of a Prime Minister’s PPP Decree, consistent with international practice and complaint with Lao legislation.

The PPP Decree defines PPPs as:

  • A medium or long term contractual arrangement between a Public Agency and a Private Body;
  • For delivery of a public service or infrastructure for which the Public Agency remains accountable;
  • Where the required service or infrastructure is specified as an output;
  • Where significant risks are transferred to the private firm, making its private investment and financial returns linked to its performance; and
  • That is procured through a competitive procurement process.

The PPP Decree aims to promote and govern PPPs as a regular method of delivering infrastructure and services for which the Government is responsible. The Decree will:

  • Promote and support PPPs where they can improve the delivery of public infrastructure and services to maximize developmental impact and economic growth;
  • Ensure public awareness of the relative costs, benefits and risks of PPP;
  • Establish key institutional roles and responsibilities with clear mandates;
  • Put in place conducive, clear, transparent and enforceable PPP procedures;
  • Institute a transparent, competitive and rule-based tender process for solicited PPPs and subject all unsolicited proposals to market challenge;
  • Prioritize major investment projects at the senior political level;
  • Make sure that all costs and contingent liabilities arising from PPPs are recognized and, where necessary, ensure provisions are made in the Budget;
  • Guard against waste and corruption by ensuring the integrity of the procurement process;
  • Ensure due diligence to mitigate negative impacts on women and children and maximize their benefit within the control of PPPs and their implementation;
  • Develop PPP Guidelines and Manuals for facilitating and managing the implementation of PPP initiatives in Lao PDR throughout the PPP cycle;
  • Investigate different forms of PPP, including revenue-based and availability-based PPPs.

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