This publication highlights how public–private partnerships (PPPs) can be effective to meet Asia's growing infrastructure needs. It shows how governments and their development partners can use PPPs to promote more inclusive and sustainable growth. The study finds that successful PPP projects are predicated on well-designed contracts, a stable economy, good governance and sound regulations, and a high level of institutional capacity to handle PPPs. It is the result of a collaboration between the Asian Development Bank, the Korea Development Institute, and other experts that supported the theme chapter "Sustaining Development through Public–Private Partnership" of the Asian Development Outlook 2017 Update.

As the world makes great strides on the path to development, the gap between infrastructure needs and the resources governments possess to meet those needs is ever growing on account of governments’ razor thin budgets, rapid urbanization and population growth. Asia’s overall infrastructure investment needs are estimated at USD 9 trillion till 2030, 68% of which is for new capacity and 32% for maintaining and replacing existing infrastructure. The average annual infrastructure investment during this period is about USD 750 billion. As countries move up the value chain and urban populations expand, demand for transport, logistics and utilities will only continue to grow, increasing the burden on public funds. If cash-flushed investors have an appetite for Asia’s infrastructure projects, what is keeping them at bay? For infrastructure development, statistics show that Asian nations have been turning to Public Private Partnerships (PPP), which seemed to be one of the main tools to attract financing and keep pace with rapid growth. Although the PPP models are established in several Asian countries, such as Singapore, South Korea and Japan, others are relatively immature. Indonesia, China and India, in particular, have announced ambitious infrastructure programs with governments developing mechanisms to encourage PPP investment and address barriers to PPP development. The new game-changers of the 21st century – India and China are showing aggressive signs of opening their domestic markets to international investors. While PPPs hold significant potential for Asia, they also present formidable challenges. Case studies of PPP markets in Australia, China, India, Indonesia, Japan, Korea, Malaysia, Singapore and Thailand provide an Asian perspective enabling recommendations for Azerbaijan. The Azerbaijani government has achieved great progress over the last decade in integrating the country into the global economic marketplace and increasing foreign investment mainly due to its oil resources. Now, the government’s focus is on diversifying the economy outside the oil sector. Azerbaijan is facing increasing demand for investment in infrastructure development, overstretching the government’s budget. There is need for not only private sector investment but also private sector knowledge and expertise. The traditional approach of the government for infrastructure development of any kind has been to use the state’s own budget or privatization. The first is markedly insufficient to meet the country’s needs while the latter only works in a sound legal and financial framework and is not appropriate for all public service delivery projects. So there is a need to see if the time is ripe for public private partnerships. PPPs may not be the ultimate solution, but they can help address many of the issues systemic to the region in the field of infrastructure development. All it needs is a systematic approach undertaken through joint efforts of private and public sectors.

Infrastructure is essential for development. This report presents a snapshot of the current condition of developing Asia's infrastructure---defined here as transport, power, telecommunications, and water supply and sanitation. It examines how much the region has been investing in infrastructure and what will likely be needed through 2030. Finally, it analyzes the financial and institutional challenges that will shape future infrastructure investment and development.

First, the book documents the evolution of Asia's infrastructure over the past half-century and reviews existing literature on the role of infrastructure investment in supporting growth and social development. It highlights the positive impact of mass transit investments on land and property values, and the possibility of taxing the increase in values to finance these investments. It then examines Asia's current practices and new solutions that can help meet the infrastructure gap. It discusses the role of institutions, how innovation can foster energy infrastructure investments, and the role of bond markets in infrastructure investments. The book explores ASEAN+3 efforts in developing local currency bond markets to provide long-term local financing for infrastructure investment while providing financial resilience. It also examines the use of green bonds to finance sustainable growth in Asia.

The book provides readers with a clear understanding of infrastructure challenges, how Public‐Private Partnerships (PPP) can help, and their use in practice. Infrastructure bottlenecks are generally considered the most important constraint to growth in many countries worldwide. Historically, infrastructure projects have been financed and implemented by the state. However, owing to the fiscal resource crunch, time and cost over‐runs, and the general poor quality of publicly provided infrastructure, many emerging market governments, including India, have increasingly adopted PPPs with billions of dollars of investment riding on them. The results have been varied – from spectacular airports like the Delhi International Airport Limited with the associated controversy over land use, to the renegotiation of contracts as in the case of Tata Mundra Ultra Mega Power Project. Illustrating concepts with relevant case studies, the book makes the challenges of PPPs understandable to industry and management practitioners as well as students of management, public policy and economics. It is useful to practitioners wishing to avoid the pitfalls in the tricky terrain of PPPs and policymakers wanting guidance in crafting proper incentives. It also helps students gain a holistic and “applied” understanding of this increasingly important and popular model. “Public Private Partnerships (PPPs) in India are currently under stress. A comprehensive treatment of the subject by a long-time and erudite practitioner and a management academic, this book should be useful to students trying to learn the basics, while also being valuable to professionals and policy makers. The book suggests that the Government should hold bidders accountable to their submitted bids, thereby preserving sanctity of contract. This will discourage aggressive bidding which has become a serious and endemic problem. The book also suggests the use of better bidding criteria to mitigate traffic risk in transport projects. Policy makers should pay heed to these suggestions as they consider improvements in the PPP policy regime going forward.”—Arvind Subramanian, Chief Economic Adviser, India/div “For a fast-growing India, infrastructure creation and operation is a great challenge and opportunity. This excellent book combines theory and practice on PPPs, and is very useful for professionals and students alike. With case studies and current developments, the authors bring out issues in India with global experiences as well. A must-read for infrastructure practitioners.”—Shailesh Pathak, Chief Executive (Designate), L&T Infrastructure Development Projects Limited “India’s program of private participation in infrastructure attracted worldwide attention as it became one of the largest programs in emerging markets. As well as the volumes of finance mobilized, it garnered interest because of some of the innovative approaches developed, such as Viability Gap Funding. The Indian PPP story is well captured in this book, which also makes the point that India is seeing project cancellations and failures rise. The authors analyze the factors behind this and point the way to a more robust PPP market that learns from the experiences of the past.”—Clive Harris, Practice Manager, Public-Private Partnerships, World Bank/div

Annotation "In recent years, the countries of the Europe and Central Asia (ECA) Region have experienced a marked decline in the interest of international private operators and investors in municipal infrastructure projects, in line with the trend experienced in other emerging markets. The objective of this paper is to explore the possible innovative elements of a Public-Private Partnership (PPP) in an effort to rekindle the sagging private finance interest in municipal infrastructure in the ECA Region. The contemplated PPP model would involve government, municipalities, Local Infrastructure Investment Trusts, private equity funds and/or turnaround advisors, and International Financial Institutions."