The following are the minutes of the meeting:
Li Pumin:
Good morning, journalists and friends! Welcome to the regular press conference of the National Development and Reform Commission. At today's press conference, Mr. Li Kang, Director of the Department of Regulation and Law, and I will introduce the Measures for the Administration of Franchising Infrastructure and Public Utilities and answer your questions. Now, let me briefly introduce some general situations.
Franchising infrastructure and public utilities is an important reform and institutional innovation, which is conducive to expanding private investment, stimulating social vitality and increasing the supply of public goods and services. Since 1984, Shenzhen Shajiao B Power Plant has been franchised, and the franchise of infrastructure and public utilities has been carried out in China for more than 30 years. Over the past 30 years, a large number of franchise projects have been carried out in various places, and more than 60 local laws, regulations or normative documents have been formulated by relevant departments in the State Council and relevant provinces and cities.
In recent years, in view of the increasing downward pressure on the economy and the decline of traditional growth engines, the state has actively taken effective measures to give full play to the key role of investment in steady growth and promote stable and healthy economic development. Especially since last year, with the approval of the State Council, the National Development and Reform Commission (NDRC) has taken the lead in implementing seven categories of investment projects and six categories of consumption projects, and launched 80 demonstration projects to encourage social capital, especially private investment, to participate in construction and operation. Relevant localities have also extensively attracted social investment and launched a number of government and social capital cooperation projects, which have achieved positive results.
However, in practice, relevant parties, especially market players, have also reflected some problems that need to be solved urgently, mainly: the lack of unified institutional norms at the national level, the imperfect protection mechanism for private investment rights and interests, and the cumbersome administrative examination and approval procedures. These problems affect the enthusiasm of social capital participation and restrict the healthy development of franchising.
The CPC Central Committee and the State Council attached great importance to this. The Third Plenary Session of the 18th CPC Central Committee explicitly called for "formulating specific measures for non-public enterprises to enter the franchise field". The State Council's leading comrades have repeatedly given important instructions, demanding the promotion of project financing, franchising and other modes, attracting more social capital to participate in construction and operation, actively promoting relevant legislation, and providing legal protection for encouraging private capital to enter related fields.
In order to meet the requirements of the CPC Central Committee and the State Council, the National Development and Reform Commission, together with relevant departments, is drafting the Law on Franchising Infrastructure and Public Utilities in accordance with the key points of the 20 15 reform work of the Central Leading Group for Comprehensively Deepening Reform, the five-year legislative plan of the 12th National People's Congress and the legislative plan of the State Council. At the same time, considering the urgency of promoting private investment and stabilizing the demand for economic growth, according to the principle of emergency priority, our Committee, together with the Ministry of Finance, the Ministry of Housing and Urban-Rural Development, the Ministry of Transport, the Ministry of Water Resources and the People's Bank of China, drafted the Measures for the Administration of Infrastructure and Public Utilities Franchising, which was deliberated and adopted at the 89th executive meeting in the State Council and came into force on June 1 this year.
The Measures, which consists of 8 chapters and 60 articles, provides comprehensive and detailed provisions on the scope of application, implementation procedures and policy support for infrastructure and public utilities franchising. The main contents include the following five aspects: First, determine the applicable fields. The Measures clearly stipulate that energy, transportation, water conservancy, environmental protection, municipal and other infrastructure and public utilities shall be franchised. The second is to clarify the scope of application. According to the Measures, domestic and foreign legal persons or other organizations can participate in the investment, construction and operation of infrastructure and public utilities within a certain period and scope through open competition, and obtain benefits. The third is to improve policies and measures. The Measures emphasize that in order to improve the franchise price and charging mechanism, the government can give necessary financial subsidies as agreed, and simplify the procedures of planning and site selection, land use and project approval. The fourth is to strengthen financing support. The "Measures" propose to allow the development of expected income pledge loans for franchise projects, encourage the establishment of industrial funds and other forms of shares to provide project capital, support project companies to set up private equity funds, and issue project income bills, asset-backed bills, corporate bonds, corporate bonds, etc. to broaden financing channels. Policy-oriented and development-oriented financial institutions can provide differentiated credit support with a loan term of up to 30 years. Fifth, strict performance supervision. The "Measures" clearly stipulate that it is necessary to strictly perform contracts, implement joint punishment, protect the legitimate rights and interests of franchisees, stabilize market expectations, and attract and expand effective social investment.
