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  4. The Ideal Form of Private Finance Initiative Projects in Japan

2016 Vol.2
The Ideal Form of Private Finance Initiative Projects in Japan

An Examination Based on Comparison with

2016/05/06

More than 15 years have passed since the enactment of the Act on Promotion of Private Finance Initiatives (PFI Promotion Act), and the government is promoting efforts to further expand PFI projects, including the introduction of a concession system that grants the right to operate public facilities. However, as the number of projects that have been implemented grows, it has become possible to resort to explanations based on precedents, which might result in some important issues being given insufficient examination. Among such issues, this paper focuses on practical challenges and examines the possibility of future improvements, by drawing comparisons with cases from Australia, an advanced country in terms of PFI projects. More specifically, this paper systematically examines differences between Japan and Australia in terms of practical aspects of PFI projects, with particular attention to risk analysis and the method of communicating with private enterprises̶two factors that are essential to PFI projects and important in selecting enterprises for the projects. Japan and Australia have similar basic approaches to risk analysis and the method of communicating with private enterprises, but Australia is more advanced in terms of specific measures and actual operations. Also, there are many practical lessons that Japan can learn from Australia’s experience. PFI projects in Japan can thus grow further if the country looks into overseas examples at the practical level, properly breaks down each example, and “Japanizes” the lessons learned. Also, growth at the practical level is crucial for proper risk management, which is one of the original purposes of PFI projects.

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