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LAO PDR : PPP Framework Support

The current infrastructure gap in Lao PDR remains large, which is the main obstacle for poverty alleviation and graduation from the list of least developed countries. As government fiscal space is very limited, there is a critical need to mobilize resources from the private sector to invest in the development of infrastructure that is economically and financially feasible. In this context, the government has recently introduced the PPP concept to the transport sector with the support of PPIAF.
The Ministry of Planning and Investment (MPI) leads in supporting PPPs and developing an appropriate enabling framework. However, while there is strong support at the government and policy level to implement PPPs in Lao PDR, there is a lack of capacity to identify, prepare, procure, and manage PPP projects. In addition, there are overlaps and inconsistencies between the PPP Decree and other laws and regulations that need to be addressed to support the successful implementation of PPPs and an over-reliance on unsolicited proposals. Finally, for a country that is suffering from high levels of government debt and guarantees, there is no robust framework in place to manage fiscal commitments and contingent liabilities.  
Therefore, to deploy the PPP concept further, PPP guidelines and related regulations need to be developed in parallel with MPI's effort to socialize the PPP decree to the rest of the government, and capacity building for those key agencies involved in PPPs was also required.
The objectives of the activities under this PPIAF support was to improve the developing PPP framework in Lao PDR, build capacity within relevant government entities, and assist such entities with the treatment of Unsolicited Proposals (USPs) in a fiscally sustainable manner by helping the government improve: its PPP framework (legal, regulatory, and institutional), the management of PPP-related Fiscal Commitment and Contingent Liabilities (FCCL), management of USPs, and the general PPP capacity of selected line ministries and provincial agencies.
The project provided MPI with a National PPP roadmap that indicated the strategies, policies, and further actions that will be needed to stimulate a successful PPP program in Lao PDR. This activity also supported to MPI and the Ministry of Finance (MOF) in addressing some of those key issues related to PPP, including the monitoring and mitigation of FCCL risks and the management of USPs, by applying the recommended policy guidelines to PPP examples. In addition, workshops were provided to strengthen the government's capacity around key areas, including project identification and PPP screening, preparation of outline business cases and management of FCCLs and USPs. These workshops were attended by officials from a number of line ministries and agencies that are directly involved in PPPs, including MOF, MPI, and the Ministry of Public Works and Transport (MPWT).
A PPP Decree has been issued, but based on the advice of the bank team, the government of Lao PDR has decided to implement a PPP Law in 2022/2023, which should clarify and remove some of the existing inconsistencies between the PPP Decree and other existing laws – particularly the Investment Promotion Law.

Approved date2020-04-08
SectorMulti-sector (i.e. for infrastructure in general)
StatusCompleted
Country
RegionEast Asia & Pacific
InstrumentPPIAF

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PPP Legal, Regulatory and Institutional Framework Gap Analysis in Lao PDR

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