Private-public Partnership

According to the book “Public-private partnership projects in infrastructure: An essential guide for policy makers” by Jeffrey Delmon (2011:7), we learned that cooperation between private and public sectors is essential when it comes to service delivery:

“PPP is an arrangement for the private sector to deliver infrastructure services for the public sector or to assist the public sector in its task of delivering infrastructure services to the public. Even for most public service providers, private involvement forms an essential part of successful service delivery.”

Namely, the government doesn’t have to undertake every task. It may be more efficient and cost-saving to cooperate with private sectors. Moreover, a successful service delivery includes the involvement of private sectors. From the interview data, respondents from Japan and Taiwan both mentioned about the partnership between public and private. Moreover, sound supplementary measures are also important when starting the PPP. For instance, not only the

information should be symmetric, the degree of freedom regarding the participation rules is also viral when private and public sectors are to cooperate. All in all, only by implementing sound supplementary measures could PPP be steady and worthy, and finally be able to inspire more creativities and bring about a more benign competition.

“In order for the private sectors to have the willingness to invest in the long-term care, there should be supplementary measures for the future development. For example, enough information provision, regulatory transparency, and user protection, etc.” (J2)

“Though the government is intended to reduce public services, the public attitude toward the private sector is now larger than before…Administratively, the right setting of VFM and the easier entrance for private sectors are important.” (J5)

“I think it’s ineffective because the rules are too many. Hence, the degree of freedom is low. As a result, the creativity is not stimulated.” (J6)

“People might not have enough knowledge to consume, so if Taiwanese government wants to cooperate with private sectors, there should be a reliable inspection, coordination, and something like consumer’s foundation to tell people what’s good and bad; namely, to prevent the problem of information asymmetry.” (T3)

In addition, when it comes to PPP, in spite of Taiwan’s BOT plans for long-term care that are carrying out next year (Lin, 2019), in order to make a good use of people’s skills, energies, and funds, the government in Japan provides a long-term care service scheme called “Private Finance Initiative (PFI)”. The policy is originated in England and the government in Japan learned from the experience. It is a policy for the government to have less budget problems and debt by cooperating with the non-government institutions or private enterprises (C. Huang, M.

Hong, Y. Chen, Vol. 43, No. 2: 106 ). Also, it is a method that provides private finance for PPP (Private- Public Partnership) between the public and the private sectors (Whittaker, 2010).

Graph 22. The PFI Procurement Process

Source: This Research

For example, from graph 22, the government will have a long-term contract with a private enterprise, which would be the public service provider that provide services to people. After the infrastructure is built, the government will not only procure the public asset but the services;

and then repay periodically with the evaluation of VFM (Value for Money). VFM is very important in order that PFI is a performance-based payment (績效式付款). VFM is an evaluation method to see if there is going to be beneficial results for the PFI plan (M. Hong, 2013: 78). To be more precise, the government no longer has a huge amount of public debt and would be able to share the building and operation risks with the private enterprises. Though it seems somehow similar to BOT, PFI emphasizes more on the long-term contract that government would procure the services. On the other hand, BOT is a project which a chartered corporation’s (特許公司) revenue is from the consumer; namely, the risk is mostly on the corporation. All in all, if the service provision of an infrastructure is unable to pay back the income, BOT would not be a feasible choice of a PPP project. (K. Sun, 2015: 8)

According to the suggestions from the Japanese central (J1) and local government (J2), PFI is able to renew the out-of-date public facilities. Especially, it would be more urgent as the issue of low fertility and population aging are getting worse. Hence, it is said by the central government in Japan to be a policy that would be more essential in the future.

“Hereafter, especially for large cities, due to the rapid increase of the low fertility and population aging problems, there will be urgent demands of setting up efficient facilities and institutions. In this sense, I think the utilization of PFI would not be little.” (J1)

“PFI could renew the out-of-date public facilities.” (J2)

However, there are 4 drawbacks while carrying out the policy. According to the Japanese local government,

“It is hard for the untraditional private sectors to cross the barriers of entry; moreover, it is important to have a good communication between the official and the public. Also, there is a difficulty of management by local government with few management experiences.

More importantly, the policy should prevent the risks of expensive and few services.” (J2)

Since the Taiwanese respondents were insufficient about PFI, the data collecting from the aspect of Taiwan would only focus on the public released data.

For the case of Taiwan’s long-term care PPP, according to the news article “Physical Examination of Sidewalks in Super-aged Society: Can PFI Be a Solution To Public Construction?” (2019), since the year 2013 did Taiwanese government start to dig into the feasibilities of PFI. According to the news article, Executive Yuan has neither an intention to establish any special act for PFI nor amend The Promotion of Private Participation in Infrastructure Project (促進民間參與公共建設法) and the Government Procurement Act (政 府採購法). Still, the governments are allowed to adopt PFI if the project is not included in The

City has already carried out PFI. However, since Taiwan has not yet adopted VFM, the evaluation of PFI might be with reservation. In this sense, the feasibility if PFI plans for long-term care facilities is still uncertain for Taiwan.

4.5 Discussion

In this section, we would be discussing about the answers to the research questions.

According to the four aspects along with the analysis of results from the institutional traits, the three research questions were answered. Firstly, we learned the differences of long-term care policies between Japan and Taiwan from the public released data and the insights from the interviews. We found out that long-term care system in Taiwan is catching up with that in Japan, and some policies are indeed very similar and successful in a systematic way. However, there are still some details to improve, and they will be further discussed in the following paragraphs.

Also, from the interview data insight seeking and analyzing, we found the elements of long-term care policies, determining the effects of financial sustainability. The industrialization and integration are the two important elements for governance structure, which would affect long-term care financial sustainability; moreover, decentralization, human resources, resource allocation, and the efficiency of the administration process are also the essential elements concerning service delivery. As for the aspect of the finance scheme, it is not an “either-or”

question when it comes to insurance and tax policies toward long-term care. It means there could be a “policy mix”, as long as the tax resources are stable and relevant to long-term care.

For the case in Taiwan, carrying out both insurance and tax policies simultaneously as Japan did, may be the best solution to long-term care financial sustainability since conducting only the tax policy is not considerably stable regarding a long-term plan set for financial resources.

Besides, on the aspect of gaining political supports, it could be a good idea to address the insurance policy. Furthermore, on the aspect of sustainability scheme in both countries, the

important elements include securing of financial resources, retrenchment, prevention, political support, and PPP. The results of this research shows how important these elements are to the issue of long-term care financial sustainability.