The promulgation of the "Measures" is an important measure to guide and standardize the franchise of infrastructure and public utilities and promote the cooperation between the government and social capital. It is conducive to safeguarding the rights and interests of private capital investment, promoting the transformation of government functions, improving the quality and efficiency of public services, and is of great significance to stabilizing growth, adjusting structure, making up shortcomings and benefiting people's livelihood. In the next step, our Committee will work with relevant departments to implement the measures and supervise and inspect the implementation in various places in a timely manner.
Let me briefly introduce the overall situation here. Please ask questions next. Ask only one question when asking questions, please inform the media you represent.
China economic herald and China Development Network:
I want to ask Director Ali a question. At present, some private investments reflect that the implementation period of franchise projects is long, which requires the long-term cooperation and support of the government. Sometimes, the government fails to fulfill its price adjustment commitment in accordance with the franchise agreement, or once the government changes or the person in charge changes, it may adjust or modify the original franchise agreement, or even some governments directly default. What measures does the Measures take in this regard? Thank you.
Li:
This question raised by this reporter friend is really of great concern to us and relevant departments in the process of drafting the Measures for the Administration of Franchise. Franchise projects often involve a large amount of investment, a long period of time, multiple stakeholders, and many government departments and some intermediaries, so they need long-term stable and predictable cooperation and support mechanisms from the government.
In practice, sometimes it does happen that some local governments and relevant departments do not fulfill their price adjustment commitments in accordance with the franchise agreement. Some promises are good, and I'll give you an interest guarantee. After a few years, the mayor changed and the main person in charge was adjusted, so they refused to admit it. Saying that you don't know about this agreement may lead to the need to modify and adjust the original franchise agreement, and some governments directly breach the contract and turn their backs on people. This situation does exist, and we need to focus on solving it in legislation. Therefore, we believe that the core of franchising itself is the negotiation and agreement between the government and society, taking risks, long-term cooperation, giving full play to their respective strengths and providing high-quality public products and services. In this sense, the government's good faith performance is very important, which is very important for protecting investors' rights and interests, stabilizing franchise expectations and continuously ensuring the supply of public goods and services.
Therefore, the "Measures" attempt to make institutional arrangements in three aspects: First, it emphasizes consultation and cooperation between the two sides. Article 4 of the Measures regards "transforming government functions and strengthening consultation and cooperation between the government and social capital" as one of the four principles of franchising. 18 further stipulates that the government shall sign a franchise agreement with the franchisee selected according to law, and stipulate the rights and obligations of all parties through the agreement. It is a very important requirement to stipulate in advance what responsibilities the government has, what it can and cannot do. At the same time, Article 37 stipulates that if the contents of the agreement really need to be changed, a supplementary agreement shall be signed on the basis of consensus. Sometimes there are some unpredictable factors in the business process, and it is reasonable to supplement and adjust individual terms of the agreement. What needs to be emphasized is that the collegial consultation cannot be decided by both parties, because the government is in charge of public resources and determines public policies, and cannot adjust them as soon as it feels necessary. This needs to be clarified in the Measures. Chapter VI of the Measures on dispute settlement also emphasizes that both parties should negotiate on an equal footing and give play to the mediation role of experts and third-party institutions. The "Measures" reflect the consultation and cooperation between the two sides from the aspects of principles and specific system design.
