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2018 Executive training program for Indian government officials

18 May, 2018 News Center 1,027

The end of February was highlighted by the successful completion of the executive training program for the Indian Senior Government Officials from DARPG (Department of Administrative Reforms & Public Grievances). During the six-day intensive program (Feb. 18-24) experts on Korean public policy shared the Korean experience in economic development, reforms in education and governance, practices for the 4th Industrial Revolution, dispute resolution, smart city development, etc. Moreover, trainees had a chance to visit several public sites as well as to dive into a beauty of the Korean culture at the meanwhile. 

On February 22, 2018, a delegation of 15 DAPRG Senior Officials visited KDIS to learn about PPP (Public-Private Partnership) in Korea from  Professor Jong-yearn Lee. Nowadays, Korea’s public investment management is at the stake of a “trilemma” in a sense that there is a quandary of (1) the fiscal limits on traditional procurement as the demand for social welfare skyrockets; (2) the demand for certain infrastructure; and (3) the down turning PPP market. The PPP Act (1994) precedes other Acts so that projects may be exempt from specific regulations.  Professor Lee thoroughly explained the insights of two models of PPP which are in use in Korea.

First, the BTO, or Build-Transfer-Operate, is the type of PPP where investors transfer the ownership to the government and operate the infrastructure facility without any tax payments for a given period of time. BTO has more popularity in developing countries and, usually, covers projects such as the construction of roads, seaports, railways, etc. The investment recovery is based on user fee. Incheon International Expressway, Incheon Bridge, Busan New Port Phase I are one of the biggest, most successful BTOs in Korea.  

Second, BTL (Build-Transfer-Lease), which has more popularity in developed countries, works within the same logic. However, concessionaires’ investments are recovered by the government (lease payments + operational costs) based on performance for a given period of time (around 20 years). BTL is characterized by the supreme quality of services and gives the private sector a greater space for efficiency and creativity. Chungju Military Apartment Housing, Ulsan National Institute of Science and Technology, Anhwa High School are the leading examples of successful BTL projects.

How can a government support PPP? Professor Lee pointed out the most important preconditions, such as giving land acquisition rights, construction subsidies, reduced taxes for infrastructure bonds, minimum revenue guarantees (in case of revenue falls), buyout options in force majeure, etc. Key points for successful Implementation of PPP, primarily, are the clearly defined institutional framework and market promotion along with the fiscal discipline.

By Ranat RYSBEK (2017 MPP, Kyrgyzstan)