'Lack of fairness, transparency may lead to favoritism'
'Lack of fairness, transparency may lead to favoritism'
JAKARTA (JP): Pil-Gon Rhee, vice chairman of South Korea's
Samsung Corp., stressed the need for transparency and fairness in
the selection of private infrastructure developers and investors;
otherwise, accusations of political favoritism are unavoidable.
"Some of the private infrastructure projects now underway in
the region have been accused of being connected with political
favoritism, because the selection criteria were ambiguous," Rhee
told an international conference on infrastructure yesterday.
Rhee suggested that governments announce ahead of time well-
defined and detailed criteria for qualification of bidders and
bid evaluation.
Transparency was cited by the participants at the World Bank
international seminar as one of the prerequisites to attract
private investors to the development of infrastructures.
The Korean businessmen said that legal and regulatory
frameworks conducive to private infrastructure participation
should also be firmly established and effectively adhered to.
"The public sector should make deliberate efforts to build and
maintain the reputation of rigorously honoring the agreed
contractual terms," he said.
Rhee also cited four other requirements to induce greater
participation of private investors in infrastructure development:
Enactment of a special legal regime governing private
infrastructure participation, establishment of a neutral
regulatory agency, improved and speedy interministerial
coordination and use of an independent third-party evaluation
mechanism.
He suggested that given the long-term uncertainties and risks
involved in infrastructure investment, the multilateral agencies,
such as the World Bank and Asian Development Bank, need to review
their current support programs to help mitigate political risks.
Philippine Secretary of Finance Roberto F. De Ocampo, who also
addressed the conference, shared Rhee's views.
Recounting the good lessons from his country's experiences in
inducing private investments into infrastructure development, De
Ocampo stressed the imperative for developing a sector plan and a
regulatory framework as well as ground rules for risk sharing.
De Ocampo also cited the need for mobilizing affordable
external finance and for contracting some of the processes,
including financial and legal negotiations.
Rhee's and De Ocampo's views are also central in the
recommendations carried by the latest edition of the World Bank
report Private Sector, Infrastructure, which was discussed
during the three-day conference on the public-private interface
in East Asian infrastructure.
The World Bank suggests, on the basis of its experiences in
the developed and developing countries, that governments set up a
conducive and credible policy and institutional frameworks.
Though the bank acknowledged the variety in country and
sector-specific conditions, it suggested two basic components of
the policy framework.
The first component relates to policies and actions necessary
to promote overall economic growth and private sector development
in all economic sectors.
The second relates to policies and actions specifically
concerning infrastructure.
The first component, the World Bank suggests, calls for the
maintenance of a stable macroeconomic environment and a
transparent, robust investment environment.
The second basic component requires four measures: The
clarification of government objectives and strategy for private
participation, putting in place an explicit framework and
mechanism for unbundling, mitigating and managing risks,
reduction of transaction costs through transparent and
competitive mechanisms and streamlined public decisionmaking and
the development of local capital markets and creation of
mechanisms to facilitate long-term debts. (vin)