Foundation Charter for the Organization for PPP Promotion Support (OPPS)
Following the start of the Act on the Promotion of Private Finance Initiatives (PFI Act) in 2000, public-private partnerships and private finance initiatives (PPP/PFI) in Japan have taken hold, focused largely on improving or managing operations at public facilities. As of March 31, 2018 total of 666 PFI projects with a cumulative value of 5.8 trillion yen1 have been implemented. Concession projects in the domestic infrastructure market have also increased in recent years, beginning with the privatization of Kansai International Airport in 2016. As of July 2018, concessions are in place for six airports, one national road and one sewage system.2 To better facilitate PPP/PFI from a legislative perspective, the Japanese government has been steadily improving the basic legislative environment for PPP/PFI through amendments to the PFI Act and laws related to the Water Supply Act that make it easier for local governments to implement PPP/PFI for the domestic infrastructure market, and with new laws such as the Act to Promote Entry by Japanese Enterprises into Overseas Infrastructure Businesses, which allows certain Japanese entities such as Incorporated Administrative Agencies to conduct the necessary research and other tasks regarding the infrastructure business overseas.
PPP/PFI not only alleviates public-sector financial burdens but also results in regional revitalization. However, it may also be said that local governments have not yet fully learned to take advantage of PPP/PFI, so project development in terms of infrastructure has remained stagnant with the exception of airport construction. There is also little opportunity for private business operators to enter the domestic PPP/PFI market due to restrictions on the transfer of PPP/PFI–related stocks.
Conversely, North American countries, Australia, India and ASEAN countries have been vigorously implementing PPP/PFI projects to attract foreign investment, while businesses from countries such as China and Korea are actively starting to enter the overseas PPP/PFI market alongside experienced European companies.
Given these circumstances, it is urgent that Japanese companies find a pathway into the overseas PPP/PFI market. However, because Japanese companies do not yet have sufficient expertise in PPP/PFI projects for the domestic infrastructure market, they remain hesitant to enter into overseas projects due to concerns about excessive risk. Although Japan International Cooperation Agency (JICA) has conducted numerous overseas PPP infrastructure project feasibility studies, only a very few have successfully progressed to actual projects.
Given such harsh realities, it is crucial for the private and public sectors to collaborate with an umbrella of support from the Japanese government so that Japanese private enterprises can build a track record for developing and implementing overseas PPP/PFI projects rather than leaving private enterprises to undertake such efforts on their own. Specifically, it is necessary for the public and private sectors to screen potential overseas PPP/PFI projects, select optimal projects through public-private consultation, and work collaboratively to design a PPP/PFI system and implement a PPP/PFI business structure. OPPS was therefore established to improve Japan’s current PPP/PFI situation by unifying the strengths of the private and public sectors, to increase prospective business opportunities, and to share information and exchange ideas among members. We strongly believe that OPPS will serve as a significant bridge between private business and the public sector.
1:Cumulative value from FY 1999 to FY 2017. (Source: Materials from Public Private Partnership Private Finance Initiative Promotion Office, Cabinet Office)
2:Source: Concession jigyou-tou no juuten bunya no shinchoku joukyou (H30.7.1 jiten) (State of progress for concession projects in priority areas as of July 1, 2018), Public Private Partnership Private Finance Initiative Promotion Office, Cabinet Office