Private financing initiatives: Developing countries' experience

The expansion of middle income households and increase in the rate of urban migration has resulted in congestion in cities like Bangkok, Kuala Lumpur, and Metro Manila. To address this situation, massive transportation infrastructure projects were undertaken in these cities. Traditionally, two sources of funds have been tapped for these projects: Official Development Assistance (ODA) and government revenues. However, it has been the amount of ODA has decreased in the last few years. Thus, the concept of private sector participation in financing of projects was explored. The private sector is involved in the planning and implementation of infrastructure planning through Private Financing Initiative (PFI). This paper seeks to investigate the potential limitations of PFI and the possible extension of coverage of ODA based on the experiences of the rail transport projects in the three cities as well as endeavor to suggest implementation of both financing schemes in a complimentary manner.