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Diverse Introduction of Private Funds to be Invested in Infrastructure Projects

Due to the total budget of the central government being limited by the funding of annual revenue and influenced by the debt ceiling next year, there is difficulty for the annual expenditure to have room to grow, which limits budget allocation for infrastructure projects. In the situation where the total budget is limited, while the domestic private funds are sufficient, in order to revitalize the economy, uphold the principle of providing non-stop infrastructure project service for the public, and maintain the energy of domestic infrastructure, the Premier of Executive Yuan Sean Chen instructed all levels of government to expand the introduction of private funds into the participation of infrastructure projects, and also instructed the Public Construction Commission, Executive Yuan (hereinafter referred as “PCC”) to establish a private investment business opportunity platform to introduce diversely the investment of private funds into infrastructure projects by functioning as a business matchmaker through quick compilation and selection of suitable private investment cases and providing these information to domestic and foreign investors.

PCC Counselor Guo-ji Zeng explained that besides government official budget or fund budget, the sources of funding also includes private funds. The sources of private funds include foreign investment, overseas Chinese investment, mainland Chinese investment, and domestic funds. Domestic funds include insurance funds, postal savings, labor pension, labor insurance funds, and other domestic enterprise funds. In order to guide the private funds into investing in infrastructure projects and reduce the burden of government finances, PCC will join with related ministries and commissions in expanding the establishment of a business investment opportunity platform, and will send written requests to all ministries, commissions, and local governments to actively assess the cases suitable for the participation of private funds, for example, commercial land development, superficies creation, culture and education accommodation facilities, major facilities for tourism and recreation, parking lot, etc., or those with high public welfare and can be combined with the PFI mechanism, such as sewage systems, long-term care, and desalination facilities. PCC Chairperson Zhen-chuan Chen will once again be convening an “Executive Yuan Committee for the Promotion of Private Participation in Infrastructure Projects” meeting in the near future, and have sent written requests for agencies to actively propose specific cases, and PCC will compile, assess, and include them into the business investment opportunity platform, and will handle the publishing of business opportunities in a timely manner for public reference.

Through the analysis of related laws by PCC, private investors can participate and fund infrastructure projects through methods such as direct participation in investing, building, and operating, and also through methods such as purchase of shares, corporate bonds or public construction bonds, and securitized products. As for the legal source in participation, basing on each individual case policy and goal, one can use the Act for Promotion of Private Participation in Infrastructure Projects, the Housing Act, the Commercial Port Act, Urban Renewal Statute, Mass Rapid Transit Act, National Property Act, the Regulations of the Relevant Local Governments Governing the Management of the Government-Owned Property, etc. Each authority can use the appropriate laws according to the characteristic of the infrastructure project. PCC Chairperson Zhen-chuan Chen welcomes life insurance industries with sufficient funds and other investors to provide suggestions, and even propose cases through the Act for Promotion of Private Participation in Infrastructure Projects that are creative and can include private investors in order to promote national construction together.

Because of the diverse ways and methods in which private investors can participate in domestic infrastructure projects, it is difficult for investors to have a thorough understanding. In order to guide private funds, PCC will once again invite the Financial Supervisory Commission, Council for Economic Planning and Development, Ministry of Finance, and Infrastructure Project Industry Competent Authorities, along with scholars and experts in engineering, law, finance, etc. to establish a counseling team on investing infrastructure projects in order to customize and provide the infrastructure project items and participation methods suitable for various types of funds, and to coordinate and remove any obstacles that private investors will encounter when funding infrastructure projects.

As for the administrative measures, PCC will ask the authorities to review and assess each type of infrastructure project case from time to time, so as to include them into the business investment opportunity platform whenever necessary and to publish monthly public infrastructure business opportunities for private investors; PCC will establish a cross-ministries and commissions counseling team to solve the problems and obstacles in private investments by reviewing the deregulation of relevant laws, regulations, and measures and through the meeting mechanism of the Executive Yuan Promotion of Private Participation Committee. In terms of the circulation of business opportunity information, the authority will submit the most recent types of cases and return rates that will be released, hold business opportunity forums periodically or whenever necessary, invite together funding industries and investors, etc., to carry out investment appraisals in order to facilitate investing the funds into appropriate infrastructure projects.