The second is about strict government performance of obligations. Article 26 stipulates that the parties to a franchise agreement shall follow the principle of good faith and fully perform their obligations as agreed. Article 2 1 stipulates that the government can make commitments in preventing similar competition, providing financial subsidies and supporting infrastructure. Article 34 also stipulates that the government shall strictly perform relevant obligations in accordance with the agreement and provide convenience and support for the franchisee, and particularly emphasizes that the adjustment of administrative divisions, the change of government, the adjustment of departments and the change of responsible persons shall not affect the performance of the franchise agreement. It turns out that we are still pondering that this requirement is quite sharp, and legislative provisions generally do not write like this. However, considering that legislation should solve the problem, we discussed with relevant departments and added such a clause in the Measures. The adjustment of administrative divisions and the change of the person in charge cannot be used as the reason and basis for supplementing, adjusting or abolishing the franchise agreement.
The third is to clarify the government's liability for breach of contract. The government is not only the executor of public power, but also your government has the final say. If it breaks the contract and fails to fulfill its promise according to the agreement reached by both parties in advance, it's also your fault. Article 26 of the Measures explicitly requires the government to continue to perform, take remedial measures or compensate for losses in accordance with the agreement if it fails to fulfill the obligations agreed in the franchise agreement or fails to meet the agreed requirements.
In short, the Measures try to enhance the government's performance awareness, restrain the government's public rights and create a good investment environment through the above-mentioned series of regulations and institutional arrangements, with a view to inciting social investment, stimulating social innovation and creating vitality, and increasing the supply of public goods and services. Thank you.
Guangming Daily:
Just now we talked about strengthening consultation and cooperation between the government and social capital. We also know that the country has recently issued PPP related documents, and various places are also exploring PPP. What is the relationship between PPP and the relevant contents announced this time? Thank you.
Li:
Many aspects pay attention to the relationship between franchising and PPP. Here, I am happy to share some of my preliminary understanding with you. In fact, the cooperation between the government and social capital, the so-called PPP, has a wide range and connotation. We have also done a lot of research, including some domestic and foreign legislative cases and some domestic practices. PPP is also called public-private partnership, including franchising, equity cooperation and government purchasing services. For example, Britain has sold shares in some joint ventures and state-owned enterprises, and some experts, in particular, regard the so-called privatization as a specific category of public-private cooperation. We have studied the cases of many international organizations and countries, including UNCITRAL, Europe, Japan and South Korea. And found that PPP is mainly implemented and completed in the fields of infrastructure and so-called public construction, specifically through franchising. According to the incomplete statistics of the World Bank, since 1990s, China has organized more than 1 1,000 franchise projects in the fields of transportation, energy and municipal administration. According to preliminary statistics, 42% of urban sewage treatment and 20% of public water projects in China are franchised respectively.
Therefore, after the promulgation of the Measures, some experts in the industry believe that the Measures are an important system design to promote the PPP model, so they think that it is the basic law of PPP. I won't comment on this. I think there are several basic considerations why the Measures adopt the concept of franchising instead of PPP: First, the scope of adjustment is relatively clear. Because the connotation and extension of infrastructure and public utilities franchise are relatively easy to grasp. Article 2 of the Measures stipulates the scope of application according to the key areas of promoting private investment, article 3 defines franchising with reference to relevant regulations at home and abroad, and article 5 sorts out and summarizes practical practices and stipulates the basic mode of franchising. I understand that this is different from the nature and connotation of government purchasing services and equity cooperation.
Second, it is easy for all parties to understand and accept. Because the concept of franchising has been used in China for decades, as the Secretary-General just introduced, the concept of franchising has been basically used in the practice of China since the 1980s. Relevant departments of the State Council and various provinces and cities have issued a large number of local laws, regulations and normative documents on franchising, all of which use the concept of franchising. Therefore, continuing to use this term is conducive to maintaining the continuity and implementation of policies and systems.
