Thailand New PPP Act
by Panisa Suwanmatajarn and Jin Sukme
Nowadays, the Thai Government has increased its demands on social and economic infrastructures, such as high sky trains, motorways and hospitals in order to support economic development of the country even it has too limited resource and man power in response to such demand. Therefore, the Public Private Partnership (“PPP”) then has been promoted to support expansion of such infrastructures and improvement level of public services. On 13th December 2018, the Cabinet has approved the draft Public and Private Partnership Act (“Draft Act”). The Draft Act is now in process of consideration and approval by the National Legislative Assembly prior to publishing in the Royal Gazette and then becoming the law.
The Draft Act shall be applied in place of the Private Investment in State Undertaking Act B.E. 2556 (“The Private Investment Act”). The most striking change is that the Draft Act shall specify the definition of PPP clearer than the Private Investment Act. Currently, the PPP project can be interpreted in too broad terms, which may include leasing of the Government’s properties. The Draft Act then provides that the projects which are fallen under the term of PPP and subjected to the procedures imposed by the Draft Act are as follows:
- The investment projects in which responsible government sectors have responsibility to perform so according to the law; and
- Such projects shall be in relation to the infrastructures and public amenities such as motorways, airports, communications, ports, schools and hospitals.
The Draft Act is based on the principle of “F.A.S.T.” where the F word stands for “Facilitation” which means that it aims to facilitate domestic investment by having friendly procedures and adding more incentive. The A word stands for “Alignment” implying that the PPP project in Thailand will be in align with an international standard. The S word stands for “Streamline” which shows that the Draft Act aims to make the processes shortened and more flexible including enhancement of collaboration between engaged entities. The T word stands for “Transparency” which indicates that the PPP project under the Draft Act shall be transparent and each step of the processes can be investigated thoroughly.
The PPP project under this Draft Act is divided into 2 levels, i.e. below 5 billion baht and from 5 billion baht. In case of the first level, the procedures for procuring such project shall be in accordance with a further announcement of the State Enterprise Policy Committee (“Committee”). For the second level, the project shall commence by the responsible government sector. It shall initially submit principle of that PPP project and present the same to the relevant minister for approval.
After that, the responsible government sector shall provide the principle and study and analysis report of such project to the Committee and the Cabinet for their further consideration. If both approve so, the responsible government sector shall initiate the processes for selecting its partnership accordingly. Normally, overall duration of abovementioned processes may take up to 25 months. However, such duration could be effectively shortened by the Committee on a case by case basis.
To implement this Draft Act, more than 20 ancillary regulations are required to be enacted in providing guidelines for each practical situation which at this moment are under the legislative process as well. We hope that this Draft Act would efficiently enhance the services level of infrastructures and public amenities for the benefit of public at large.
The PPP project conducted in the Eastern Special Development Zone, currently covering areas of Chachoengsao, Chonburi and Rayong Provinces, shall not be subjected to this Draft Act, but under the specific regulation, namely, the Eastern Special Development Zone Act B.E. 2561 (A.D. 2018). For more information, please visit the following link for our previous publication