Discussion Paper Series

2013-04
Effects of public-private collaborations
for industrial development project
Motohiro Kurokawa

November 6, 2013

Discussion Papers can be downloaded:
http://www1.tcue.ac.jp/home1/c-gakkai/dp/dp13-04

Effects of public-private collaborations for industrial development project1
Motohiro Kurokawa2

1. Introduction

Improvement of development assistance project is always discussed in the area ofinternational development and cooperation study, in recent two decades, collaboration withprivate sector is highly recommended as one of methodologies among internationalorganizations and government agencies in developed countries, which efficiently brings about
better outcome after the implementation of development projects by attracting strong points ofboth public and private sector.

Additionally, it is expected to utilize monetary resource ofprivate sector allocated to developing economy through the mechanism of collaboration, which
could be provision against decreasing ODA budget in some country.

On the other hand,private sector, especially businesses, is reconsidering their strategy on developing economies,
building strategic combination with public sector has discussed to facilitate their businessactivities more efficiently.

And they also have strong willingness to participate international

cooperation, namely Corporate Social Responsibility (CSR) and Basement of Pyramid (BOP),
Public-Private collaboration is becoming very familiar as a result of meeting both needs.
Shown in Chart 1.1., both public and private can find merits to collaborate in various
aspects. In addition to find razing as above, public sector will be supplied knowledge fromprivate sector to make project feasible in various aspects.

Private sector can accomplish their

purpose to participate international cooperation through CSR and BOP, but they can alsoenhance business merit through project.

But, even though those two sectors would findincentive from beneficial points, basically, it must be functioned as development projects,
outcome of collaboration should be reconfirmed to satisfy crucial points, and those are forexample, relevance, efficiency, effectiveness, impacts and sustainability, in line with OECD
Development Assistance Committee (DAC) 5 principles.

So to speak, evaluation methods ofcollaboration should be fixed to emphasize effectiveness of this regime, which is one of issues
tried to discuss in this study.
Origin of this types of collaboration is early 1990th, it has started as Private FinanceInitiative (PFI), which is a scheme to depend on private sector finance for strong driving forth
to conduct large scale projects like infrastructure.

But after 2000, collaborative projects arestarted to be called Public-Private Partnership (PPP) to cover widely spread definition, and
USAID, one of agencies to accelerate this trend, named it as Public-Private Alliance (PPA)
paralleling in the same period.

In this study, such types of activities are defined as Public-

Private Collaboration (PPC), although the increasing definition and common name of it are notconcreted.
Considering such circumstance, it is useful to reconfirm related theory of PPC and toreview some of good practices are also beneficial for farther project development. In thisregard, this study aims to find merits of collaboration through theoretical discussion and casestudy.

As cases for this study, two major industrial development projects by the Japanese

government are selected, which were implemented in automotive industry of Thailand and thatof Malaysia.

Public Development offeasible project Meet the needs ofprivate sector

PrivateRelivance

CSR

Efficiency

Advatisement

EffectivinessSpread original
method/technology

 Sustainability
Impacts

 National intrests toutilize own private
sectorSustainability

Information gathering
SalesChart 1.1. Purpose of alliances
Source: by author

Thailand Automotive Human Resource Development Program (TAHRDP) was
conducted from 2006 to 2011, as five-year plan, and resulted to incubate specific humanresource for automotive industry, which has contributed to strengthen Thai automotive industry.
To discuss the effect of this program, it was noteworthy that participatory assistance fromprivate sector, such are Toyota, Honda, Denso and Nissan, were really functioned well invarious aspects, so it is an applicable project to judge the effect of PPC regime. Secondly, as
far Malaysia-Japan Automotive Industry Cooperation (MAJAICO), which was also a five-yearplan almost the same period, but project framework has not really formed PPC style comparing
to TAHRDP. Several components of the project has not reached to outcome due to passive
attitudes of private sectors, which should be comparatively analyzed with Thai case.

But othercomponents of project was really successful, the results come from stronger commitment fromprivate sector.
This paper is consisted with 5 parts include this introduction, 2nd chapter tries to define
Public-Private Collaboration (PPC), and 3rd chapter discusses evaluation method of PPC typeproject.

