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A Study on the Adoption of the Designated Manager System in Private Finance Initiative(PFI)

  • Public Land Law Review
  • Abbr : KPLLR
  • 2021, 93(), pp.245-277
  • Publisher : Korean Public Land Law Association
  • Research Area : Social Science > Law
  • Received : February 1, 2021
  • Accepted : February 22, 2021
  • Published : February 25, 2021

Hwang Jihye 1

1한양대학교 법학연구소

Accredited

ABSTRACT

To recover from the recession caused by the COVID 19, countries are implementing “New Deal policy” that seeks to boost the economy by injecting finances into infrastrucure(SOC). Korean government is expanding its infrastructure(SOC) projects in this trend. It also plans to adopt Private Finance Initiative actively to get financial resources securely. However, to use PFI actively, it is necessary to solve problems such as excessive financial leaks. The fundamental cause for these problems is the lack of role sharing between public sector and private sector. On role-sharing between public and private sector, we have “Guarantee State Theory” or “Gewährleistungsstaat Theorie” in Germany. According to “Guarantee State Theory”, public sector is responsible for supervising private sector to perform PFI projects properly while private sector is responsible for providing public services through PFI projects. Based upon the Guarantee State Theory, this article focuses on how to institutionalize public & private sector's roles in the already present but imperfect “Act on Public-Private Partnership in Infrastructure in Korea(2020)”. The author proposes in this article that public sector's role be clarified through “Designated Public Manager System” and private sector's role be clarified through “Designated Facility Manager System”. In the “Designated Public Manager System”, the competent authority will be given the status of a “Public Manager” & at the same time the responsibility for supervision to make private-sector perform the task successfully. How can the “Public Manager” supervise the private sector? Firstly public sector(state) can demand to revise PFI contract, secondly it has State Compensation Act system for the victims from the SOC. Thirdly, it has state's Right of Termination of PFI contract for public interest. Designated Facility Manager System is a system that legally grants private sector the status of “facility manager” to be able to focus on infrastructure work. In order to supplement the PFI’s structure, in which private sector can work on only the hardware work such as facility work, the scope of work will be expanded to soft work such as a performance plan. As a comparative legal model for Designated Manager System, this article finds an example in Japan legal institution. By introducing a “Designated Public Manager System” and a “Designated Facility Manager System”, it can be expected that the role sharing between the public and the private sector can be clarified. It is also expected to improve the problem points raised in PFI so that public services can be provided to the public more securely and effectively.

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This paper was written with support from the National Research Foundation of Korea.
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