For the last few decades and especially during the 1970s and 1980s, the Republic of Korea achieved outstanding economic development. Provision of adequate infrastructure facilities was one of the main policies of the Government to help the economy to grow and the results were impressive. In 1994, the Government launched a new Private Participation in Infrastructure (PPI) programme to promote private sector participation in infrastructure development. The PPI programme aimed at delivering infrastructure facilities by the private sector in order to reduce the burden on the public budget as well as to exploit the efficiency and creativity of the private sector.
The PPI programme of 1994, however, was not particularly successful in attracting private participation in infrastructure sectors for various reasons. The financial crisis of the late 1990s compounded the problem by imposing severe constraints on the Government in making budgetary allocations to the infrastructure sectors. Faced with this situation, the Government took new initiatives to promote private participation. In 1999, a new PPI programme was launched through the enactment of a PPI Act, which, inter alia, established a special unit, the Private Infrastructure Investment Center of Korea (PICKO), charged with promoting private participation. Under the new law, various incentive packages are offered to the private sector and rules and procedures for project selection, evaluation and approval have been simplified.
These new initiatives along with other major reforms in the economy have helped the new PPI programme to make tremendous progress. Troubled and delayed infrastructure projects under the previous PPI regime were cancelled and efforts were redirected towards facilitating the implementation of more promising projects. By March 2003, 130 projects were being implemented. Foreign investors have invested, or are expected to invest, about $ 3.5 billion. Contracts involving $ 13 billion of domestic and foreign capital have been awarded. Against this background, this paper provides an overview of the Republic of Korea's PPI programme, its history, successes and failures, and unique features. Finally, it makes some concluding remarks about the future of the PPI programme in the country.