Along with discussion of those two chapters, TAHRDP and MAJAICO will be

reviewed in the 4th chapter and 5th chapter concludes this study.

2. Definitions of PPC

In this chapter, definition and shape of Public-Private Collaboration (PPC) is mainly
discussed, which is changeable time after time and range to cover is widely spreading by models.
Chart 2.1. explains the change in definition of PPC in a short history in recent two
decades, which has started from financial scheme namely Private Finance Initiative (PFI).

In

early 1990th, consept of PFI was developed to fulfill a shortage of development assistancebudget through inducement of private investment, and enlarged budget as PFI was adopted to
implement large scale project, such as social infrastructures.

Since PFI is not only amethodology to collect investment from private sector, private sector was requested to be
involved into implementation and operational process with outcomes, various types of PFI wasinvented at that period. Those are Build-Operate-Transfer (BOT), Build-Own Operate (BOO)
and Build-Transfer-Operate (BTO).

PFI is still thought to be a mainstream of PPC, which isfeasible to conduct large scale and long term social infrastructure project, such are road
construction, water supply or public facility.
In early 2000th, in addition to PFI, more commitment from private sectors were started
to required, which was along with the downsizing role of public sectors and public finance.
Not only in financing stage, private sector was expected to join implementation and operation
stage, which is recognized as Public-Private Partnerships (PPP).

Firstly, motions of PPP haveshown in each domestic system of developed countries, in UK, Government owned, Contractor

Operated (GOCO) regime was developed, and privatization and outsourcing regime in US andother countries were accelerated to improve efficiency for project operation. After all, thisthought has also started to be adopted when they assist public sector service in developing
countries.

1990thAround2000

PFI(BTO, BOO,

PPP
(Privatization,
Outsourcing,

Investment andoperation of
infrastructure

Investment andoperation ofvarious public
srevices

After
2000th

PPA (GDA)

CSR, BOP
andother project
imprementations
in various
sectors

Chart 2.1. Transition of PPP
Source: by author

METI in Japan also kicked off arguments on Public-Private collaborations in the same
period, based on the basic concept of “small government”, they have considered introducing
PPP for accelerating privatization for public services.

In the meantime, introduction of PPP

for international development has not discussed yet in Japan3.
It was USAID an international development agency for US government, they haveraised their attention to build partnerships with private sector after 2000th, under the frameworkof “Global Development Alliance” (GDA), they have been expanding the idea to Public-Private
Alliance (PPA).

Currently, sectors to make alliances are widely spread, those are, Agriculture,

Democracy, Economic Growth and Trade, Education, Emergencies, Extractives, health,Microfinance & Microenterprise, Water and Workforce development, including most of crucial

development issues, number of alliances reached to over 1,000 cases with 3,000 private partners
since 20014.

USAID (2006) discusses the importance of public-private alliances to increase

effectiveness, efficiency is emphasized from the perspective of increasing share of FDI inflows
to developing countries, which is more than 85%, and they have reconfirmed the change inroles of public sector when US access to developing economies.

In recent years, PPA has beena mainstream of USAID when they implement projects.

Business
OutcomeIncrease access to
sufficiently qualified andskilled talent

Alliances

Education &Workforce
Development

Developemnt
Outcomes
Increase employment
rate and indivitdual
incomeIncrease efficiencies
Improve
distributionsystem
Reduce cost of products

Strengthen the
Supply Chain

Increase suppliers
incomeimprove access tomarkets

Increase access to newmarkets
Develop new products
and servicies

Distribution
System andNetworks

Increase access toaffordable and highquality goods andservices that provide a

Improve relationshipwith key stakeholders
Mitigate risk of market
entry

Government
Capacity
Building

Inprove democracy
and increase politicalstability
Reduce corruption

Chart 2.2. Intersections of outcomes on PPAs
Source: Saul et al. (2010) p 20

Chart 2.2. is expressing possibility of PPA in several purpose to alliance.

In thisexplanation, private sector could be assumed as business enterprises, their outcomes are listed
in the left row.

Merits brought by each outcome will be separated into four parts, those aremostly equal to necessary conditions to make their business successful in developing countries.

