Standardized PPP Contract in Korea and its Implications for Latin America and the Caribbean

Abstract

The standardization of PPP contracts in Korea has played a key role in establishing PPP institutional frameworks in the civil law system in which there must be legal and institutional safeguards for the long-term PPP contracts. The reliability of standardized contracts is secured due to the fact that the standardized PPP contract has been prepared by the statutory PPP agency under the approval of the Ministry of Economy and Finance, an influential ministry within the government. The standardization of PPP contracts has been of great utility for both the competent authorities and private partners. The standardized contract has streamlined negotiations. The private partner was able to trust in the major risk allocation declared through the standardized contract in handling land acquisition, construction completion, operation and demand, and termination. We found out through our survey that there are similarities between Korea and LAC countries in that most LAC countries have adopted the civil law system and the countries have developed similar payment types for PPP and risk allocation principles. The experience and lessons on standardized PPP contract in Korea can be of great utility to LAC countries.