Third, it conforms to international practice. PPP is the general name and generalization of public-private cooperation. As I said just now, privatization and privatization are both public-private partnerships, and there is also a lack of unified and authoritative understanding in the world. There are also some disputes about the specific scope of the specification. Therefore, in the process of drafting the Measures, we put forward such a name by combining our country's practice and referring to the legislative practices of foreign countries and international organizations. For example, the United Nations Trade Commission's Model Law on Private Financing of Infrastructure, the European Union's directive on the procedures for awarding franchise contracts explicitly use the word franchise, the Russian federal franchise law and the Mongolian franchise law. So I'd like to introduce you to the concept and terminology of franchising in China. Thank you.
Li Pumin:
I also want to introduce some work and achievements of the National Development and Reform Commission in promoting PPP to journalists and friends. According to the requirements of the State Council, since the second half of last year, the National Development and Reform Commission has acted quickly and actively promoted the PPP model, mainly in four aspects:
First, in the document "Guiding Opinions on Innovating Investment and Financing Mechanisms in Key Areas to Encourage Social Investment", a separate part puts forward clear requirements for establishing and improving the PPP model promotion mechanism. This document also systematically expounds the implementation of PPP mode in the name of the State Council document for the first time. Second, in order to strengthen the normative guidance of PPP mode and promote the smooth implementation of PPP projects, the National Development and Reform Commission issued the Guiding Opinions on Cooperation between Government and Social Capital, which put forward normative requirements for PPP project construction from the aspects of applicable fields, operational procedures and operational norms. Third, in order to effectively solve the problem of lack of financial support for PPP projects with matching term and applicable cost, the National Development and Reform Commission and the China Development Bank jointly issued the Notice on Promoting Development Finance to Support Cooperation between Government and Social Capital, proposing that the China Development Bank provide differentiated credit policies for PPP projects at preferential interest rates, with a loan term of up to 30 years. Fourth, in order to do a good job in promoting PPP projects and encourage and guide social investment, the National Development and Reform Commission issued the Notice on Further Improving the Work of Promoting Cooperation Projects between Government and Social Capital, timely summarized the projects promoted by various localities, established the PPP project database of the National Development and Reform Commission, and set up a column on the website of the Commission to publicly release project information, assisting various localities to increase publicity and guide social investment from a wider scope.
With the joint efforts of all relevant parties and localities, the promotion of PPP model has made positive progress. At the beginning, I introduced to you that 80 first investment projects were launched last year to encourage social capital to participate. At present, these projects are progressing smoothly. In the next step, the National Development and Reform Commission will mainly carry out work in two aspects: on the one hand, it will promptly organize and implement the Measures for the Administration of Franchising of Infrastructure and Public Utilities, on the other hand, it will issue typical PPP cases and strengthen case guidance.
Voice of the Central People's Broadcasting Station Economy:
At present, many places reflect that private investors are willing to participate in infrastructure and public utilities franchising, but they lack action and have a wait-and-see mood. Are there any measures to support and encourage private investment franchising in the Measures? Thank you.
Li:
The question you mentioned is also something we often hear. Many private capitals and entrepreneurs reflect the phenomenon of "three doors", namely "glass door", "spring door" and "revolving door". We are also trying to solve this problem in this "method", and we have taken three specific measures.
The first is to strengthen the protection of legitimate rights and interests. Among the four principles of franchising stipulated in Article 4 of the Measures, two particularly emphasize "giving full play to the advantages of social capital in financing, specialty, technology and management, improving the quality and efficiency of public services" and "protecting the legitimate rights and interests of social capital and ensuring the continuity and stability of franchising". In fact, private capital and market participants very much hope that the relevant departments in the State Council will take concerted action to make it clear from the very beginning that the chartered private capital is protected by law. When we entrusted the All-China Federation of Industry and Commerce to solicit opinions from market players, especially private capital, they also called for this principle to be written into legislation. So I think this is very important, not only a principle, but also a concrete action. At the same time, Article 27 of the Measures clearly stipulates that no unit or individual may interfere with the legitimate business activities of franchisees. Articles 36, 38 and 40 respectively stipulate that franchisees have the right to compensation and the priority to renew their contracts.
