Newsletter
The December 2023 Amendment to the Enforcement Rules of the Act for Promotion of Private Participation in Infrastructure Projects
The amendment of certain articles of the Act for Promotion of Private Participation in Infrastructure Projects (the “PPP Act”) by a presidential decree on December 21, 2022, ushered in a new era in the promotion of private participation in infrastructure projects, called PPP 2.0. Subsequently, the Enforcement Rules of the PPP Act were amended and approved by the Executive Yuan on December 7, 2023, promulgated and came into effect on December 28, 2023, completing the legislative work for PPP 2.0.
The amended enforcement rules are to complement the amended PPP Act, in order to improve the investment environment, diversify private participation, implement rigorous processing procedures, and enhance operational efficiency.
A. Improving the Investment Environment
I. In response to changes in needs and the economic environment, the amendment expands the scope of public construction projects covered by the PPP Act. The enforcement rules define the new categories of public construction projects added to the PPP Act, such as digital infrastructure, green energy facilities, audiovisual and music facilities, and agricultural and resource recycling and reuse facilities. Existing categories of public construction projects have also been revised to reduce ambiguity in application (e.g., Articles 2, 4, 8–25).
II. Another major change is the elimination of investment thresholds or development scale limits for certain public construction projects. In the past, public construction projects under the PPP Act, such as air transportation business, harbors, off-street parking lots, logistics centers, international exhibition centers, and shopping centers, were subject to investment or development area limits. The amendment lifted those thresholds to give more latitude to the project owners to plan PPP projects while observing the requirements of different public construction categories (e.g., Articles 2, 19, and 20).
B. Diversifying Private Participation
The enforcement rules clearly define the terms for extension, reconstruction, and repair, as well as the process for approving funds for BTO construction. It also establishes procedures for acquiring public services with compensation , creating more opportunities for private participation (e.g., Articles 34–37).
C. Implementing Rigorous Processing Procedures
This initiative includes conducting pre-evaluation when launching PPP projects planned by the government, making tender documents available for public viewing before the first announcement of key projects, and attaching preliminary plans to the tender documents for applicants’ reference. Also, BOO is added to facilitate contract performance management and subsequent support to optimize the processing procedures for PPP projects (e.g., Articles 29, 33, 38, 39, 40, 61, and 62).
D. Enhancing Overall Operational Efficiency
While ensuring the processing procedures are rigorous, the enforcement rules also specify how issues in determining public construction project categories should be resolved, identify the matters that the project owners may authorize or delegate, and streamline pre-operational procedures for the same project. The rules also stipulate that major public construction projects must undergo performance evaluations at least once a year after commencing operations for an entire operational year, while evaluations of non-major projects or those operating for less than a year are subject to the investment contract. Additionally, in line with the principle of fairness and reasonableness, the rules for contract negotiations allow additional terms or arrangements that arise following the tender documents and are beneficial to the project, in recognition of the characteristically long term of contracts for PPP projects. Such accommodation is aimed at facilitating the completion of PPP projects (e.g., Articles 26, 27, 32, 66, and 75).
PPP projects can now be planned for two or more types of public construction categories as needed, and private organizations can participate via a host of methods (e.g., combining BOT and ROT, or OT and ROT). This effectively opens up private participation, which helps improve the overall self-financing of private entities and enables effective government supervision and management, resulting in positive promotion of public construction.
In addition, the Ministry of Finance has gradually completed complementary measures for PPP 2.0, including paid PPP regulations, created on June 20, 2023, and a mediation committee, created on July 1, 2023. A total of 54 articles of the enforcement rules were reviewed and amended, with 11 new articles added. The Ministry of Finance also hopes that through the PPP legislative work, the investment environment and PPP processing procedures will become more user-friendly and convenient, leading to an increase in PPP projects, a reduction in private investment risks, improvements in the rigor in the processing procedures, and an increase in administrative efficiency. This will bring about changes in the way private entities participate in public construction and the benefits they receive, in order to continue providing public services with higher quality.