1. The views expressed in this presentation are the views of the authors and do not necessarily reflect the views or policies of any of the institutions named above, specifically the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), the World Bank Institute, the World Bank, the Multilateral Investment Fund, and the Inter-American Development Bank, nor the Board of Directors of each of these institutions, nor the governments they separately represent. These institutions do not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with official terms used by these institutions. PPPs for Infrastructure: Global Opportunities & Emerging Market Potential Elaine Glennie Senior Capacity Building Specialist Asian Development Bank Institute Govindan Nair Lead Economist World Bank Institute David Bloomgarden Project Specialist Multilateral Investment Fund – Inter-American Development Bank

2. Global Trends Pre-Financial Crisis PPI Investment by Region, US$ Million Source: World Bank PPIAF Database

3. Global Trends Pre-Financial Crisis PPI Investment by Sector, US$ Million

4. BRICs Emerged as Top PPPI Recipients in 2007 Country Share of total investment (%) Investment in US$ billions* Share of total projects (%) India14.2 %22.517.4 % Russian Federation12 %194.9 % Brazil10.1 %15.93.1 % Mexico6.3 %9.94.9 % China4.7 %7.528.1 %

5. Flows from Emerging Economies to Africa Grew Significantly  In 2006, emerging financiers – including China, India and Arab states – committed more than $8 billion to infrastructure in Africa.  Chinese investment in Africa was at least $7 billion in 2006 and estimated $4.5 billion in 2007.  In June 2006, Premier Wen Jiabao said China has offered more than $44 billion over past 50 years to finance 900 infrastructure projects. Annual Commitments to Infrastructure Projects in Sub-Saharan Africa by Emerging Market Financiers, 2001-2007

6. And then...the Financial Crisis: Impact on Short-term Economic Health Source: Morgan Stanley Research, December 2008 Asia (Ex-Japan) Real GDP (%) Latin America Real GDP (%) Global Economic Outlook Real GDP (%) Global Economy Industrial WorldDeveloping World CEEMEA Real GDP (%) Growth

7. GFC Impact: Emerging Market Spreads Increased Dramatically Emerging-market Sovereign Bond Spreads: EMBI January 2007 – December 5, 2008 Emerging-market Corporate Bond (CEMBI) Spreads: January 2007 – December 1, 2008 Source: World Bank PPIAF Database

8. GFC Impact: Constrained Access to Capital  For new PPP projects : Reduced access to lending particularly from foreign banks, requirements for greater sponsor equity, shorter underwriting periods, more stringent conditions, and greater financing costs for long-term concessions  For existing PPP projects : Increased refinancing risk for long-term concessions, potential delays in refinancing with risk of cancellation and market disruption

9. GFC Impact: Project Closures Down 26% By Income Group:  upper middle income countries reporting lower investments  lower middle income countries attracting higher investments  low income countries seeing stable investments By Region:  Eastern Europe/Central Asia, Latin America/Caribbean hardest hit  Sub-Saharan Africa stable  Asia and the Pacific, and the Middle East and North Africa attracting higher investment By Sector:  Transport, energy and water reporting lower investments

10. But PPP Remains an Actively Pursued Option  Increasing public infrastructure demands worldwide  Fiscal constraints place more importance on private sector engagement  Fiscal stimulus responses to global financial crisis focus on infrastructure …Countries continue to tender/award new PPP projects and/or prepare new project pipelines

11. Asia Pacific PPPs: A Diverse Picture of “Stars and Black Holes” Total 2007 PPP Investment, US$ Million India 22,485 China 7,456 Philippines 4,386 Viet Nam 1,332 Indonesia 1,441 Cambodia 816 Pakistan 4,487 Thailand 1,050 Sri Lanka 387 Malaysia 1,057 Source: World Bank PPIAF Database Afghanistan 240 Papua New Guinea 150 Kazakhstan 833

12. Recent Asia PPP Trends: Recent Asia PPP Trends: Enormous infrastructure demand (Annual infrastructure needs, 2005-2010) In US$ Million Source: World Bank Policy Research Working Paper

