Seven opportunities: Thailand’s Public-Private-Partnerships (PPP)
The need for speed on Thailand’s late public-private partnership party
A public-private partnership enables the state sector to outsource public services to the foreign and domestic private sector and private companies to invest and engage in public infrastructure and energy projects. The economic benefit of public-private partnerships for the public welfare is disputed, but they can create an attractive business opportunity for foreign enterprises.
Thailand’s experiences with PPP schemes are mixed at best. Its first legislation, the Private Participation in State Undertaking Act 1992 (PPSU Act), had no success. Its second version, the Private Investment in State Undertaking Act 2013 (PISU Act), has justifiably the bad reputation to be exorbitant complicated, lengthy and inefficient. Its track record is frustratingly short and too many foreign business opportunities are left unused. Typical time-wasters are extensive project review periods, the EIA environmental impact assessment process, and committee decision-making procedures. In addition, there are gray areas of the bureaucracy, a frightening criminal liability and a lack of transparency.
The PISU Act 2013 defines a PPP as “Public sector’s investment with the private sector in any form or allowing private sector investment by issuing a permit, granting of a concession or of any form of right”. It is the declared objective of the legislation to promoted PPP investments by standardizations, facilitation, and transparency. The key role of State Enterprise Policy Office (SEPO) is to act as the central PPP Unit, as the secretariat to the PPP Committee and to be in charge of multi-agency coordination.
Welcome to the premium independent advisory law firm. PUGNATORIUS Ltd. is a Bangkok-headquartered specialist provider of bespoke transactional legal and tax advice in the corporate and property legal and taxation industry sectors.
Not ignoring the initial difficulties for PPP schemes in the past, latest developments show clear signs of a change for the better. Correctly applied, the upcoming legal and regulatory framework gives foreign enterprises the chance to participate in Thailand”s PPP ventures not only fair and easy but also successful and sustainable. To be late to Thailand’s public-private partnership party might be a costly experience.
PPPs in the fast lane: Seven swift opportunities
The development of Thailand’s PPP environment is a work in progress. The current PISU Act, fast-track regulations, the growing network of Thailand 4.0 provisions, the upcoming EEC Act which is not yet in its final stage as well as adjustments and bypassing of existing laws under the martial law section of Thailand’s interim constitution sum up to a patchwork which urgently needs simplification, harmonization and legal certainty. The following seven-point list should see merely as an inspiration than a menu card.
1. Slow-track 2.0: The government gained some experiences with the existing legislation, and inefficiencies and glitches are steadily removed. This does not make the slow-track to the all-time favorite for foreign enterprises, but it is still one of seven possible routes. Projects under the PPP Masterplan 2015 – 2018 are promised to receive support and close monitoring from the public sector
2. Regular fast track: Some projects are already fast tracked bu the government with conventional means. The shrunk time schedule of nine instead of 25 months is in most cases not achieved in practice. At least it shows the efforts for improvements and the awareness of a need for acceleration. Current fast-tracked projects include electric train lines, high-speed lines, and motorways.
3. BOI: An investment promotion by the Board of Investment can under some aspects act as an accelerator for a PPP as well. More details to follow.
Do you like to know more? The law firm keeps foreign companies up-to-date on investment opportunities in Thailand’s energy and infrastructure sectors in its newsletter “Seven Opportunities“. Further information is available here.
4. EEC: Under the forthcoming Eastern Economic Corridor Act, PPP projects in the three Thai provinces Rayong, Chonburi, and Chachoengsao will obtain a foreign investment-centric regulatory framework which speeds up PPP processes by cutting red-tape and avoiding the engagement of one aspect by various authorities.
5. Fast EEC: Depending on the final legislation, a super fast track PPP with a process duration of three months is under discussion. The fast as it gets for selected projects, hopefully not only for available for Sino-Thai PPPs.
6. Thailand 4.0 will make tools and modules available to speed-up PPP in whole Thailand.
7. S44IV: Section 44 of Thailand”s interim constitution gives the army the ultimate and incontestable power to bypass existing laws to remove barriers and please foreign investors. This is the “nuclear option” to realize public-private partnership ventures on the fly.