For solicited projects, Indonesia and the Philippines appraise, select, budget, manage, and monitor their PPPs separately from government-procured projects. This practice distorts the priorities of public investments, ignores the management of public finances, and creates undue fiscal risks, which can be caused by PPP projects. To counter these problems and to help promote slackening private investment in infrastructure, the Republic of Korea, in 2015, adopted a unified framework for integrating PPPs and government-procured investment projects.
Using a unified framework was also aimed at promoting private sector investments in infrastructure, which have declined since 2011. To help counter this, the government raised the amount of PPP investment targets by widening the scope of PPP applications and government-procured infrastructure projects that can be converted into PPPs. To do this, it was essential to devise an implementation process that introduced PPPs as an alternative procurement method for traditionally procured government infrastructure projects. For this, a unified procedure was needed to review government-procured and PPP projects. Under the framework, the Ministry of Economy and Finance selects a project for which a preliminary feasibility study and a value-for-money test are conducted. Based on the Republic of Korea's experiences, the unified framework ensures that the modality that offers the best value for money is chosen. Indonesia and the Philippines would benefit from using a unified framework to be able to assess their PPP and government-procured investment projects more objectively. Doing this will also benefit the management of their public finances.
All three countries have legal bases for PPPs that allow for unsolicited proposals. The Philippines and Indonesia give precise conditions for unsolicited proposals to prevent them from being overused, and for procurement procedures to enhance transparency and invite third-party participation. The Republic of Korea, in 2016, relaxed its regulations on unsolicited proposals by allowing private proposals for BTL projects. Unlike developed countries, which prepare projects that attract private investors without relying on unsolicited proposals, the Republic of Korea promotes unsolicited proposals to expand the participation of small and medium-sized companies and financial investors in PPPs. Even though PIMAC scrutinizes unsolicited proposals using mandatory value-for-money tests, the government still evaluates these proposals to ensure their alignment with its investment needs and competitive procurement processes. To keep the market competitive, the procedure must allow sufficient time for bidders other than the project proponent to make their proposals.