Risk Management and Governance for PFI Project ... - Title Page - MIT

Cause of problems
● Optimistic demand forecast: there is the opinion that the largest reason for the
questionable demand forecast was the political impact 6 .
It should be noted that because the actual traffic volume was far less than the estimated volume, a
social experiment of reducing the fee charge (e.g., lowering from the original ¥ 3,000 to ¥ 800 for
each ordinary vehicle) has been conducted since 2009. In this current year (2012), the traffic
volume has increased by 65% compared with 2008, which was just before the start of the social
experiment. (Chiba Prefectural Government, 2012)
Summary
The "min-katsu" policy carried out by Prime Minister Nakasone in the 1980s was aimed at
expanding domestic demand under the circumstances of the time, such as the slump in the domestic
economy, the harsh requests to reduce the trade surplus from abroad, and the fiscal reconstruction.
It has been noted that although the idea of "min-katsu" was good, there was insufficient knowledge
to promote it. It has also been said that despite the successful introduction of private funds, the
inflexible scheme decided by the government and the irresponsible system that resulted from the
interdependence between public and private sectors led to the failures and problems of the projects.
Through the experience of these failures, Japan recognized a great principle. That is, the national
and local governments should not expect private sectors to give priority to public interests, and the
private sectors should not rely on the public sectors to avoid business risks in the setting of public
credibility. There was always an optimistic idea that they could succeed by the "ambiguous trust
relationship" between the public and private sectors.
In the late 1990s, a new mechanism was introduced that could control and incorporate both sectors
which have inherently different natures. The next chapter will present an overview of the new
mechanism, PFI, including its introduction and its development history.
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6 It was noted that the project was promoted on the abstract pretext of regional development and excursion of technology
postponing the discussion of risk allocation. (Hasegawa, Public Works - Its Ideal and Reality-)
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