III. ASEAN Plus Three Cooperation on Connectivity. IV. Engaging the Private Sector: PPP

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2 Contents I. The Role of ROK Government in Enhancing Connectivity II. The Role of the ASEAN-Korea Centre in Enhancing Connectivity III. ASEAN Plus Three Cooperation on Connectivity IV. Engaging the Private Sector: PPP 2

3 The Role of the ROK Government in Enhancing Connectivity 1. Mission of the ROK to ASEAN Established in Jakarta, Indonesia in October 2012 to further strengthen the cooperative partnership between Korea and ASEAN Appointed its first resident Ambassador to ASEAN 2. Inaugural meeting between ASEAN Connectivity Coordinating Committee (ACCC) and the Korea s Task Force on ASEAN Connectivity Held in June 2013 in Balikpapan, Indonesia Discussed the modality and areas of cooperation in which both Korea and ASEAN share interest

4 The Role of the ROK Government in Enhancing Connectivity 3. Platform for institutionalized ROK-Mekong Cooperation 3 rd Mekong-ROK Foreign Ministers Meeting (30 June 2013) Reviewed status of the pilot projects in 6 priority areas: 1) infrastructure 2) ICT 3) green growth 4) water resources development 5) agriculture and rural development 6) human resources development Mekong Transportation Institute & Mekong-ROK Cooperation Fund 1 st Mekong-ROK Business Forum in Bangkok, Thailand (23 May) 2 nd to be held in Viet Nam in 2014 Mekong-ROK Action Plan To be announced at the 4 th Mekong-ROK Foreign Ministers Meeting hosted by ROK in 2014, co-chaired by Thailand Variety of cultural events in 2014 as the Mekong-ROK Exchange Year Welcomed implementation of the Saemaeul Movement Project to share ROK s development experience in narrowing domestic development gaps

5 The Role of the ROK Government in Enhancing Connectivity 4. Co-organizing International Seminar on Connectivity International Seminar on ASEAN Connectivity (Thailand, 10 September 2010) ASEAN-ROK Seminar on the MPAC (Singapore, 31 October 2012) 5. ASEAN Cyber University Project Initiated by Korea at the 2009 ASEAN-Korea Commemorative Summit in Jeju, Korea; MOU signed on 15 August 2012 in Hanoi, Vietnam Aims to promote development of higher education in ASEAN through ICT The 1 st Steering Committee Meeting held on 22 March 2012 Korea s contribution KOICA supported the establishment of e-learning Centers in participating countries Seoul Cyber University of Korea operates as the Secretariat of ACU

6 The Role of the ASEAN-Korea Centre in Enhancing Connectivity 1. ASEAN Connectivity Forum (Focused on Infrastructure) Co-hosted by International Contractors Association of Korea (ICAK) Date / Venue: 21 or 22 October 2013 / Korea Objectives - To provide information on the present status of the Master Plan on ASEAN Connectivity to Korean interest groups, and an opportunity to establish networks between ASEAN government officials and Korean construction companies - To give Korean construction companies, potential investors, and related institutions information on the infrastructure investment plans of each ASEAN Member States Participants - From ASEAN: Government officials from infrastructure-related ministries, ordering companies, experts on ASEAN Connectivity from the ASEAN Secretariat, and experts on ASEAN Connectivity from outside - From Korea: Representatives of Korean construction companies, relevant organizations including ICAK, potential investors, Korea Eximbank, public corporations and government officials related to construction

7 The Role of the ASEAN-Korea Centre in Enhancing Connectivity 2. ASEAN-Korea Youth Network To reiterate the importance of ASEAN-Korea partnership and facilitate exchanges among ASEAN and Korean youth Participants: University students of ASEAN and Korea Main activities in FY2012 Arranged special lectures on culture and society of AMS Organized trips to historical sites in Korea Launched an online Facebook page to share information among the participants Conducted the ASEAN-Korea Youth Online Photo Contest for ASEAN students in Korea

8 The Role of the ASEAN-Korea Centre in Enhancing Connectivity 3. Other Key Activities Knowledge Sharing and Benchmarking Workshop: Provides training programs for ASEAN government officials to share the knowledge and experience on economic development of Korea ASEAN Culture and Tourism Fair: Presents a diverse culture of ASEAN to Korean public with its traditional dance, folk songs and instrumental music ASEAN Tourism Human Resources Development Program: Provides opportunity for ASEAN tourism professionals including tour guides, hoteliers, etc. to better understand in-depth analysis on tourism trends and prospects of Korea s tourism market and general overview of the Korea history, culture, lifestyles * In 2012, the exchange of visitors between ASEAN and Korea exceeded 5.7 million

