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PPP crucial to tackling economic needs of the region
May 25, 2017, 8:48 am
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Adopting the Public–Private Partnership (PPP) model for future infrastructure spending would mean GCC governments can save valuable public finances during the current challenging period, according to accountancy and finance body ICAEW. It would also enable them to attract more foreign investment, create jobs and encourage the transfer of skills to the public sector. This was the consensus during ICAEW’s Corporate Finance Faculty round-table about PPP prospects in the region, which was held in Dubai last week.

The distinguished panel of speakers and invited guests discussed how the governments and businesses in the region can work together to address the economic diversification needs of the region, as well as tackle challenges and seize opportunities associated with PPP in the region. Panelists agreed there was a lack of understanding about the PPP concept in the region, which is largely considered to be purely a financial tool.

Speakers explained that GCC governments have to appreciate that the PPP model is a long-term partnership that brings to the public sector a number of benefits including the transfer of expertise, innovation and efficiency from the private sector. It also transfers many risks, that typically have been borne solely by the public sector, to the private sector.

Panelists advised that in order to facilitate collaboration between the public and private sectors, there was a need for a good ‘Public Procurement Law’ which is transparent and sets out the processes to be followed for all forms of public procurement.

“Using PPPs to develop infrastructure means governments have the opportunity to shift large upfront capital spending off their near-term financing commitments. However, PPP has to be structured in the right way from the outset.

There needs to be an approach by both the government and the private sector providers that looks carefully at how the deals can be structured in the most effective and efficient manner. Because it is a partnership, it must be attractive and beneficial not only for the government, but also for those investing their personal funds,” said Michael Armstrong,  ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA).

Speakers also agreed that the most important lesson learned in other jurisdictions that can be applied in the GCC is that each PPP structure should be tailored to serve the project. Parties need to be patient in order to get the structure right and must not rush PPPs.

Panelists applauded Abu Dhabi’s approach in implementing PPPs. The Emirate was recognized for having established a PPP model that works well and has successfully completed PPPs in energy, infrastructure and educational sectors.

The event was attended by close to 100 ICAEW members and senior business representatives from the major global and regional financial organizations.


 

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