Innovative Strategies for Accelerated Human Resources Development in South Asia

Public–Private Partnerships for Education and Training: Special Focus on Bangladesh, Nepal, and Sri Lanka

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• Publisher: Asian Development Bank
• Year: 2017
• ISBN:
  9789292610357
• Topic: Business
• Subtopic: Government & Business
• Index: Business

South Asia remains one of the fastest-growing regions in the world but concerns are rising that its workforce lacks the skills and education to drive its economy into the 21st century. Providing access to quality education and skills training is now a priority of policymakers in the region. But even though government spending on education has increased significantly in recent years, it has not resulted in effective education outcomes. This report is one in a series of four publications that examines how education and training systems in the region can be improved. In particular, it looks at the role that the private sector can play in improving standards through investments in education and training.

VII. PUBLIC–PRIVATE PARTNERSHIP FOR EDUCATION IN SRI LANKA

A. Public–Private Partnerships in Sri Lanka

1. Legal and Institutional Frameworks

The development history of public–private partnerships (PPPs) in Sri Lanka can be divided into four periods: (i) 1992–1995, when policy and institutional setup with support from development partners started; (ii) 1996–2004, when PPP projects were implemented; (iii) late 2004, when PPP momentum ceased after the change of government; and (iv) after the end of the civil war in 2009, when there was a shift back toward the possible use of the PPP modalities. PPPs can be traced back to the early 1990s with the privatization of public sector undertakings such as the estate plantations, telecommunications, insurance, and some industrial undertakings. In the 1990s, the plantations were offered to the private sector on management contracts before subsequently migrating to become fully privatized entities except for a few state-managed plantations. The telecoms were privatized in the early 1990s. There were several other state manufacturing and servicing entities such as the Ceylon Steel Corporation, the Sri Lanka Insurance Corporation, and the National Insurance Corporation that were privatized in the 1990s.

However, this use of a PPP approach occurred more as a result of circumstantial and crisis management factors than due to any major shift in policy at the time. The island was plunged into prolonged blackout caused by a shortage in power generation, and the government had no option but to turn to the private sector for power plant investment. Several power plants were established by private sector operatives with this policy change. Later, the government embarked on PPPs in other sectors as well, such as ports and housing.

ADB’s Public–Private Partnership Operational Plan, 2012–2020 has identified three options to address the urgent infrastructure needs of governments: (i) review traditional sources of funds and explore means to access additional funding from them; (ii) investigate mechanisms for generating more resources from off-budget sources; and (iii) consider a greater role for PPPs as a way to procure infrastructure, and identify and address impediments to the development of PPP transactions.⁷⁹ Sri Lanka’s investment climate for the private sector has been affected adversely in the past by conflict-related uncertainties, legal disputes, and infrastructure limitations. However, there are indications that the climate is rapidly improving.

One such example of this change is provided by the Mahinda Chinthana: Vision for the Future Development Policy Framework, 2010–2016. For education, the Mahinda Chinthana states that it will “restructure the education and knowledge systems suitably, so that Sri Lanka becomes a key hub for knowledge and learning in the world.”⁸⁰ It also specifically promotes the use of PPPs in supporting the education sector in the following manner:

“While the public education system will remain as the predominant service provider, private schools that are operated under the state regulations and standards will be encouraged to provide educational facilities for students who prefer to study in these schools.”⁸¹

While there have been a number of broad policy statements, there have also been a number of different initiatives to encompass this reform drive with the requisite legal and regulatory instruments in the education sector. For example, the Government of Sri Lanka has stated explicitly that it will seek to open the higher education sector to private investment and delivery of services. In 1997, the Department of Public Finance of the Ministry of Finance and Planning issued Guidelines on the Government Tender Procedure to be followed in the procurement of private sector infrastructure projects. These guidelines are to be followed by all government agencies, including the provincial councils in the case of PPPs, and set out a very detailed and transparent procedure to be followed in selecting investors for PPP projects. There are also guidelines in place for unsolicited proposals, and the cabinet is the final decision maker on these matters. Chapter XV of the guidelines stipulates how unsolicited projects could be dealt with when the project is of national importance. At present, most projects with private sector investment are accommodated within this arrangement.

The institutional origins for PPP in Sri Lanka can be traced back to the Secretariat for Infrastructure Development and Investment, which was formed in 1992. The secretariat was later taken over by the Bureau of Infrastructure Investment, which was established in 1996 as an arm of the Board of Investment of Sri Lanka to promote and assist PPPs undertaken by relevant ministries and government departments. The Board of Investment is the apex statutory body empowered to grant approval for foreign investment. It has a wide range of powers including the granting of tax exemptions to foreign and local companies investing in Sri Lanka. During the tenure of the Bureau of Infrastructure Investment, several flagship PPPs were established for a variety of infrastructure projects, including power and ports.