9 The Role of the ASEAN-Korea Centre in Enhancing Connectivity 4. Cooperation among ASEAN-Korea Centre, ASEAN-Japan Centre, and ASEAN-China Centre ASEAN-Korea Centre initiated the meeting to explore ways on how the three Centres can cooperate to advance the ASEAN+3 Cooperation Agreed to share each others publication materials, which may be extended to publishing joint publication by the three Centres at a later stage, i.e. ASEAN+3 Facts and Figures Shared the best practices of ASEAN-Korea Centre on document format Distributed the concept paper on Joint HRD Program of the three Centres Discussed potential areas of cooperation: ASEAN+3 Youth Sports Games, Youth Exchange Programs ASEAN+3 Tourism Expo; among others The three Secretary Generals to gather again on the margins of the next ASEAN Tourism Forum (ATF) in Kuching, Malaysia in January 2014

10 ASEAN Plus Three Cooperation on Connectivity 1. East Asia Vision Group II EAVG II report Realising an East Asia Economic Community (2012 APT Summit) : Reviewed the achievements of ASEAN+3 cooperation activities and lay out a new vision for cooperation in the region, based on the outcome of review Concept Paper on the Follow-ups to the EAVG II report (2013 APT Foreign Ministers Meeting) : Outlined a comprehensive assessment to undertake three phrases from Nov to Oct. 2014

11 ASEAN Plus Three Cooperation on Connectivity 2. Participation in Evolving Regional Economic Architectures To contribute to integration and connectivity in the region RCEP China-Japan-Korea FTA Korea-China FTA * which are currently under negotiation Expected to give a huge boost to ASEAN connectivity, as well as East Asia cooperation and integration

12 ASEAN Plus Three Cooperation on Connectivity 3. APT Cooperation on Youth The 4 th ASEAN Plus Three Ministerial Meeting on Youth (23 May, Brunei) Exchanged views on youth cooperation among APT countries and explored further possibilities to strengthen cooperation among youth in the East Asia region Current youth programs: ASEAN-Korea Future-Oriented Cooperation Projects (ASEAN-Korea Cooperation Fund) ASEAN-Korea Academic Exchange Programme, ASEAN-Korea Film Community Project, ASEAN- Korea Forum and Advanced Seminar, ASEAN-Korea Youth Exchange and Cultural Community Building Project, Korea-ASEAN Youth Square, Training Project For ASEAN Children's Librarians, ASEAN-Korea Frontier Forum Exchanges among teenagers with ASEAN Countries in 2012 Brunei, Indonesia, Malaysia, Singapore and Vietnam (total 180 dispatched or invited) Participation in APT Youth Leaders Symposium (18-19 October 2012,Cambodia)

13 ASEAN Plus Three Cooperation on Connectivity 4. New Suggestions for People-to-People Connectivity Establishment of East Asian Cultural Foundation that could coordinate to organize East Asian Cultural Capitals and festivals and form research networks Establishment of East Asia Culture and Knowledge Expo (EACKE) Establishment of ASEAN Cultural Archive East Asian Song Contest to be held annually and hosted by each ASEAN+3 countries in turn, broadcasted through traditional and internet media Textbook of East Asian History and Culture to promote understanding of common history and culture

14 Engaging the Private Sector: What is PPP? To build infrastructure for ASEAN physical connectivity, engage the private sector via Public-Private Partnership, which is a key component in the development of ASEAN physical connectivity of building infrastructure brings together the best of the knowledge and expertise of the private sector, and the funds and institutional reach of the public sector should be beneficial for ASEAN to involve more industrial heads and entrepreneurs during project and financial decision making processes

15 Engaging the Private Sector: What is PPP? Benefits of PPP By introducing capital and technology from the private sector, it is possible to supply the necessary infrastructure to the public in a timely manner Difficult to accommodate demand for new and improved infrastructure facilities due to government budget constraints; PPP an effective alternative to tackle financial constraints that governments face Private sector s know-how and creativity will help provide better, more efficient public services and can create stable, long-term investment opportunities Required conditions for Eligible Infrastructure Facilities Certainty of future cash flow from projects Ability of controlling and managing capital expenditure and operating expenses Strong demand for output enough to enter into long-term off-take contract Proven technology for construction and operation of facilities Economic viability

16 Engaging the Private Sector: What is PPP? Financing for PPP: Project Finance Definition: The raising of funds to finance an economically separable capital investment project, in which the providers of the funds look primarily to the cash flow from the project as the source of funds, to service their loans and provide the return on their equity invested in the project Critical Distinguishing Feature: A distinct legal entity (SPV : Special Purpose Vehicle), project assets, project-related contracts, and project cash flow, which are segregated to a substantial degree from the sponsoring entity

