Contracts & Commercial

Propose Law to promote Public Private Partnerships, NA instructs

Date: 11 July 2018; Type: Legal News; Source: Vientiane Times

The National Assembly (NA) has told the government to formulate legislation to manage and attract more investment in the form of public-private partnerships (PPP), and Build-Operate-Transfer (BOT) projects to drive development.

Members of the legislature adopted a resolution at its recent fifth ordinary session asking the government to work on proposed legislation for consideration.

Appropriate laws remain elusive, despite many PPP and BOT projects having already been implemented in Laos, particularly in the field of infrastructure.

Economists have suggested that the legislation must ensure transparent, fair and just treatment to strengthen the confidence of the private sector thus attracting more investment.

“Ensuring transparent and just practices with efficient operation of PPP projects is critically important to promoting PPP investment,” deputy chief of the National Economic Research Institute, Dr Leeber Leebouapao told Vientiane Times yesterday.

He underlined the need to promote PPP investment to lessen the burden on the state budget, which is limited amid substantial investment needs, especially in infrastructure.

“Many countries including developed countries have attached great importance to promoting PPP investment to lessen the state investment burden,” Dr Leeber said.

Though Laos’ current Investment Promotion Law stipulates the promotion of PPP investment, the content of the law is not comprehensive; thus the particular legislation is needed.

“Some countries not only have a particular law in place but also establish a particular organisation to manage PPP investment affairs,” he said.

Many projects are being implemented and set to be developed under the PPP and BOT model including the Nam Theun II hydropower project, the 585-km Vientiane-Pakxe expressway linking the Lao capital with southern province of Champassak, and the 109.12-km Vientiane-Vangvieng expressway.

PPP investment has the potential to fill the gap of infrastructure investments need in developing Asia including Laos, Asian Development Bank (ADB) said in a report.

The region will need to invest US$1.7 trillion per year in infrastructure until 2030 to maintain its growth momentum, tackle poverty, and respond to climate change, the bank said.

ADB Lao PDR Resident Mission’s Public Management Specialist, Dr Rattanatay Luanglatbandith said previously that public investment was far below needs for infrastructure.

To attract more significant investment from the PPP projects to fulfil the investment need, Dr Rattanatay underlined the need for the country to develop and strictly observe a rule-based approach to secure confidence among the private investors into a joint venture.

“A PPP project must be approved through a transparent process via bidding,” he said.

“Project’s risks and investment must be shared appropriately between the state and private investors.”

A standardised legal system that guarantees just treatment in the business-related activities including in cases of business disputes must also be employed, Dr Rattanatay said.

Speaking to Vientiane Times previously, an independent economist and business advisor Dr Mana Southichack agreed that improving the legal system to ensure transparency, justice and fairness in the business environment is crucial to attracting more PPP investment.

He recommended the government to source finance from external sources when it comes to promoting PPP investment into infrastructure development, saying domestic financial sources would remain limited.

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