In most countries, the provision of infrastructure services is the responsibility of the public sector. Depending on the political and administrative structure of the country, legislations at different levels of government (local, provincial, and national) may govern the infrastructure sectors. As such, generally some form of legal authority of an appropriate level of government is required to permit private involvement in infrastructure development. Legal provisions may also be required to process, promote and facilitate private involvement.
| In many countries, the legal provisions and procedures related to private sector participation are complex, numerous, scattered over many different instruments and often not clear on many issues, and have no fixed time frame for completion. For example, the PPP legal regime may scatter over many legal instruments that include the private contract law, company law, tax law, labour law, competition law, consumer protection law, insolvency law, infrastructure sector laws, property law, foreign investment law, intellectual property law, environmental law, public procurement law or rules, acquisition or appropriation law and many other laws. To address these problems, many countries have enacted special legal and regulatory instruments and/or have suitably amended their existing infrastructure sector laws. These measures have helped to reduce the level of uncertainty surrounding public-private partnership project deals and have increased investors confidence. | Why special laws on PPPs |
Legislation may also play an important role in facilitating the issuance of various licences and permits that may be required for project implementation. Such licences and permits include licences for setting up a company by the concessionaire, licence for exploration and extraction of mineral resources, work permit for foreigners, import licence for equipment and other supplies, building permits, and radiofrequency spectrum allocation for telecommunication and television transmission.
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The special legal instruments may specify the types of permitted PPP models, general conditions for these models, guidelines on risk sharing arrangements, provision of financial and other incentives, and may provide details of project identification, approval, procurement (including contract negotiation and making contract agreement), and implementation arrangements.6 The legal instruments may also define division of responsibility between different levels of government. In some countries, special PPP units in governments have been established under the provisions of such special legal instruments. These special PPP units in governments facilitate PPP project development and implementation in those countries. The BOT Center in the Philippines is an example of such a PPP unit established under the BOT Law of the country. See Box 2 for examples of legal instruments and PPP units in Asia and the Pacific region. |
Contents of special laws |
| Box 2: PPP Acts/legal instruments and PPP units in governments PPP Acts/ legal instruments Examples of PPP legal instruments from Asia and the Pacific region include Private Provision of Infrastructure (PPI) Act, Republic of Korea; Build-Operate-Transfer Law, the Philippines; Act on Private Participation in State Undertaking, Thailand; Build-Operate-Transfer Law, Turkey; Private Finance Initiative Promotion Law, Japan; Land Transport Management Act, New Zealand; Public Private Partnerships Act 2006, Fiji; Law on Concession 2007, Cambodia; Decree on Investment on the Basis of Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO) and Build-Transfer (BT) Contracts, 2007, Viet Nam; and Gujarat Infrastructure Development Act, Gujarat, and Punjab Infrastructure Development Act, Punjab, India. Similar legal instruments also exist in many countries of Europe including Greece, Ireland, Italy and the United Kingdom, and in many States of the United States of America. Many countries in Africa including the Republic of Mauritius and South Africa have also passed special legal instruments on PPPs. PPP units in governments Special PPP units exist in Australia (PPP Unit, Department of Finance and Deregulation); Bangladesh (Infrastructure Investment Facilitation Centre or IIFC); Indonesia (PPP Central Unit or P3CU; the Philippines (BOT Center); Pakistan (Infrastructure Project Development Facility or (IPDF); Republic of Korea (Private Infrastructure Investment Management Center, PIMAC); Fiji (PPP Unit); and Sri Lanka (PPP Unit, Board of Investment). Some states in India such as Gujarat and Punjab have established PPP units. Many countries in Europe also have PPP units in Governments. Some other Governments have established a special cell within the Prime Minister’s Office or a senior ministry to deal with PPP projects as in Australia (PPP Unit, Department of Finance and Deregulation), India and Malaysia. Some countries have also established PPP units at the provincial level, for example, states in Australia (such as, Partnership Victoria in the State of Victoria), and India (such as, Gujarat Infrastructure Development Board in India). |
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6 The PPI Act of the Republic of Korea (see box 2) is such a legal instrument. Legal instruments of many countries however, do not provide details of the partnership arrangements and the administrative process (for example, the Private Participation in State Undertaking Act of Thailand).