News

• 20 September, 2024
• Posted by: EuroCham Cambodia

This week, we interviewed  H.E. Meas Soksensan, Secretary of State, Ministry of Economy and Finance (MEF) ahead of our first joint webinar, scheduled for 26 September on Public-Private Partnership (PPP) Opportunities in Cambodia. Read on to find out why PPP projects are so crucial for Cambodia's development, which priority sectors are ideal for PPPs, and why they are also appealing for international investors. And don't forget to tune in for the free webinar on 26 September, where you'll be able to learn more bout the Royal Government of Cambodia's plans to partner with international investors on projects that will shape Cambodia's future.

EuroCham: We are delighted to collaborate on this webinar with you on this very important topic of public-private partnerships. As the Secretary of State (under MEF) oversees the General Department of Public-Private Partnerships, what would your message be to people thinking about joining the webinar?

H.E. Meas Soksensan: In recent years, PPP has become an essential tool utilized globally for addressing public infrastructure and services gaps, experiencing significant growth across various industries particularly in energy, infrastructure, transportation, healthcare and education. In line with our commitment to drive inclusive growth, Cambodia has also embraced PPPs to support infrastructure development. This aligns with the Government’s Pentagonal Strategy, which emphasizes the crucial role of the private sector in fostering economic diversification and growth, to ultimately achieve our Vision 2050 of becoming a high-income country.

We understand that a thriving PPP mechanism hinges on a clearly defined and sound legal and regulatory framework. The government began to institutionalize these requirements by first introducing the Policy Paper on Public-Private Partnerships for Public Investment Project Management 2016-2020 laying the roadmap for the development and implementation of a comprehensive framework in consistent with international standards. Under this roadmap, the Law on PPP was promulgated under the Royal Kram No. NS/RKM/1121/018 dated November 18th, 2021, and subsequently the issuance of a Sub-Decree for the Standard Operating Procedures (SOPs) for PPP Projects. These documents mark a significant milestone for the Royal Government of Cambodia and are fundamental in addressing one the main obstacles to the effective delivery of PPP projects.

We must promote this framework to potential investors and relevant stakeholders to signal that Cambodia is open and adaptive to the needs of international businesses. This upcoming webinar provides the perfect platform for disseminating such information to both domestic and international markets. Through this webinar, participants will gain valuable insights into structural intervention and policy reforms particularly legal and regulatory framework and institutional readiness that facilitate and simplify the delivery of PPP Projects in Cambodia.

EuroCham: Why are PPPs an attractive option, both for potential investors and the government?

H.E. Meas Soksensan: To determine why PPP is an attractive option, we should begin by looking into historical and structural issues of every country and categorizing their different levels of development. Developed countries tend to implement PPP in social sectors such as healthcare, education, and affordable housing, aiming to enhance quality of life, modernize public services, and promote social inclusion. Most developing countries implement PPP for critical infrastructure needs such as roads, bridges, power generation, and water supply systems, which are essential for economic growth, poverty reduction, and improved living standards.

In addressing these demands, PPP has emerged as a robust model for both potential investors and the government for several reasons:

• Risk Sharing: PPPs facilitate risk sharing between the public and private sectors. This approach could draw in investment from the private sector and lessen the financial strain on the government.
• Efficient Project Delivery: Leveraging the private sector's expertise in project management and innovation, PPPs often result in more efficient use of resources, ensuring projects are delivered promptly and effectively.
• Innovation: By emphasizing output-based specifications, PPPs incentivize private partners to innovate in design, construction, and maintenance, leading to more cost-effective and sustainable solutions.
• Cost-Effectiveness: Compared to traditional procurement methods, PPPs can be more cost-effective as private partners are motivated to complete projects on time and within budget, maximizing their return on investment.
• Enhanced service delivery: PPPs can improve service quality, as private sector partners have a vested interest in maintaining and operating the infrastructure efficiently to safeguard their investments.

In conclusion, PPP is an option that can provide numerous opportunities to both investors and governments, including effective risk sharing, efficient project delivery, quality infrastructure, cost-saving, and enhanced service quality.

EuroCham: The Law on Public-Private Partnerships promulgated in 2021 laid the foundation for this work. Could you briefly explain the framework of the law and the subsequent Standard Operating Procedures that followed in August 2022?

H.E. Meas Soksensan: May I begin by highlighting that the Law on PPPs marks a significant milestone for our government. By laying the groundworks for PPPs, we are also setting up the foundation for an advanced private investment landscape for investors to leverage on Cambodia’s conducive environment. The Law on PPPs aims to promote the management of PPP mechanisms for the preparation, development, and implementation of public infrastructure and public service projects in an efficient, effective, sustainable, transparent, and an accountable manner for the benefit of socio-economic development in Cambodia. The Law further defines the institutional arrangements, PPP project development cycle, financial mechanism supports for PPP projects, and more that aligns with international best practices whilst adapting to the unique requirements and circumstances of Cambodia.

