This chapter delineates the landscape for infrastructure development in Southeast Asia. Its emphasis is on the financing mechanisms for public-private partnerships (PPPs), which governments across the region are promoting to help close their infrastructure gaps amid limited public resources. The Association of Southeast Asian Nations (ASEAN) needs infrastructure investments of at least $100 billion a year to sustain economic growth, which cannot be fulfilled solely by public funds. The chapter discusses Southeast Asia's infrastructure ecosystem, the factors that influence the performance of PPPs in the region, and the use of these partnerships in social infrastructure and pro-poor development planning. The focus is on the region's five countries that are most actively promoting PPPs: Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam.
PPPs in Southeast Asia face challenges on numerous fronts, including inadequate regulatory frameworks and institutional arrangements for their implementation. The problems often stem from incomplete or unclear regulations, the lack of a champion in government to promote PPPs, and not enough or incompatible support. Public stakeholders also lack the capacity to use PPPs. The lack of credible pipelines for infrastructure PPPs has resulted in an inefficient PPP market in Southeast Asia and high uncertainty over the sustainability of offered projects.
Several policy recommendations are offered to help remedy this situation. For PPPs to take off in Southeast Asia, decision makers should focus on offering a few well-prepared PPP projects that can deliver demonstration effects. Across the region, the capacity of national and subnational government agencies dealing with PPPs need to be improved, and multinational development banks can help client governments build this capacity. From a development perspective, PPPs need to be incorporated into poverty alleviation programs. Improving the governance of these partnerships, especially transparency and accountability, is a regional challenge. All countries in the region need to create fiscal space to support their infrastructure development, and here establishing special funds for PPPs could help.