13. India: World’s Biggest PPP Market? Average Project Size Reaching Financial Close, US$ Million

14. India: PPP Landscape

15. Asia Pacific Region: PPP Country Readiness 0 ? 1 ? 2 ? 8 ? 31 ? A few IPPs or nothing much at allMainly IPPs, trying others Extensive but limited sectors Extensive but very domestic Extensive, established, largely domestic, mainly physical infrastructure Complete buy-in, institutionalized, open, international, physical & social infrastructure

16. Latin America: PPP Market Private-Sector Commitments to Infrastructure Investment, US$ Million

17. Emerging Market PPPs: Capacity and Knowledge Gaps are Key Bottlenecks  Public Sector: PPPs a “new procurement approach” that requires “new PPP skills”  Private Sector: A new market opportunity that requires market intelligence to evaluate “emerging country” opportunities

18. MP3IC: Global PPP Learning Program  Cutting edge learning modules to enable PPP institution building and development of PPP practitioner skills  Benchmarking tools to identify gaps and remedy PPP institutional and policy frameworks which deter investors

19. MP3IC: Global PPP Learning Program Strategic Design  Designed as a global learning product with features to adapt to country circumstances  Customized to multiple audiences – policy makers, managers, professional and technical staff  Based on multiple global comparative analyses and tools – MP3IC Country and Project Case Studies – Law and Infrastructure website – Global PPP Readiness Index

20. MP3IC Global Comparisons : Infrastructure & Law Website www.worldbank.org/inflaw Takes users through the PPP project development process - starting with Government Objectives, then moving on to Legal and Regulatory Frameworks and Agreements

21. MP3IC Global Comparisons: Infrascope Readiness Scorecard 1. Legal and regulatory framework 1.1Consistency and quality of PPP regulations 1.2Effective PPP selection and decision making 1.3Fairness/openness of bids, contract changes 1.4Dispute resolution mechanisms 2. Institutional framework 2.1Quality of institutional design 2.2PPP contract, hold-up and expropriation risk 3. Operational maturity 3.1Public capacity to plan and oversee PPPs 3.2Methods and criteria for awarding projects 3.3Regulators’ risk allocation record 3.4Experience in transport & water concessions 3.5Quality of transport and water concessions 4. Investment climate 4.1Political distortion 4.2Business environment 4.3Social attitudes towards privatization 5. Financial facilities 5.1Government payment risk 5.2Capital market: private infrastructure finance 5.3Marketable debt 5.4Government support for low income users

22. MP3IC Global Comparisons: PPPI Approaches Public Sector  Comparing PPP Attractiveness  Identifying what it takes to improve PPP attractiveness  Prioritizing actions to improve PPP attractiveness Private Sector  Identifying Opportunities  Evaluating Conditions  Predicting Bottlenecks

23. PPPI Days 2009 9-13 November 2009, Manila Philippines ADB Business Forum PPPI Knowledge Sharing - Comparing PPP Programs, Projects, and Country Readiness PPPI Days Conference PPPI Knowledge Sharing – Frontier Issues in Global PPP Development 9-10 November 10 November 11-12 November 13 November

24. PPPI Days 2009: PPPs in a Changing Global Environment  Revisiting Risk in the Aftermath of Global Financial Crisis  Megacities and Rise of Urban PPPs  Climate Change and Greening of PPPs  Escalating Demand for Social Services  Globalization and Increasing Need for Harmonization

25. PPPI Days 2009: New PPP Frontiers  Social Sectors – Unlocking PPP Potential for Human Capital Development  Bundled Service Delivery and Multisectoral PPP Approaches  Harmonization and Cross Border PPPs  Challenges for PPPs in Fragile and Small Island States

26. MDBs Role in Changing Landscape  Strengthening policy guidance and Bringing additional financial and technical expertise  Expanding lending programs to assist in rapid delivery of infrastructure projects  Offering innovative range of credit enhancements and risk mitigation measures

27. MDBs Role in Changing Landscape Investment Economic Growth Entrepreneurship Poverty Alleviation Enabling Environment Catalytic Transactions MDBs

28. The views expressed in this presentation are the views of the authors and do not necessarily reflect the views or policies of any of the institutions named above, specifically the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), the World Bank Institute, the World Bank, the Multilateral Investment Fund, and the Inter-American Development Bank, nor the Board of Directors of each of these institutions, nor the governments they separately represent. These institutions do not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with official terms used by these institutions. Thank you