WEF FFD WORKSHOP HONG KONG, 15-16 MARCH 2005Proposal Concept - Applied learningMultilateral development institutions play an important part in legal reforms. Many of these reforms have focused on corporate governance, insolvency laws and laws and regulations that encourage the development of the private sector, both domestic as well as foreign direct investment.In many cases, these reforms have been sponsored by technical assistance programs, or by linking the reforms to financial assistance, where, for instance, the passing of a new law is a condition to drawdown under a loan facility made available to the country in question.However, the issue of new laws does not guarantee a change of practice. Often laws are not fully implemented or enforced. Or laws are issued that do not facilitate the type of activity that they intend to regulate. One important reason for these deficiencies is the lack of understanding by regulators in-country of the subjects covered by the new laws. What exactly is corporate governance and why is it important? How do you structure a project financing, what security rights do lenders expect to get and why do they need those rights? What is the right balance between creditors protection and the right of a company in a bankruptcy?In my view, and in my experience as a legal practitioner in Asia for more than ten years, there is no better way to learn about the law than by “doing deals”. And laws are as much about facilitating deals as they are about protecting the parties (both private and public) with interests in a transaction. A good understanding of the structure and risk analysis of a transaction will allow regulators to create adequate laws and regulations, and help them enforce such laws and regulations; private sector participants will learn how the laws apply to their investment, and what “corporate governance” actually means. Benefits-Understanding of deal structures will avoid new laws being impediments to desired transactions;-Regulators understanding of the laws and regulations as well as their impact on a transaction will facilitate implementation and enforcement of those laws and regulations.Recommended Steps for ImplementationApplied learning by governments and regulators:-provide public sector funding for feasibility study and implementation of public-private partnerships, such as BOT projects and other infrastructure transactions, and the financing of transactions involving the state owned sector (both in the financial sector as well as commerce).-provide support to the public sector that includes the payment of advisers acting for the government or state owned enterprises involved in the transaction. -provide support to the public sector that includes training of relevant government officials involved in the transaction: What is the optimal transaction structure? What aspect of the transaction should and should not be regulated? Are existing laws and regulations sufficient or should they be amended? Should new laws and regulations be issued? Should de-regulation take place?-provide private sector funding to the transactions.Applied learning by the private sector:-provide public sector funding for assistance to SMEs in connection with their efforts to attract bank and private equity financing, including advising on corporate governance, business planning and corporate social responsibility.-provide private sector funding to SMEs.Note: a good example of public/private support to SMEs is the Mekong Project Development Facility (MPDF). This facility is managed by the IFC and funded by ADB and IFC, and a number of donor countries. MPDF provides support to SMEs in Vietnam, Lao PDR and Cambodia. For more information see www.mpdf.org.Marie-Anne Birken28 February 2005-2-