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Duncan Pescod Head, Efficiency Unit, Hong Kong SAR Government

Duncan Pescod Head, Efficiency Unit, Hong Kong SAR Government. Private Sector Provision: What Are the Options? 27 October 2005. Agenda. Introduction A definition of Private Sector Involvement Hong Kong’s disciplined services Opportunities in Hong Kong . Private Sector Options.

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Duncan Pescod Head, Efficiency Unit, Hong Kong SAR Government

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  1. Duncan Pescod Head, Efficiency Unit, Hong Kong SAR Government Private Sector Provision: What Are the Options? 27 October 2005

  2. Agenda • Introduction • A definition of Private Sector Involvement • Hong Kong’s disciplined services • Opportunities in Hong Kong

  3. Private Sector Options Private sector acting as agent of government; shorter terms Outsourcing Principal-to-Principal relationships; longer terms; higher value (HK$300 million plus capital costs) PPPs Ownership transfers permanently; government limited to regulatory role Privatisation

  4. Outsourcing in Hong Kong

  5. Economic globalization Economic infrastructure Sustained budget deficit PPP Social programmes Staff reduction targets Increased public expectations Exploiting Government Assets Technological innovation PPPs in Hong Kong • Recent focus on PPPs

  6. Procurementof Assets Public Private Partnership Privatization Management /Maintenance ServiceDelivery Design Construction Design-Build-Operate (DBO) Build-Operate-Transfer (BOT) Note 1:The private partner, without legally owning the assets, transfers them back to the Government at the end of the contract Design Construction Management /Maintenance ServiceDelivery Finance Transfer(Note 1) Design-Build-Finance-Operate(DBFO) Management /Maintenance ServiceDelivery Design Construction Finance Build-Own-Operate-Transfer (BOOT) Note 2:The private partner owns the assets during the contract period and transfers them back to the Government at the end of the contract Management /Maintenance ServiceDelivery Design Construction Finance Ownership (Note 3) Build-Own-Operate (BOO) Note 3:The private partner retains ownership of the assets in perpetuity Typical PPP Models Ownership & Transfer (Note 2)

  7. Hong Kong’s Disciplined Services Why do things differently? • Budgetary constraints – the Government’s clear policy message is ‘small government, big market’ • Recruitment constraints – limited relaxation of the existing staff freeze • Retention of experienced people – disciplined services Rank & File can retire at the age of 45. How do you replace this knowledge and experience? • Evidence of improved value for money and quality of service

  8. Hong Kong’s Disciplined Services - Opportunities Activities/assets that can be handled by the private sector: • Vehicles, vessels equipment, maintenance, training, and procurement support • Security services • Training – internal security, fire services, flying, etc • Police, fire and ambulance stations • Prisons and prisoner escort • Ambulance services • ICT

  9. Conclusion

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