CDIA’s Basic Course on PPP in Chongqing co-organized with Chinese Ministry of Finance
July 30, 2014
CDIA’s Basic Course on Public-Private Partnership (PPP) for Municipalities travelled to Chongqing, and it was conducted for Chinese public officials that came from all over China. Considered a must-have training for those that have been tasked to pursue the development of PPP projects in China, this fourth edition was carried out in cooperation with Chinese central government involving the Chinese Ministry of Finance (MoF) Human Resources Development Centre as a co-organizer. This is the first step towards a long-term collaborative program between CDIA and MOF.
From the 22-24 July 2014, the Chongqing Financial Bureau hosted the event with more than 100 participants from MoF Financial Department, International Department, provincial and municipal financial bureaus. Chinese and foreign experts from MoF and CDIA conducted a joint discussion and study on the importance of this tool to diversify the sources of funding and expertise for the infrastructure development.
To guarantee the quality and effectiveness of the training for such a large audience, CDIA invited additional facilitators. The team was composed of Prof. Vicente Alcaraz from the Polytechnic University of Madrid, Prof. Wang Shouqing from Qinghua University, Mr. Wang Qiang from Shanghai Chengtou and Prof. Ye Sudong from Beijing Jiaotong University. This wider cooperation with Chinese local experts is in accordance with CDIA’s knowledge transfer strategy implemented in the different countries where this training program is being developed. It will also help to empower a more comprehensive educational program with MoF and NDRC in the near future.
The training started with a discussion between the Chinese and foreign experts from MoF and CDIA about the benefits and challenges inherent in a PPP program, and the realistic expectations to have.
The director of MoF Human Resources Development Centre Mr. Jia Rong’e delivered the opening speech emphasizing the significance of promoting the PPP model for infrastructure development. From his perspective, the promotion of PPP has to be viewed not only as an upgrade of the operation at the project level, but also as a macroeconomic system reform. PPPs, when well structured, can support the new urbanization in China and improve public services. In this regard, MoF will provide support to PPP by encouraging the necessary policy, institutionalization, projects and capacity development work. Mr. Jia asked students to take this training as an opportunity to learn and explore the sustainable, transparent, and healthy PPP policy environment.
In addition, Mr. Liu Jian, MoF Inspector, introduced what is PPP, the procedures of a PPP projects and the ways to adapt PPP scheme to China’s circumstance. He stressed that by bringing in foreign and local private capital and reducing government spending, PPP will help to speed up the development of public infrastructure. PPP is more suitable for the industries that have stable cash flow and changed slightly with time, such as telecom, highways, water supply and pharmaceuticals. He further presents international practise of PPP and the Chinese successful case of PPP projects.
Mr. Meng Chun, the researcher of State Council Development Centre, reviewed PPP history in China over the past thirty years. He pointed out that the obstacles of PPP development in China lies in the misunderstanding of the concepts and the lack of PPP laws and policies. The absence of a specialized organization in the government and the imperfection of supervision and evaluation system both slow down PPP’s promotion in China.
Mr. Adolfo Guerrero, the Head of CDIA China Office, spoke about the background history and the influences of the main PPP schools (UK and Spain) in different countries. Even when there are different “schools” and specific country framework, they all have commonly-accepted principles based on the fundamentals included in CDIA’s training. China should find its own PPP path based on those fundamentals generally recognized as the pillars of a real Public-Private Partnership. He, however, stressed that PPP is everything but financing. Its more important strengths lie in efficiency and innovation in service delivery, and these must be utilized to answer the demand on urban infrastructures that the fast urbanization process requires in China.
PPP consultant expert to CDIA, Prof. Vicente Alcaraz emphasized on the ever-evolving framework where PPPs develop, including those from more mature PPP markets. Therefore, whatever legal framework will be setup in China; it will have to be adapted over time to the particular conditions and circumstances of the market. He also emphasized one value of competition on the PPP projects. This enhances the quality of the project proposals, innovation and efficiencies, which are the fundamentals of the creation of value for money necessary for PPP projects. He recommends, based on his research and experiences, to set realistic expectations about PPP’s effects in boosting GDP growth. While attaining a 15% to 20% public procurement under PPP is a great achievement, it is, so far, reserved only to those countries with long experience in the implementation of this process.
Consultant expert of CDIA, Prof. Wang Souqing said that, after all, PPP is a procurement process that needs government supervision and responsibility. The government should have a partnership spirit and must combine self-learning with outsourced consultancy in engaging with the private sector. Public participation is beneficial and PPP needs transparency, fairness, and efficiency during the selection process and in the implementation.
During the three-day training, participants had the opportunity to learn the fundamentals of PPP and put concepts and approaches into case study practise. The participation and interaction in the course were active and highly spoken of. The training had an overwhelming acceptance from the audience where over 92% of the participants, on the average, were “very satisfied” or “extremely satisfied” with the contents, the facilitators, and the practical experience, as per the survey feedback conducted at the end of the course. The officials in Chongqing had the opportunity, not just to learn and practice the concepts and fundamentals of PPPs, but also to discuss and clarify their projects and situations with the team of experts.
The training was also an opportunity for CDIA to interact with many public officials and to brief them about CDIA’s work with cities beyond PPP. Many officials expressed special interest for their cities, and it is expected that some applications will come out of this training soon after.
As a conclusion of the training, MOF envisions value on this training to create the foundation of an educational process in PPP with MOF officials. A capable administration will help to carry a large-scale PPP infrastructure program in China and the education of their contributors is the first step to achieving this. The training laid the corner stone for a joint capacity development program in PPP between the Chinese Ministry of Finance and CDIA following this successful experience.