Promoting PPP To Improve Investment Environment And Giving Profits To Social Capital

Through PPP and mixed ownership, it is necessary to strengthen cooperation between government capital and social capital, or more accurately, to give profits to the social capital, which is an inevitable choice to deal with the current economic difficulties in China.

(1) to solve the problem of insufficient government funds, we should deal with the downward trend of financial revenue and land revenue under the economic downturn, especially in the context of real estate downhill.

(2) to solve the problem of inefficient government led projects and services, the government directly provides infrastructure and utilities. Compared with private sector provision, there are gaps in cost control, productivity and service awareness. With the participation of social capital, the efficiency of public construction and services can be improved.

(3) to solve the problem of the lack of private sector investment channels, the decline of traditional industries, the downside of risk-free interest rates, the real economy entering the shortage of assets, PPP and the shareholding of state-owned enterprises can provide a new investment channel, and suitable for long-term funds.

For China, privatization of state-owned enterprises is not realistic, more realistic is through mixed ownership, and PPP is actually an important form of mixed ownership.

After the promulgation of Article 43 in 2014, governments at all levels vigorously promoted the PPP mode, and a total of 3 trillion and 400 billion PPP projects were launched nationwide, but so far the project signing rate is still less than 30%.

In order to change this situation, we should start with the following aspects.

Input financial funds to carry out project feasibility analysis.

According to foreign experience, consulting costs usually account for about 1%-2% of total project investment, while PPP projects are often hundreds of billions or even billions of dollars, and they still need to pay high consulting fees without participation. Some enterprises are discouraged from PPP projects.

Through investment

Scientific feasibility analysis is carried out to reduce the participation cost and expand the participants.

Provide policy support for PPP project investment and financing.

Due to PPP's

Attribute, social capital can only get reasonable but not excess income from investment, usually the yield is between 8% and 10%. Compared with the higher financing cost, PPP project is not attractive enough for social capital.

It can provide financing support for PPP projects by providing credit preferences, project income securitization, issuing project income bonds and so on.

In the promotion of PPP, the United Kingdom set up a pension investment platform, put forward a British guarantee scheme and temporary cooperative loan, and provided financial support for the PPP project to facilitate the participation of members of the association of British insurers in the PPP mode.

Clarify the central level

Top level design and leadership mechanism.

As a new thing, PPP must have a clear top-level design.

From the central point of view, the NDRC and the Ministry of finance have issued PPP related documents and demonstration projects. The division of powers and responsibilities between the two organizations is not clear.

From the perspective of more mature countries such as the United Kingdom, Australia and South Korea, there are national PPP centers. Most of the centers are set up in the Ministry of finance, and some are independent of the Ministry of finance. Starting from China's national conditions, it is suggested that the leading group of all PPP related work can be established by the State Council. The office can be set up in the Ministry of finance or the development and Reform Commission, and the ministries and commissions related to PPP should accept the unified guidance of PPP.

Improve relevant legal system and improve the environment of PPP system.

The progress of PPP's promotion is slow, largely due to the fact that social capital is alert to the potential risks of government credit and other PPP projects, and wait-and-see sentiment is serious.

In 2011, the Asian Development Bank (PPP) scored 49.8 points in its assessment of the environmental maturity of the PPP system, which is quite different from that of PPP's mature countries, such as Australia (92.3) and the UK (89.7).

In order to bring PPP into full play, we need to improve the environment of the PPP system, clarify the price mechanism, financial commitment and budget convergence, and protect the interests of social capital in the form of legislation.