Second, strengthen the innovation of financing services. Infrastructure investment has a long cycle, high risk and huge amount involved, which requires the strong support and cooperation of financial institutions. Articles 17, 23 and 24 of the Measures put forward some specific financing policies. The first paragraph of 17 stipulates that financial institutions are encouraged to formulate investment and financing plans with legal persons or other organizations participating in the competition. Article 23 stipulates innovative credit methods and credit policies, encourages innovative financial services, gives differentiated credit support to franchise projects, explores the use of project expected income to pledge loans, and supports relevant income as a source of repayment. Article 24 stipulates that securities financing for franchise projects shall be supported, and funds for franchise projects shall be provided through the establishment of industrial funds. Franchise projects are encouraged to broaden financing channels by setting up private equity funds, introducing strategic investors and issuing corporate bonds, project income bonds, corporate bonds and non-financial corporate bond financing instruments. These financing support policies are the refinement and summary of relevant policies of relevant departments in the State Council. When we communicate with the People's Bank of China, the China Banking Regulatory Commission and other departments, we all attach great importance to and support them, hoping to embody and solidify the measures related to financing support in the Measures. Third, strengthen government investment support. In order to give full play to the guiding and leading role of government investment, Article 25 of the Measures stipulates that the relevant departments of the people's governments at or above the county level may explore the establishment of guiding funds for infrastructure and public utilities franchising with financial institutions, and support the construction and operation of related franchising projects through investment subsidies, financial subsidies, loan interest subsidies and other different ways.
China Bidding Weekly:
How will the promulgation of the Measures affect China's financial reform? What role will the "Measures" play in alleviating the financing difficulties of SMEs after promulgation? thank you
Li Pumin:
In order to alleviate the difficulty and high cost of financing for small and medium-sized enterprises, especially small and micro enterprises, the state has taken a series of measures. I think that through the promulgation of the Measures, all funds can be mobilized to participate in the construction of infrastructure and public utilities. This is not only the work of the government, but also the work of the whole society, especially some enterprises. The promulgation of the Measures will play a certain role in improving the financing difficulties of small and medium-sized enterprises, especially small and micro enterprises. Thank you.
China Sankei Shimbun:
In encouraging social investment, the state has repeatedly stressed the need to transform government functions and optimize the administrative examination and approval process. Will there be any new administrative examination and approval items in the franchise process? Thank you.
Li:
In the process of our research and demonstration, including cooperating with the release of relevant departments, market participants have strongly reflected on the problems such as many links involved in franchise projects, long approval period and cumbersome procedures. Last year, we made a survey, and a water enterprise reported a sewage treatment franchise project, which lasted for one and a half years and was stamped with more than 160 chapters before it finally started. These administrative examination and approval constitute the so-called "glass door", which affects the entry of private investment. In order to reduce the burden on franchisees, ensure the project to land as soon as possible, and promote the transformation of government functions, the Measures have grasped a very important starting point and foothold, that is, not to add any administrative approval procedures or approval links to market players, and carried out important institutional innovations.
The "Measures" particularly emphasize that administrative examination and approval should not be illegally increased in the name of franchising, and at the same time, the examination and approval process should be further simplified and optimized, and the examination and approval links should be strictly controlled, which is mainly reflected in three aspects: First, through strengthening departmental coordination, enhancing joint efforts. Franchising involves many laws and regulations, as well as the examination and approval responsibilities of many departments. Therefore, the Measures have made important innovations, emphasizing the establishment of a coordination mechanism, and the review of franchise projects must rely on the departmental coordination mechanism to speed up project implementation. Article 8 stipulates that local governments shall establish a coordination mechanism for franchise departments with the participation of various departments, be responsible for coordinating relevant policies and measures, and organize and coordinate the implementation, supervision and management of franchise projects. Article 13 stipulates that the project proposing department shall rely on the departmental coordination mechanism established by the people's government at the corresponding level to jointly review the implementation plan with other departments. All departments are very supportive and cooperative. The second is to simplify the audit content and avoid repeated audits. For those who need to go through the formalities of planning and site selection, land use and project examination and approval according to law, Article 22 of the Measures specifically stipulates that the relevant departments should simplify the examination contents, optimize the procedures and shorten the time limit for handling, and do not repeat the examination of matters for which the departments have issued written examination opinions. Third, through strict legal control, new administrative examination and approval is prohibited. Article 42 clearly stipulates that the people's governments at or above the county level and their relevant departments shall supervise and manage franchising according to laws, administrative regulations and administrative examination and approval items decided by the State Council, and shall not illegally add administrative examination and approval items or examination and approval links in the name of franchising. Thank you.
