With the implementation of local autonomy, globalization and free trading system, not only central government but local governments came to be faced with worldwide economic competition and the rapidly increasing administrative demands with their weak ...
With the implementation of local autonomy, globalization and free trading system, not only central government but local governments came to be faced with worldwide economic competition and the rapidly increasing administrative demands with their weak financial resources. As a strategy, Public-Private Partnership (PPP) is considered to mitigate their local fiscal stress and to provide good services. Since 1980's, it has been recognized to induce the private fund and skill into the public development sector. Thus lots of studies on local public corporation, privatization of public service and the third sector projects have been done on the necessity.
The purpose of this study is to search for the alternatives of activating Public-Private Partnership on the local development project.
To accomplish this purpose, this study has focused on investgating and analyzing Public-Private Partnership projects being planned and performed in Kyungnam Province, especially on the Third sector and contracting out for the expansion of Social Overhead Capital(SOC). As the method of research, the literature review, statistical data, previous project analysis and interviews have been employed. The major findings are as follows.
In Kyungnam Province, Kyungnam Trading Co. Ltd. is established on May 6, 1994 as a good example of the Third sector. Kyungnam trading is a joint-stock company invested by private enterprises and Kyungnam province. Besides Kyungnam trading, numbers of cities and counties in Kyungnam Province are planning to establish the Third sectors. Most of companies are joint-stock corporations to maximize merits from private energy.
The Private Capital Inducement Act for the Expansion of SOC (PCIA) is enacted on August 3, 1994 to establish the basic rules for Public-Private Partnership, especially the constructions of SOC facilities. It provides process procedures, selecting methods of private developer, various incentives and supporting policies, etc., in reference to PPP projects. The enactment of Private Capital Inducement Act has enabled to accelerate the process of private participation in regional infrastructure projects. Over 30 projects of private sector participation are planned as of May 1995 in Kyungnam Province.
The basic ideas for the utilization of the private sector and activation of Public-Private Partnership in the regional development projects are as follows ;
1) It is necessary to prepare the basic condition to activate Public-Private Partnership and establish the new morals and philosophies for higher level of partnership. To do this, first, government officials, regional enterprises and residents should become aware of the necessity and importance of Public-Private Partnership.
Second, the government should focus on creating competitive market to promote an economic efficiency and accountability of the regional infrastructure. Third, we must clarify the boundary of activity between public sector and private sector. Fourth, government officials should heighten the spirit of enterprisers and democratic control over activities of Public-Private Partnership must be secured to guarantee the public interest.
2) Rationalization of organization structure and personnel management need to be secured. Bureaucratic operation of authority must be eliminated and the public sector should not intervene to business activities of the private developer except for a few cases such as the price control of facilities with low price and the monitoring of the service level. Also it is necessary for the agency to be responsible for the involvement processes of private sector in the construction and management of the regional projects. Its main roles include an examination of approval processes generated in various field of the project, a review of economic subsidies and a provision of legal services.
The Private Capital Inducement Act is made as a institutional device for expansion of SOC but it is also necessary for government and private sector to make their best endeavors to refine and develop the system. The role of private developers should be considered in the field of the management of current facilities as well as the construction of new infrastructure. Also government should put a stress on reducing inter-regional inequality by carrying out the system. The opportunity of citizen participation in the process of decision-making related to PPP should be emphasized. Financial management has to be efficient. Resources of investment must be increased to use as a fund for the regional development.
3) It is necessary to reinforce policy support.
Because Public-Private Partnership is still in the beginning stage, policy supports for the operation must be reinforced. Even if the Private Capital Inducement Act has various supporting policies, it needs to be used positively and constructively. It is required ;
i)to specify the merits of public or private sector for implementing partnerships, ii) to give the participants (private developers) various incentives, iii) to revise or reinforce the legal, financial, tax supporting system for promoting Public-Private Partnerships, iv) to simplify the administrative processes and v) to provide information and technology support.