Alliance in education & workforce development will provide human resource, strengthen the
supply chain will improve quality and cost, distribution system and networks will increase sales
and contribute to expand their market, government capacity building will improve invest
environment.

To accomplish those alliances, public sector can provide outcomes throughdevelopment assistances, which are listed in the right hand, thus, the figure exactly explains
legitimacy to introduce PPA model.
If businesses are selected as a partner from private sector, merits from each side could
be summarized as above mentioned points, but USAID (2006) explains that their potential
partner could be varied, those are5,

1. Businesses,
2. Foundations and philanthropies,
3. Faith-based groups
4. Diaspora communities
5. Nongovernmental organizations and civic groups
6. Institutions of higher learning
7. International organizations, such as the United Nations and the World Bank
8. Development consulting firms
9. U.S. cities and states, and other U.S. government agencies
10. Governments of other industrial nations
and11. Host-country governments and state-owned enterprises.

So to speak, it should be noted that there are various kinds of ‘private’, includingNGOs or International Organizations, style of alliances, outcome for partners and results ofprojects are changeable by the case, PPC is filled with possibility to cope with complex
development issues.

Some of listed partners originally have relationship with bilateral agency

like USAID, the fact that USAID reconfirm them as a partners of PPA means that ways of doing
development assistance is transforming in the period of GDA.
In response to this change in trend mainly driven by USAID, Nippon Keidanren(2008) is also indicating the importance of public-private collaboration under the serious
situation caused by decreasing ODA, and suggesting change in key players in developing
economies, they are mentioning that cooperation between public and private should beaccelerated as a new strategy6. Regarding ODA budget, it has increased until 1997 at the peak,which was 1168.7 billion yen, but 40% decrease in 2008 was confirmed, essential needs of new
strategy for sufficient resource is explained. It is said that PPC can cope with the increasingneeds to introduce high-end technology provided by Japanese private sector, it also meet thelatest mainstream of developing society to take economic growth more crucial.
The report discussed that Japanese ODA has been holding characteristics like PPC,ODA provides infrastructure, and then, private investment comes later, such a “win-win” modelis already formed as “Japan’s ODA mode” or “East Asian Miracle”. On the basis of suchhistorical background, it is said that infrastructure development, PPP, policy advocacy,industrial human resource development, CSR, financing and IT are appropriate fields to conduct
PPC.

3. Evaluation Methods of PPC projects

In this chapter, evaluation methods for PPC project is mainly discussed, consideringcharacteristics of PPC, modified design for evaluation should be adopted to know the impact
of project. Like other fields, there are many arguments on evaluation method for PPC project.
Because of existence of various stakeholders, different views and standing points are available
among them, it is more complex to enhance consensus on common evaluation measure thandoing that for typical development project.
Saul, et al. (2010) is emphasizing the importance of outcome based evaluation tomeasure the result of alliance.

The paper firstly raised current problems why measuring

alliances is hard, those are;

1. PPPs are complex,
2. PPP model was not historically value-oriented or data-driven,
3. Knowing what to measure is tough,4. Existing measurement systems create accountability but do not capture value or inform
Strategy,and
5. Traditional measurement is taxing.

Those criticisms are understandable if project has strong face of donation or CSR, it
must be a tough role to ask private sector to conduct monitoring by data. For private sector,
they only need accountability and results that could be descriptive.

And budget used for CSR

is not considered to bring them business impact directly, unlike their business activities, costs
for it will not be strictly managed7.

So, results of project would be made unclear, if private

sector does not seeks for opportunity to return some benefit.

It is also an important argumentthat evaluation framework and its procedure prepared by public side is not suitable for private
sector.

Even though, development agency will prepare evaluation and monitoring tool which

they usually adopt, contents of those are different from typical management system for private
sector, consequently, they are forced to make extra efforts to supply information for evaluation
by cutting time and cost from project implementation.

Table 3.1. Metrics for evaluation
Process Metrics

Incremental Value
Metrics

Contribution Metrics

Number of weeks from concept to implementation
Number of shared outcomes / metrics identified bypartners in alliance MOU
Leverage ratio (by public-private ratio on financial
contribution)
Effectiveness: incremental degree of market relevancein job training
Scale: incremental number of people made aware
Efficiency: reduction in cost per person treatedSustainability: % of initiatives that are market-driven
Systemic Change: % of identified criticalstakeholders/organizations/industries engaged in theinitiative
Number of people made job ready% change in income among households served% increase in employee retention

Source: Saul et al. (2010) pp. 11-13

As results, Saul, et al. (2010) recommend metrics shown in Table 3.1..

