Challenges Of Public Private Partnership In Bangladesh And Ways To Combat Them
Challenges of PPP in Bangladesh:
Weak Financial Environment: Maximum financial institutions are self-centered; there is lack of dedicated financial institutions. Limited involvement of insurance/ pension funds. There is lack or underdeveloped financial products such as long term loans, take-out finance, etc.
Major Macroeconomic, regulatory and institutional constraints for infrastructure financing: There is a huge domestic savings and investment gap (especially scarcity while compared with domestic savings; surplus while compared with national savings). Fiscal discipline and budgetary constraints are also availing in Bangladesh. For this reason, Bangladesh has to lead to external borrowing, sovereign bonds. There is a monetary management problem that is low capacity to absorb capital inflows.
Institutional regulatory constraints: In case of infrastructure project, long term financing is very much troublesome. In case of non- bank financial institutions, it is limited access to low cost and long term financing. Insurance companies have no exposure to energy and infrastructure sector. In case of capital market there are lack of equity and debt financing.
Lack of ownership by ministries and agencies on implementing PPP project: Line ministries do not want to include performance targets for PPPs in their APA and there is lack of procurement experts. Lack of dedicated PPP resources in agencies result in loss of knowledge as people move. This delays projects, and prevents expertise from being build and retained in the organization. Agencies with three or more PPP projects must establish PPP cells. If less than three then it can be decided on a case to case basis.
Lack of capability both in public and private sectors: Lack of dedicated PPP resources in agencies result in loss of knowledge as people move.
Way to combat the Challenges:
- Government must establish or enhance the proper financial markets and governmental financial institutions to accommodate long term financing to private sector parties in PPPs.
- Regional cooperation should be increased on Knowledge sharing, improvement of financial climate and capacity building of both private and public sector.
- Regulatory and legal framework should be made.
- Develop a system for risk management.
Conclusion
From the above discussion we have seen that there are so many challenges in adopting PPP initiative in Bangladesh. It is matter of joy that many developmental projects are already running through PPP in Bangladesh. Political stability is availing now a day. Economy is uprising. Government is ensuring good governance. So the environment is favorable for investment and we are optimistic enough that by using PPP Bangladesh can achieve the vision of being developing country by 2021 and developed country by 2041.
