New PPP law for Thailand should deliver planned "mega projects", says expert

The new Private Investment in State Undertaking Act (PPP Act) took effect on 4 April 2013. Amongst other measures, the new Act aims to streamline the project approval process. It establishes a national PPP Committee, which will be responsible for project approval as well as drafting the various rules and procedures set out in the Act.

Projects expert John Yeap of Pinsent Masons, the law firm behind Out-Law.com, said that the new law corresponded with a new push by the Thai government to encourage private sector participation in the delivery of public services and infrastructure projects.

"With the Thai government seeking to raise loans worth over 2 trillion baht to enable it to implement various planned 'mega projects', including railways, this PPP law is a key policy development that should help facilitate such projects and will hopefully lead to greater confidence in Thailand's infrastructure industry," he said.

PPP allows public services or private business ventures to be funded and operated through a partnership between the public sector and one or more private sector companies. Under a PPP arrangement, governments can contract out the design, building and operation of a facility for the benefit of the public to a private sector company, usually for a period of 25 to 30 years.

The new Act defines a "project" as any investment in the affairs of the state, according to Infrastructure Journal. This means that the new law will apply to any joint venture between the state and the private sector with a value of 1 billion baht (approximately £20 million) or more.

According to the Act, the government agency responsible for a particular project must conduct a feasibility study to assess the viability of the project before it can proceed to approval. This study should be carried out by an external consultant, and should include both qualitative and quantitative assessments. A list of qualified external consultants will be kept by the State Enterprise Policy Office (SEPO), which will work with the PPP Committee to set out further requirements in respect of feasibility studies.

Feasibility studies should be submitted to the PPP Committee and SEPO for approval. According to Infrastructure Journal, SEPO will make recommendations to the PPP Committee which will issue a final decision. The Act sets out a timetable for each stage of the approval process, which Infrastructure Journal said has been "shortened" from the current timeframes. The new Act envisages a seven to 12 month window for the entire approval process, down from the two years project approval could take under the previous regime.

The PPP Committee established by the PPP Act will be chaired by the Thai Prime Minister, with the Minister of Finance acting as Vice Chairman. SEPO will act as the PPP secretariat and will be responsible for drafting various PPP guidance documents and preparing a draft PPP Strategic Plan for approval by the PPP Committee. The Strategic Plan will set out a five-year investment and policy plan, identifying priority sectors and pilot PPP projects, according to Infrastructure Journal. SEPO will also set out alternative PPP policies for projects valued at less than 1 billion baht, to which the new law does not apply, Infrastructure Journal said.