17 Engaging the Private Sector: Current Status of Korean PPP Global Project Finance League Table 2012 Global PFI/PPP PF Loan Ranking Global PF Loan Ranking <Source> Dealogic, Thomson Reuters

18 Engaging the Private Sector: Current Status of Korean PPP Scoring Criteria for Evaluation on PPP Environment 1. Legal and regulatory framework (weighted 25%) 1.1 Consistency and quality of PPP regulations 1.2 Effective PPP selection and decision-making 1.3 Fairness/openness of bids, contract changes 1.4 Dispute-resolution mechanisms 2. Institutional framework (weighted 20%) 2.1 Quality of institutional design 2.2 PPP contract, hold-up and expropriation risk 3. Operational maturity (weighted 15%) 3.1 Public capacity to plan and oversee PPPs 3.2 Methods and criteria for awarding projects 3.3 Regulators risk-allocation record 3.4 Experience in electricity, transport and water concessions 3.5 Quality of electricity, transport and water concessions

19 Engaging the Private Sector: Public-Private Partnership Current Status of Korean PPP (cont.) Scoring Criteria for Evaluation on PPP Environment 4. Investment climate (weighted 15%) 4.1 Political distortion 4.2 Business environment 4.3 Political will 5. Financial facilities (weighted 15%) 5.1 Government payment risk 5.2 Capital market: private infrastructure finance 5.3 Marketable debt 5.4 Government support for low-income users 6. Sub-national adjustment factor (weighted 10%) 6.1 Sub-national adjustment

20 Engaging the Private Sector: Current Status of Korean PPP PPP-readiness in the most active region <Source> Economist Intelligence Unit

21 Engaging the Private Sector: Current Status of Korean PPP Evaluation Scores on Environment for PPP <Latin America & the Caribbean> <Asia-Pacific & Benchmark> <Source> Economist Intelligence Unit

22 Engaging the Private Sector: Current Status of Korean PPP Evaluation on Korean PPP One of the region s most advanced countries in terms of PPP. Processes are fair and transparent, and the PPP body has well-trained staff. Rotation among the civil service, however, is an issue. <Source> Economist Intelligence Unit

23 Engaging the Private Sector: Current Status of Korean PPP Evaluation on ASEAN Countries PPP The Philippines has a long history with PPP projects, and benefits from a good legal framework. However, there is some institutional weakness, and limitations on dispute-resolution and financing. Despite recent improvements, there is still a lack of cohesion on PPP regulation and the institutional structure. Long-term financing options are still limited. <Source> Economist Intelligence Unit Political instability, and an unsystematic framework, in which it is not always clear which agency is in charge, create an atmosphere of uncertainty. New regulations, however, are likely to improve matters. The government shows strong interest in developing PPP projects, as evidenced by a new pilot decree. Yet there is a general lack of experience as regards PPPs, and an underdeveloped regulatory and institutional framework.

24 Engaging the Private Sector: Current Status of Korean PPP Strong Government Support

25 Situation Analysis Engaging the Private Sector: Requisite for PPP in ASEAN Countries Underdeveloped Legal & Regulatory Framework Some countries have no PPP Act Lack of cohesion on PPP regulations Unsystematic regulatory framework Low Credit Ratings Below investment grade: Philippines, Vietnam, Cambodia, Indonesia(S&P) No credit rating: Laos, Myanmar, Brunei Political Instability Continued dispute between religions and ethnic strife Lack of policy transparency Long time for decision-makings Limited Financial Market Limit on repatriation and convertibility of foreign currency Restriction on business of foreign financial institutions Limited long-term financing options

26 Engaging the Private Sector: Requisite for PPP in ASEAN Countries Considerations to be Made: No modality to bring ASEAN Member States together as one entity vs. private company There are many successful cases of PPP within the border of a country; however, there seems to be no successful cases of cross-border PPP (as of yet) How to devise equitable share of benefits that may be created by PPPs involving more than two countries remain as pending task How does ASEAN engage in PPP for ASEAN Connectivity?

27 Engaging the Private Sector: Requisite for PPP in ASEAN Countries Establishment of Legal Framework Solid legal framework corresponding to international standards Establishment of effective and transparent PPP Procedures Government commitment & support Favorable Environment for Financing Country Risk Guarantee/Insurance to compensate for low credit rating Active utilization of ODA(Official Development Assistance) funds Minimum required risk sharing of government

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