What is Public-private Partnerships?

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What is Public-private Partnerships? 

A Public-private partnership (PPP) is often defined as a long-term contract between a private party and a government agency for providing a public asset or service, in which the private party bears significant risk and management responsibility (World Bank, 2012). It relies on the recognition that public and private sectors each have certain advantages relative to other in performing specific tasks. The responsibilities of the private sector could entail finance, design, construction, operation, management and maintenance of the project.

The PPP model is well-established for the construction of economic and social infrastructure and are now used in more than half of the world’s countries. The model is well-established for the construction of economic infrastructure such as roads, bridges and public transport systems but it is also used for social infrastructure such as schools, prisons, and hospital.

PPPs have been developing in China since the very late 1980’s but the year 2014 might prove to have been a landmark year in this development. During the year, the Chinese government issued numerous important documents encouraging private investment in public services and infrastructure. The Ministry of Finance (MOF) announced the establishment of a PPP centre and published approval for 1043 new PPP projects across the country, representing a total investment of 1.97 trillion yuan. There is no doubt that 2014 was an important year for development of PPPs in China. Many elements are now assembled to allow PPPs to flourish.

A PPP project in China would be involved government authorities, financial institutions, project investors and EPC contractors. They are being bind by various agreements and contracts. Professional services in relation to project financial model design, legal terms review and tax consideration and planning would be strongly suggested when entering into PPP projects in China.

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