As mentioned previously, SOP for PPP Projects were also introduced outlining the procedures and requirements for the implementation of PPP projects as set out in the Law on PPPs.

The SOP consists of 3 Volumes as follows:

• SOP Volume I on Policies and Procedures: This lists down the key principles and overview of the PPP cycle in Cambodia.
   
• SOP Volume II on Guidelines: This describes the key supporting guidelines on:
  1. Project Identification and Selection
  2. Project Development Facility (PDF)
  3. Government Support Measures (GSM) and
  4. Contract Management.
• SOP Volume III on Procurement Manuals: This emphasizes the detailed procedures in the Selection of Consultants and Selection of Private Partners for PPP Projects.

The MEF also issued 4 supplementary guidelines to support the implementation of the above SOP which include: (1) Guidelines on Feasibility Study, (2) Financial Analysis, (3) Value for Money Analysis, and (4) Fiscal Management of PPP Projects. Together, the Law on PPP and the SOPs provide a structured approach to developing, implementing, and managing successful public-private partnerships that benefit both public and private sectors and contribute to the overall economic growth and development of the country.

In addition to the established Law on PPPs and the SOP, the MEF has also developed Guidebook on Public-Private Partnership Contracts. This guidebook draws from international experience, ensuring consistency with Cambodia's PPP Law and SOPs, and providing a framework for developing, procuring, and managing PPP contracts efficiently.

To support the implementation of the framework, we have an ongoing APMG Certified PPP Professional (CP3P) as part of capacity-building efforts. It provides training for officials on the PPP project cycle, enhancing their skills in identifying, preparing, and managing PPP projects efficiently and in line with international standards.

These efforts have received wide recognition and praises from key partners, including ADB, World Bank, the International Monetary Funds (IMF), the P4I of the Australian government, UNCDF and other regional and international partners.

EuroCham: Could you give us some examples of successful PPP projects in Cambodia?

H.E. Meas Soksensan: Before the Law on PPP was promulgated in 2021 to replace the Law on Concession, several successful projects were developed under the latter, particularly in the transportation, energy, and infrastructure sectors. These projects were instrumental in advancing Cambodia's infrastructure and laid the foundation for the more comprehensive PPP frameworks now in place under the 2021 Law on PPP.

Currently, Cambodia has 13 projects in the PPP pipeline, not counting the legacy projects from the Law on Concession; including 6 solicited and 7 unsolicited projects, with most in the preparation and appraisal phases. This robust pipeline reflects our ongoing commitment to advancing infrastructure development through PPPs.

Cambodia has successfully implemented several mega and moderate projects, including:

1. Phnom Penh-Sihanoukville Expressway, which is the country’s first expressway and has significantly contributed to boosting Cambodia's economic growth and tourism development. This expressway is a key strategic route, as it connects the first economic powerhouse of Phnom Penh with the second economic powerhouse of Sihanoukville.
2. The Kampot International Tourism Port is another notable project, designed to enhance cross-border tourism along the Southern Coastal Corridor, stimulate local economic growth, and create income-generating opportunities for residents and businesses in Kampot Province, and
3. The Provision of Aviation Security Services project aims to bring the Cambodia’s aviation security practice into compliance with the International Civil Aviation Organization (ICAO) standards by providing top-notch security services across the airports in Cambodia. This project will upgrade security across all Cambodian airports, including enhancements to staffing, facilities, and specialized services such as K9 units and a security academy.

EuroCham: Do you have any potential sectors or areas where PPP projects could play a big role in the short to medium-term future?

H.E. Meas Soksensan: As the government transitions from Least Developed Country status to becoming an upper-middle-income country by 2030 and a high-income country by 2050, building robust public infrastructure is crucial for fostering economic growth and achieving our long-term development goals. Successful PPP projects enhance infrastructure quality, attract private and international investment, and stimulate economic growth by leveraging private sector expertise, thereby supporting the Cambodia government’s goals and contributing to the achievement of Cambodia Vision 2050.

In the short to medium term, under the Comprehensive Master Plan on Cambodia Intermodal Transport and Logistics System 2023-2033, a large number of PPP projects have been prioritized in the transport & logistics sector, in the development  and enhancement of infrastructure such as roads, bridges, and public transit systems to improve connectivity and stimulate economic growth, by upgrading both physical and non-physical infrastructure to enhance connectivity within the country and the region, thereby fostering national economic growth and promoting a sustainable, inclusive socio-economy.

To achieve broader coverage, we have also been actively engaging and discussing with line ministries and development partners to identify potential sectors for inclusion in the priority sector list for PPP implementation project over the next 10 years, which was conducted under the consultation workshop on “Identification of Priority Sectors for PPP Projects for 2025-2035”. Following its recent approval, the government will soon officially introduce the priority sector list featuring key sectors, which will serve as a foundation for strategic public investment planning and enhance the delivery of PPP projects. 

Looking further ahead, we plan to transition to the social sector, focusing on healthcare and education projects. This strategic shift is designed to address critical social needs, support sustainable development, and ultimately improve the quality of life for our citizens.