Thesemetrics are figured out along with current trend in evaluation methods, which is Results BasedManagement (RBM). RBM is a model consisted with 7 processes for project management
and strongly demanding the rule to utilize performance indices, those are, output, outcome andimpact, bilateral agencies and international organizations are also modifying their evaluation
methods accordingly. Indicators shown in the table are quite relevant but considering datacollection activities and opportunity to utilize data for monitoring and evaluation, some of them
are difficult to figure out, there are some problems left before using this framework for actual
evaluation.
By results of Dewar, et al. (2009), USAID was given evaluation framework for GDA,
it is shown in Table 3.2..
of project.

This framework is meaningful in terms of covering whole processes

But those are lined up with rough items, precise part of evaluation could bechangeable by project or by evaluator, and information is possibly given as descriptive data,
which is not always useful for comparative analysis. This framework can be developed byadding several indices in vertical axis.

Crucial findings from the survey would supply thoseindices, which will influence results of each items, and it can be adopted as independentvaluables.

Table 3.2. GDA evaluation framework
item
Core Alliance Goals

referencedevelopment/business

Key Partners
Target Populations

intended beneficiaries

Primary Components

what is done ?

Implementation Strategy

who and how

Grants / Other Actions

what specifically done

Short-Term Outcomes

1 yearIntermediate Outcomes

2-3 years

Long-term Outcomes

5+ years

Sustainability Issues

Source: Dewar et al. (2009) p 55

project ……

At the end of this chapter, newly revised guideline of JICA for project evaluation is
discussed. Table 3.3. shows five types of evaluations by JICA and important elements of thoseare explained in line with DAC 5 principles.

It is feasible that all evaluations conducted indifferent period do not have to cover all elements of 5 principles, especially for the Terminal
evaluation, evaluator can concentrate on ‘Effectiveness’. This kind of information helps toimprove feasibility of evaluation by enabling us to have limited scope for monitoring andevaluation, and quality of it could be improved too.

Table 3.3. Types of Evaluations
Relevancy

Effectiveness

Efficiency

ImpactSustainability

Ex-ante evaluation

○

○

○

○

○

Mid-term evaluation

○

○

○
○*

○*

DAC 5 principles○

Terminal evaluation
Ex-post evaluation

○

○

○

○

○

Monitoring evaluation

na

na

na

na

na

Source: JICA (2010) pp.19-20* does not necessarily actual base, but prediction

4. Review of TAHRDP and MAJAICO projects

In this chapter, two major projects to support automotive industry development inThailand and Malaysia, those are TAHRDP (Thailand Automotive Human Resource
Development Project) and MAJAICO (Malaysia-Japan Automotive Industry Cooperation).
Through the introductions and discussions on characteristics of those, evaluation frameworkdemonstrated in Table 3.2 are tried to adopt for demonstration.
As shown in Chart 4.1., TAHRDP introduced in Thailand is mainly formed withstronger commitment from private sectors.

In addition to automotive industry related

foundation and business association like JAMA (Japan Automotive Manufacturers Association),3 major automotive producers, TOYOTA, HONDA and NISSAN, and 1 mega parts producer,
DENSO participated to the project from the project planning process and all the implementation
process was mainly driven by those companies in each program, which is a private dependentstyle, and it is quite feasible case to reconfirm effects of PPC project.

Usually, development

assistance project is mainly designed by development organizations, which means, public sector
singly takes initiative for planning. But in case of TAHRDP, above four private companies
have committed from planning stage and inputted knowledge on automotive industry.
helped public sector to set up a feasible project.

It hasAfter planning, implementation will beassigned to development consultants or consulting companies, in TAHRDP, automotive
assemblers, non-professional consultants, has taken responsibility and dispatched experts fromtheir firms.

In the meantime, during they have participated to “Steering Committee” andproject was controlled under Public-Private regime 8 .

