Overview of PFI Act Amendments
Chronological overview of major amendments from 1999 enactment to 2022
The unit costs and amounts that follow are assumptions this article makes, not published statistics. They move a great deal with the building, the area and the line of business, so replace them with your own quotes and comparable local results.
Major PFI Act amendments (since 1999 enactment)
7 times
Cumulative PFI projects (end of FY2024)
1,154 projects
Action Plan project volume target (ten years from FY2022 to FY2031)
¥40 trillion
Ten-year project count target set by the 2024 revision (all priority areas)
650 projects
The 2026 revision sets project count targets per priority area instead
The PFI Act (Act on Promotion of Private Finance Initiative) has undergone multiple amendments since its 1999 enactment to adapt to changing socioeconomic conditions. The major amendments in chronological order:
| Year | Key Content |
|---|---|
| 2001 | Administrative property lending provisions |
| 2005 | Groundwork for public facility operating rights (concession) system |
| 2011 | Concession system creation, private proposal system introduction |
| 2013 | Establishment of the PFI Promotion Corporation |
| 2015 | Secondment system for public employees in concession projects |
| 2018 | Water/sewerage concession promotion, enhanced municipal support |
| 2022 | Facility scope expansion, concession procedure simplification, designated manager coordination |
This article focuses on the December 2022 amendment and the June 2024 PPP/PFI Promotion Action Plan revision, analyzing their practical impact on municipal operations.
Three Pillars of the 2022 Amendment
Detailed analysis of facility scope expansion, concession promotion, and designated manager coordination
The PFI Act amendment promulgated on December 16, 2022 comprises three pillars. Implementation was staggered: (1) on December 16, 2022, (3) on January 16, 2023, and (2) on June 15, 2023.
Pillar 1: Facility Scope Expansion
Sports facilities and assembly facilities were explicitly added to the definition of "public facilities, etc." in Article 2, Paragraph 1 of the PFI Act.
While PFI projects for sports and assembly facilities were already possible, the statutory clarification formalized their institutional standing. This amendment was driven by the "Stadium and Arena Reform" promoted by the Japan Sports Agency and the Ministry of Economy, Trade and Industry.
The Cabinet Office published Stadium and Arena Concession Utilization Guidelines in January 2023, targeting the development of 20 venues by 2025.
Pillar 2: Concession Promotion Enhancement
Procedure simplification was introduced for concession (public facility operating rights) projects. Specifically, when designating a concession operator as a designated manager, the previous requirement for assembly resolution was relaxed — post-hoc reporting is now sufficient if special provisions are made in the relevant ordinance, as a special exception to the Local Autonomy Act.
This addresses the practical barrier created by dual procedures for concession operators and designated managers, aiming to reduce administrative burden and accelerate project implementation.
Additionally, pricing flexibility for concession operators serving as designated managers was enhanced. New provisions enable flexible fee setting tailored to concession project characteristics, relaxing the previous constraint of "within the range prescribed by ordinance."
Pillar 3: Other Institutional Improvements
- Relaxation of prefectural governor involvement in fee approval for concession operators
- Strengthened information disclosure requirements for concession operators
2024 Action Plan Revision
Upward revision of project count target and four priority policy areas
On June 3, 2024, the 20th Private Finance Initiative Promotion Conference adopted the PPP/PFI Promotion Action Plan (Revised 2024 Edition). The four key revision points:
1. Upward Revision of Project Count Target
The 10-year project count target was raised to 650 projects, reflecting the pace of PPP/PFI implementation exceeding the original plan.
2. Priority Area Reorganization
Self-Defense Force facilities were newly added as a priority area, alongside existing priorities (roads, ports, airports, railways, public housing, sewerage, waste treatment, waterworks, urban parks, educational facilities, etc.).
3. Cross-Sector and Wide-Area PPP/PFI Promotion
A policy promoting bundled management of multiple facilities and wide-area collaboration across multiple municipalities was articulated. This aims to secure economies of scale for private participation even when individual facilities are small.
