Assessing Readiness of Enabling Environment to Support CVC

Lack of clear understanding of CVC and its potential to help reduce fiscal commitments or liabilities  (See Box 6).

Lack of clear policy guidance for Project Owners to fully consider CVC at the project level. 

Lack of knowledge and skills to consider CVC opportunities proposed by line agencies leading to lack of policy support for the project. 

Lack of clear policy framework and incentives to guide and encourage Project Owners to actively consider CVC in the early project stages, resulting in missed opportunities to incorporate CVC when developing new infrastructure projects.

Lack of political and public support for CVC due to general public perception that commercial interests can lead to conflicts of interest. 

Increase knowledge and understanding of CVC and its potential to help projects get implemented with reduced fiscal commitments or liabilities among planning agencies and finance ministries through knowledge sharing of successful experiences. Governments can engage consultants with relevant experience to assist in sharing and disseminating knowledge and conducting market soundings.

Provide clear policy direction to encourage Project Owners to consider CVC when preparing new projects. This should include a review of the legal and regulatory (discussed in detail later) leeway available for implementing CVC, and developing a roadmap to resolve any such hurdles and overlaps. 

Adopt this Guidelines as a policy tool to guide Project Owners to apply CVC. For example, planning agencies or approval authorities can consider mandating Project Owners to apply the Guidelines when preparing projects and reporting back to demonstrate that CVC has been fully considered.

Communicate with the public/stakeholders on the role of CVC and how it can be effectively used to balance public and commercial objectives.  

Policy agencies could require reporting on potential CVC for any project implemented, including value for money assessment. 

Lack of or unclear legal mandate of Project Owners to implement CVC leading to the project owner not taking the risks of introducing CVC in the project. E.g. regulations are unclear as to which commercial activities can be undertaken by Project Owners) 

Lack of clear legal route to implement CVC. For example, can CVC be implemented through PPP? 

Legal issues related to the use of public land for commercial activities. For example, in some cases, land appropriated for public infrastructure cannot be used for commercial purposes.

Legal issues around budgeting and fiscal management which might constrain how revenue from CVC will be managed. For example, in a PPP project, will revenue shared need to flow directly into the general budget or can it be ring-fenced to fund O&M expenses or other projects?

Lack of flexibility in legal framework to implement innovative solutions. For example, is there a flexibility in the legal framework to establish a new entity or design new contractual arrangements. 

Consider CVC opportunities if the Project Owner has a clear legal mandate and contractual authority to implement CVC. 

Seek a legal or regulatory review to address the legal issues identified. E.g. seek the legal opinion from a general counsel or the attorney general. The Project Owner may need to assess how complex the review process might be and if benefit will outweigh costs.  

Planning agencies can identify legal changes required, analyse the cost and benefit of implementing such reforms and assess the political appetite to implement those reforms, if major legal constraints to CVC are found across projects. 

Lack of well-defined roles and responsibilities of agencies involved which can lead to inaction. For example, where the Ministry of Transport is responsible for the project but the local government is responsible for some of the CVC activities and the provincial government is responsible for other CVC activities.

Lack of will, time and incentives of Project  Owners to carefully assess risks and rewards which can lead to inaction.

Lack of creativity of Project Owner due to a fear of failure or fear of decision-making. 

Lack of technical capacity in Project Owners (experience, skills, expertise)  to carefully assess risks and rewards of CVC opportunities. For example, how to assess the commercial potential of CVC, how to commercially structure CVC, and how to integrate CVC in project design and services.

Lack of cross-agency coordination as implementing CVC might involve dealing with more than one agency. Potential coordination issues include land acquisition, services provision, asset ownership, benefit sharing, contractual arrangements and etc. (See Box 7)

Lack of private sector appetite to participate in public projects due to bureaucratic processes or complex regulations in general. 

Clarify or define roles and responsibilities of planning agencies and Project Owners in considering CVC.

Provide the right incentives to Project Owners to maximise CVC.

Share international experiences from successful and unsuccessful cases to stimulate creativity. 

Increase technical capacity and skills of and provide external technical support to Project Owners to analyse CVC opportunities.

Improve coordination with whole-of-government efforts through different measures such as using institutionalised platforms for coordination (e.g. committees chaired by a high-level authority), providing clear policy direction to the agencies involved and developing a benefit-sharing mechanism to incentivize relevant agencies to jointly develop projects.

Getting private sector’s views to assess private sector appetite at early planning stages, address private sector’s concerns early in the project structure, and screen out CVC ideas which are not commercially attractive.