This Committee is symbolic for

TAHRDP to be PPC type project.

Steering Committee
JETRO
JICA

Toyota

TPS

AOTS

Honda

Mold & Die

MOI

NissanSkill Certification

Denso

Mind & Skill

JAMA

TAI
TAIA
TAPMA

Chart 4.1. TAHRDP Framework
Source: by author

In case of TPS (Toyota Production System) program, Toyota was in charge ofprogramming and implementing it for local parts producers. In this program, application wascollected by company level even though it is a human resource development project, and TPS
experts, who were incubated in the first stage of the program, have dispatched to participating

companies to introduce TPS system to their firms.

The program has taken those companies

as cases, employees have learned TPS through co-working activities with dispatched experts,
that worked as in-house training.

For trained experts, experiences to introducing TPS are goodlearning opportunity to improve their teaching skill.

As results of the program, number ofparts producers enhanced TPS are automatically increased and those could be thought to bringabout positive impact to automotive industry, public sector could accomplish their purpose forindustrial development.

On the other hand, farther production activity of TOYOTA will beefficient by standardizing their production method among parts producers, thus, theircooperation to TAHRDP will be get returned in the long run. This is one of factors to give
TOYOTA a strong incentive to keep the quality of program and effect of program could
automatically increase. About long-term outcomes and sustainability, TOYOTA would makecontinuous effort even after the period of program, since follow up activities to parts producers
are equal to maintenance their supplier system, such costs and efforts could be considered as
supplier development activities which they usually do.

According to the story of TPS program,

those good results are emphasized by the framework in Chart 4.1., it is reasonable to evaluate
PPC project with it.

Table 4.1. Review of TPS
item
Core Alliance Goals
Key Partners
Target Populations
Primary Components
Imprementation Stratgy
Grants / Other Actions
Short-Term OutcomesIntermediate OutcomesLong-term Outcomes
Sustainability Issues

totalBusiness
meritscommitment

Relations

5
4
4
5
4
3
4
4
4
3

5
5
5
5
5
3
4
5
4
4

5
5
4
5
5
3
3
5
5
3

4
3
4
5
3
3
3
3
3
3

Source: by author

For trial evaluation, as in Table 4.1., TPS program is discussed in line with GDA

framework. It has already reconfirmed that the program will bring sufficient business merit, so
this point is positively contributing to total evaluation.

Accordingly, project has succeeded toenhance stronger commitment from TOYOTA, this point is higher than average.

But in termsof relations between Private and Public, public sector was hard to control the project because
implementation activity has not disclosed to them.

Since TOYOTA has been transferring theirhidden information, they decided not to inform everything, but situation allowed to increase
effectiveness and quality of project contains.
As a second case of PPC project, MAJAICO in Malaysia as summarized in Table 4.2.,
is picked up to discuss evaluation framework.

In MAJAICO, there are 10 programs tostrengthen Malaysian automotive industries, in every program, there are collaboration occurred
between public sector of Japan and that of Malaysia.

But considering the fact that neither

Malaysian nor Japanese private sector are not officially involved into organization, and all
implementation agencies are public sectors in Japan, degree of PPC is completely lower than
TAHRDP9.

Table 4.2. MAJAICO framework
Code

Contents of ProjectCounterpart

Implementation

A1

Lean production

MAI (SME Corp)

JODC

A2

Mold & Die

SIRIM

JODC

A3

Accreditation system

MOT

METI

B

Skill training course

MOHR

JETRO

C

Skilled labor training in Japan

MOHR

AOTS

D

Testing center support

SIRIM

JICA

E

Business matching

MACPMAJETRO

F1Information exchange

MIDA

JAMA

F2

JV matching

MIDA

JAMA

F3

Promotion in Japan

MATRADE

JETRO

Source: from JETRO-KL document

In this case, smaller commitment by Japanese automotive producers areunderstandable.

Malaysian automotive industry is carefully protected by ISI policy of thegovernment to support local auto producers, unlike in Thailand, development of industry is noteasily bring about business impact for Japanese producers10 .

