Many regions including Inner Mongolia and Jiangsu province recently specified plan for public-private partnership (PPP) in 2018. They plan to further strengthen supervision over PPP, regulate PPP-based projects, enhance incentives moderately, and give more supports for private capitals to join in PPP-based projects, reported by Securities Daily.
“The development of PPP will enter a new stage. On the one hand, standard operation should be emphasized; on the other hand, diversification of social capitals should be encouraged.” Chen Feichi, a PPP expert and head of Beijing Rongbang Ruiming Investment Management Co., Ltd., said that many provinces encourage private capitals to participate in PPP projects. It seemingly leaves larger market space for private capitals. But if government wants to achieve substantial promotion, it needs to launch more detailed measures on supporting private capitals besides offering more incentives and subsidies.
It is learnt that Inner Mongolia Autonomous Region will make the best of China’s PPP comprehensive information platform and reinforce reserves of PPP projects. It will focus more on normalization of projects while paying attention to the number of implemented projects. It will strictly practice standards of including new projects and remove those unqualified projects. It will enhance incentives and subsidies and encourage regions and projects which meet requirements.
Jiangsu province will further intensify supervision over PPP projects and carry out standard PPP projects. It will be strict in selecting PPP projects. Meanwhile, it revises methods of providing incentives and subsidies for PPP projects, which will be favorable to private capitals. It will provide more incentives and subsidies for private capitals and the piloting PPP projects led by private capitals.
In addition, Shandong and Anhui provinces proposed to give more supports for private capitals to be involved in PPP projects, formulate policies and measures of backing up participation of private capitals, give full play to fiscal incentives and subsidies, and further stimulate vitality of private capital investment. They require being tough in defining scope and boundary for the application of PPP mode, prohibit financing in the guise of PPP projects, and prevent raising funds by packing commercial projects and pure engineering projects into PPP projects.
Chen added that the development of PPP will see a new stage with stable development and focusing on both quantity and quality instead of just the former. Many provinces emphasized standard operation, improving quality, and removing unqualified projects. This implies the influence of a circular on regulating management of project library of PPP comprehensive information platform released in November of 2017, which attaches unprecedented importance to standard operation of PPP projects.
“Insisting on implementing standard PPP projects is the joint responsibility of all participants including governments, social capitals, consulting agencies and financial institutions. It cannot rely on only one of them.” Chen pointed out that government should regulate administration, social capitals should take part in it in accordance with laws and rules, consulting agencies should provide professionalized services and guide scientific operations, and financial institution should change their thoughts and undertake financing service specific projects. Only with endeavors of various participants can they realize standardized operation of PPP projects and prevent people from exploiting advantages.
Translated by Vanessa Chen
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