5. Public Private Partnership

Cambodia considers the use of PPP as the best alternative financing option for infrastructure development. This is because, on the one hand, the demand for infrastructure has been gradually increasing while the government budget is limited, and on the other hand, PPP brings innovation and increases the quality of infrastructure or service and provides better value for money.

In order to successfully operate PPP projects in the current economic growth environment, Cambodia has established a PPP enabling policy and standard operating procedure (SOP), and in 2021, it also reformed the PPP law to govern, promote and facilitate the effectiveness, transparency, fairness and accountability of PPP projects 1.

The PPP Law defines a PPP as an agreement between the State and a private partner (“Private Partner”) under which the Private Partner is authorized to perform the restoration, repair, expansion, construction, operation and/or maintenance of the public infrastructure or project assets or to provide public services for a specified period of time. In this agreement, the private partner will invest, bear part of the risks and obtain performance-based benefits in accordance with the terms and conditions set out in the PPP contract 2.

The Ministry of Economy and Finance (“MEF”) acts as a one-stop shop in the direction and management of PPP projects.

In addition to the MEF, the Executive Agency, which can be a ministry or a government agency, is responsible for the implementation of PPP projects falling within its areas of competence. The Executive Agency has the authority to manage the relevant PPP projects, which include:

• identification and prioritization of PPP projects, before submitting the request for approval to the MEF,

• selection and management of consultants for the preparation and implementation of the PPP project,

• propose to the Ministry of Economy and Finance the revision of the feasibility study report,

• lead, negotiate and execute PPP contracts on behalf of the Government,

• inspect and evaluate the implementation of the PPP project.

According to the PPP Law, the contract must specify the duration and the conditions under which the contract can be extended. The initial period of the PPP contract will be determined based on the expected useful life of the project assets and the time needed by the Private Partner to amortize the cost of the investment. The initial period of the PPP contract does not exceed 30 years from the date of signing the PPP contract. Where necessary and depending on the type of project, the Government may set the initial period of the contract to be more than 30 years.