4. Ensuring Appropriate Private Operator Profits
The revised plan newly incorporates building an environment where private operators can earn appropriate profits and promoting calculation of appropriate prices. This addresses the current situation where cost-reduction-focused procurement conditions are dampening operator entry motivation.
Impact on Municipal Practice
Lowered Priority Review threshold, profit assurance, and changes to practical workflows
Expanded Priority Review Procedure Scope
The guideline revision of 4 June 2025 widened the range of municipalities asked to formulate a Priority Review Procedure from "population 100,000+" to "population 50,000+". The 2024 Action Plan, at that point, still asked municipalities of 100,000 or more to formulate one promptly.
Municipalities with populations of 50,000 or more are asked to formulate a Priority Review Procedure under the guidelines and to carry out priority review accordingly, in light of local circumstances. The newly covered band, populations of 50,000 to 100,000, holds 237 municipalities, of which 41 (17.3%) have formulated a procedure. These municipalities now face the practical challenge of building organizational frameworks for PPP/PFI review.
The Ministry's research found that smaller municipalities report higher rates of "insufficient understanding, know-how, and staffing" as barriers. Expanded training and support for small and medium municipalities is essential alongside the threshold reduction.
Concession x Designated Manager Practical Response
The 2022 amendment's simplified procedures for designating concession operators as designated managers require ordinance amendments. Affected municipalities need to coordinate amendment timing with assembly explanation preparation.
Appropriate Price Calculation and Procurement Condition Review
The policy of ensuring appropriate operator profits requires specific municipal actions: setting minimum management fee levels and introducing price escalation clauses. With ongoing increases in labor and material costs, establishing price revision mechanisms during contract periods is urgent.
Future Outlook
Small concession institutionalization, wide-area collaboration, and cross-sector project expansion
Institutional Clarification of Small Concessions
Small concessions were conceptually defined in November 2023 but lack established legal positioning. Future PFI Act amendments or new guidelines may provide institutional foundations.
Digital Technology Adoption
BIM/CIM, IoT sensors, and AI for facility maintenance and monitoring are expected to advance, with movements to include digital technology utilization as evaluation criteria in PFI procurement.
Wide-Area Collaboration Acceleration
In depopulating rural areas where single-municipality PPP/PFI scale merits are limited, multi-municipality wide-area PPP/PFI is expected to expand. The Action Plan's "cross-sector and wide-area PPP/PFI promotion" provides institutional backing for this direction.
Related Articles
PPP/PFI Introduction for Municipal Officials
From PPP vs. PFI to the full landscape of seven methods
Optimal PPP/PFI Method Selection by Municipality Size
Method selection guide from populations under 50,000 to designated cities
PPP/PFI: Seven Methods Compared
Cross-cutting comparison of Designated Manager, Park-PFI, Small Concession, PFI Act, and more
What to do next
In the order you can act on them, within the week you read this.
| # | What to do | Where | Rough effort |
|---|---|---|---|
| 1 | Establish the project cost. Above 1 billion yen including construction, or 100 million a year for operations alone, changes what priority review covers | Budget team | Half a day |
| 2 | Check whether your organisation has a priority review regulation. If not, follow the Cabinet Office guidelines | Planning team | One week |
| 3 | Sort facilities by whether user charges are levied, or could be. If they can be, operating rights come into view | Each department | One week |
| 4 | Use steps 1–3 to narrow the method: Park-PFI for urban parks, a small concession for other idle facilities | Departmental decision | — |
| 5 | Pick the first project and run market sounding. Do not advance every facility at once | Private operators | 2–3 months |
Step 1 takes half a day and decides whether review is mandatory at all.
References
PFI Act Amendment (Act No. 94 of 2022) — Cabinet Office Private Finance Initiative Promotion Office (2022)
PPP/PFI Promotion Action Plan (Revised 2024 Edition) — Cabinet Office Private Finance Initiative Promotion Office (2024)
PFI Fundamentals and Recent Legal Amendments — Business & Law (2023)
Analysis of the PPP/PFI Promotion Action Plan (Revised 2024 Edition) — Sumitomo Mitsui Trust Research Institute (2024)
