## Section 2

## Effective Development and Operation of Infrastructure Through Public-private Partnership

As described in Section 1, the proper development of infrastructure has an effect to promote the activation of private investment and vitalization of the local district. For the efficient and effective infrastructure development, the public-private partnership is also valid to incorporate private funds and ingenuity. With the utilization of PPP/PFI, the businesses that were previously in charge of public entities open up to the private sector to spark up new private demand. At the same time, with the utilization of the private funds, management knowhow and technical capabilities, the promotion of streamlining services and rising service levels are expected. In the latter part, we introduce the approaches of PPP/PFI.

## 1 Domestic PPP/PFI market

## (1) The situation of PPP/PFI utilization

The PPP (Public Private Partnership) is the concept that the method of private participation is captured extensively in some way within the public service provision and there are various categories depending on the involvement of the private sector. Some of the representative examples include PFI (Private Finance Initiative) and comprehensive work consignment to private sector (Figure 2-2-1).

Figure 2-2-1

Major PPP methods

Methods	Summary	Basis laws	Facility ownership	Funding	Example of deployment field
PFI Method	A method to construct, maintain, manage, and operate public facilities through utilization of private finance, management abilities and technical capabilities.	PFI Act (1999)	Government/ Private	Private	Publicly owned residential and government buildings, etc.
Concession method	Concession is grant of rights to the private business to operate the public facilities that collect (usage) fees while the public entity continues to possess their ownership.	PFI Act Amendment (2011)	Government	Private	Airport, Road Sewage system, etc. (scheduled)
Designated administrator system	A system in which a designated administrator (corporations that local governments designate) acts over the management and operation of public facilities. Due to a legal reform, the management (entity) of the public facilities is opened up extensively to private businesses, NPO organization, etc.	Local Autonomy Act Amendment (2003)	Government	Government	Parks, ports and harbors, etc.
Comprehensive work consignment to private sector	Regarding management and operation duties of public facilities and the like, by refraining from determining the details of the operation of business and according to the efficiency-ordering method in which the operation is outsourced to a group of private industries, one may provide effective services that capitalize on the creativity and ingenuity of the private sector.	—	Government	Government	Sewage, etc.

Source) MLIT

In the monitor survey, when we surveyed the recognition of people about the difficulties of infrastructure management by local governments due to insufficient human resources and financial reasons, 77.3% of the respondents answered that they have heard about it (Figure 2-2-2). In addition, nearly 79.5% of the people think it is important or slightly important to user private funds for the development of infrastructure, indicating that the necessity of public-private partnership is recognized among people (Figure 2-2-3).

Figure 2-2-2

## Understanding of the situation that is difficult to maintain infrastructure management system

Source) Monitor survey by MLIT