China News Agency:
Excuse me, infrastructure and public utilities are related to the vital interests of the broad masses of the people. With the development of franchising in the future, if all of them are built and operated by social capital, how can we ensure that the quality and efficiency of these public services and products will not decline, and how can we ensure that public interests and public safety will not be harmed? Thank you.
Li:
This is a very realistic problem, and places have indeed appeared in the promotion process. After the implementation of franchising, funds came in, and investment, operation, management and operation were all completed by social capital, reducing the burden on some governments. Over time, public interests are not protected, the quality of public services declines, and even some mass incidents are triggered. It should be emphasized that franchising did not completely relieve the obligation of providing public services to the market and enterprises like a burden, and the government gave up. The fundamental purpose of franchising is to provide high-quality and efficient public services for society, market players and the public through the cooperation between the government and social capital.
Therefore, the "Measures" not only ensure the franchisees to obtain reasonable income, but also stipulate the safeguard measures for public interests from four aspects: First, clarify the implementation conditions. 10 Article 9 sets requirements for the standards proposed for franchise projects, stipulating that relevant departments should conform to relevant plans when proposing projects, and the construction and operation standards and regulatory requirements should be clear, and ensure the integrity and continuity of the projects. The project implementation plan should also include basic economic and technical indicators, investment return calculation, feasibility analysis and other basic contents. Articles 1 1 and 12 stipulate the feasibility assessment of franchising and introduce a third-party assessment mechanism. This is a very specific and indispensable operation step. Attracting private investment is not simply to say that you can compete in this field, but to regulate what the government should do, how to implement franchising, and which projects and fields adopt what methods and procedures to carry out franchising from the level and angle of limiting the government's public power.
Second, strengthen administrative supervision. Article 4 1 of the Measures stipulates administrative supervision means such as industry supervision, cost supervision and audit supervision. Article 43 stipulates that the government shall regularly monitor, analyze and evaluate the construction and operation of franchise projects according to the franchise agreement to ensure the quality and efficiency of public services and products.
Third, strengthen social supervision. Article 43 stipulates that the implementing agency shall take public opinions as an important content of monitoring, analysis and performance evaluation. Article 44 of the Measures stipulates the right of public supervision, complaints and suggestions. Article 45 The government and the franchisee are respectively provided with corresponding information disclosure obligations. The government should disclose the policies, measures and supervision mechanism related to franchising in time, and the implementing agencies and franchisees should disclose the whole process information of franchising projects, including providing construction and operation standards, regular monitoring and analysis, performance evaluation and financial accounting. Sunlight is the best preservative, even in the field of franchising. I think it is a very powerful measure to disclose all government information related to franchising, including the investment, construction and operation information of franchisees, to the public according to law, which is conducive to timely supervision by the public.
Fourth, improve the safeguard mechanism. Article 46 stipulates the franchisee's obligation to provide public services without discrimination. Articles 40, 48 and 52 provide measures to ensure the stable and continuous provision of public goods or services under special circumstances. When there is a dispute between the two parties to the agreement, neither the government nor the franchisee can affect the public's normal access to public goods or services. Article 47 also provides for emergency plan guarantee in case of emergency.
In a word, franchising is an important innovation in the mechanism of providing products and services to the public. The role and responsibility of the government as the supervisor and guarantor of public services always exist. We have further improved the system and mechanism in ensuring the sustained and stable supply of public services and safeguarding public interests and safety. Thank you.