The PPP Unit’s mandate includes facilitating the implementation of PPPs in other state agencies. The services include advisory functions, assistance to line agencies, screening to assess value for money, disseminating good practice, and identifying partners through transparent bidding systems. In addition, this unit also has a capacity-building function, which it implements by holding workshops and seminars. The Board of Investment offers tax exemptions to investors who will invest in the provision of educational services. In addition to income tax exemptions, there are other incentives, such as relief from payment of customs duty on imported capital goods value-added tax and from the Port and Airport

Development Levy, depending on the size of the investment. There are also other agencies engaged in the design, implementation, and delivery of PPPs (Table 48).

Table 48: Focal Agencies with Responsibility for Public–Private Partnerships, Sri Lanka

Agency	Role
Attorney General’s Department	• Nonministerial government department whose main function is to advise the government on legal matters. Where the cabinet appoints a negotiating committee to assess any investment projects submitted by any private sector party, the Attorney General’s Department is always represented in the technical evaluation committee and sometimes plays a leading role.
External Resources Department	• Government agency that is mandated to mobilize official development assistance, including technical cooperation. The areas of responsibility for the External Resources Department include conducting consultations with donors, preparing project pipelines, facilitating pre-project feasibility studies, coordinating with line ministries and agencies, negotiating loans, obtaining approvals, concluding banking arrangements, obtaining donor concurrence, and overseeing implementation.
Ministry of Finance and Planning	• Operates under the direct purview of the President and is mandated to formulate national economic and financial policies as well as the overall strategy. Engaged in facilitation of new projects as well as setting the overall policy direction on PPPs in Sri Lanka.
Department of Public Enterprises	• Under the Ministry of Finance, it is mandated to monitor public enterprises and implement corporate governance practices as well as look at restructuring and post-privatization issues.
Interdepartmental coordination and capacity building	• PPP units are mandated to coordinate and assist other ministries and departments to implement PPP projects, but in reality, ministries try to do their own PPP projects.

PPP = public–private partnership.

Source: Authors’ compilation.

2.Examples of Public–Private Partnerships in Sri Lanka

During 1993–2009, the country attracted about $3.3 billion of private investment in infrastructure projects, mostly in telecommunication but also some in electricity and one in the ports sector. Sri Lanka pioneered telecom reforms in South Asia and established the first independent sector-specific regulator. Although Sri Lanka can boast of successful PPPs in the power and ports sectors, hardly any partnerships have been realized in other hard infrastructure sectors such as roads, airports, or water and sewage, or in the social sectors. Table 49 provides a summary of a few examples of PPPs in education using service contracting, management contracting, and private finance arrangements.⁸²

Table 49: Examples of Sri Lanka Public–Private Partnerships in Education, 2000–2013

IT = information technology, PPP = public–private partnership.

^a In Sri Lanka, an online program or distance education is referred to as an “external degree.”

Source: Authors’ compilation.

B. Education Sector Analysis

The Government of Sri Lanka’s sustained strong commitment to education has led to admirable progress in reaching universal primary enrollment and attaining high literacy rates. However, there is still a need to improve the quality, relevance, and equity of secondary education. The secondary education net enrollment rate in grades 10–13 is still only 65%. Passing rates are still lower than lower middle-income country average, and the passing rates for the grade 13 advanced level examination have stagnated for the last 5 years, and are significantly lower in science, mathematics, and English than in other subjects; and as many as 33% enter the labor market without proper academic qualifications or skills training, which is leading to a high unemployment rate for the 15–24 age group.

Key areas of ongoing focus now include, for the quality perspective, the establishment of a national student assessment framework that integrates school-based assessment with external examinations; the introduction of a technology stream that offers diverse pathways from secondary education to higher education, vocational training, and job markets; and the introduction of computer-aided learning. While from the equity and efficiency perspectives, facilities in secondary schools will be upgraded; teachers with relevant qualifications will be recruited, trai...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Tables, Figures, and Boxes
• Foreword
• Preface
• Abbreviations
• Key Messages for Forging Public–Private Partnerships in Education and Training in South Asia
• Executive Summary
• I. Introduction and Background
• II. Public–Private Partnerships in Education and Training
• III. Challenges and Possible Use of Public–Private Partnerships as An Innovative Solution
• IV. Establishing a Framework for Reform Using Public–Private Partnerships
• V. Public–Private Partnerships for Education in Bangladesh
• VI. Public–Private Partnership for Education in Nepal
• VII. Public–Private Partnership for Education in Sri Lanka
• VIII. Summary, Conclusion, and Recommendations
• References
• Appendix: Perfect—A Summary of Public–Private Partnership Framework Requirements
• Footnotes
• Back Cover