As a result, any automotive

producers have not taken role as implementation agencies and contribution to technologicalsupports were weakened by indirect approach to recipient. It is true that experts dispatchedby public agencies have been making enormous effort to make program more effective, but
those efforts are not supported by positive commitment of auto producers in private sector.
This case explains the importance of attracting incentives to private sector for successful PPC,
and future business merit is one of important keys to straighten and sustain industrial
development project.
In Table 4.3., MAJAICO B tasked by NISSAN to upgrade local vocational school bydeveloping training curriculum, is evaluated as a trial case.

NISSAN has selecteddistinguished experts from their firm and retirements, and built good relation with JETRO, but
comparing to Thai case, they were hard to seek for business merit form Malaysian project,which declined overall evaluation.

Table 4.3. Review of MAJAICO B
item

total

Business
meritsCore Alliance Goals
Key Partners
Target Populations
Primary Components
Imprementation Stratgy
Grants / Other Actions
Short-Term OutcomesIntermidiate OutcomesLong-term Outcomes
Sustainability Issues

4
4
4
4
5
4
3
4
5
5

3
4
3
4
5
4
3
4
5
4

Source: by authorcommitment Relations
5
5
4
5
5
3
3
4
5
5

5
3
4
4
4
5
4
4
4
5

5. Conclusion

In this paper, effects and merits of PPC type project were successfully explained ndemphasized, related discussion proceeded to the point that how we should evaluate those PPC
project.

In USAID, they have already experienced plenty amount of cases of PPA in 2000s,

tailor-made evaluation method for those has started to discuss.
Fortunately, we have similar projects in Malaysia and in Thailand, namely, TAHRDP
and MAJAICO, those are automotive industry development projects, two results should becomparatively analyzed and method to evaluate PPC project could be usable to do so.
Actually, by picking up two projects, both TAHRDP and MAJAICO were briefly reviewed byevaluation framework of GDA in this paper, found that it really accountable to judge both
TAHRDP and MAJAICO.
In the meantime, this study will try to reconfirm evaluation method for PPC projectand more precise evaluation will be demonstrated in the farther study.

References

Dewar, Tom, C. Davachi, K Swinerton, C. Bolick, and K. Kaplan (2009). Evaluating Global
Development Alliance: An Analysis of USAID’s Public‐Private Partnerships for Development,
Development Alternatives, Inc.
FASID-IDRI (2007) Role and the Future Possibility of Private Sector in International
Development, FASIDJICA (2010) Guideline for Project Evaluation, JICA
Nippon Keidanren（2008）Discussions and Suggestions to International Cooperation toward
the future, Suggesting the Importance of Strategic Perspective and Strengthen Public-Private
Collaborations, Nippon Keidanren
OECD (1998) Review of the DAC Principles for Evaluation of Development Assistance, OECD
Saul Jason, C. Davenport and A. Ouellette (2010) (RE)Valuing Public‐Private Alliances: An
Outcomes‐Based Solution, USAID
USAID(2006)

The

GlobalDevelopment

Alliance,

Public-Private

Transformational Development, USAID
USAID website, (http://www.usaid.gov/our_work/global_partnerships/gda/)

AlliancesforThis is a revised version of the paper presented in 1st International Workshop on
Assistance for Developing Manufacturing Human Resources, Organized by Thammasat
University, Bangkok March, 2011.
2 Associate Professor, Faculty of Regional Policy, Takasaki City University of Economics
kurokawa@tcue.ac.jp
3 In the middle of 2000th, JICA has started to increase PPC project.
And Ministry ofForeign Affair has started to accept PPC proposal from private sector since 2010.
4 http://www.usaid.gov/our_work/global_partnerships/gda/
5 USAID (2006) pp. 26-27
6 The report also explain that Japanese ODA has been originally a PPC style, like ODA
settle infrastructure and FDI inflow later.
7 In this aspect, combination with private CSR is possibly resulted to lower achievement,
which requires farther discussion.
8 As in Chart, Steering Committee was formed with four stakeholders, which are Japanese
private and public, Thai private and public.
9 In fact, throuth implementation agencies in public sector, private sectors were assigned to
conduct activities, but they have not committed to planning and project management, thesituation was different from TAHRDP.
10 In Thai, around 90% of car production is dominated by Japanese assemblers.
1

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