Vietnam approves new decree on PPP investment form

Project contract types: PPP is an investment form implemented on the basis of contract between the authorised state agency and the investor, project enterprise to implement, manage, and operate infrastructure project or provide public services. Such contracts may include not only the BOT, BTO and BT contracts, but also BOO (Build – Own – Operate), BTL (Build – Transfer – Lease), BLT (Build – Lease – Transfer), O&M (Operate – Manage) contracts. Other similar contracts may be proposed by the authorised state agency and decided by the Prime Minister under Decree 15.

Applicable Investments sectors: Investment sectors applicable for PPP comprise projects for construction, renovation, operation, business and management of infrastructure facilities, or provision of public equipment or services, including:

• Transportation infrastructure facilities and related services;
• Lighting systems; clean water supply systems; water drainage systems; waste water, waste collection and treatment systems; social housing; resettlement housing; cemeteries;
• Power plants, power transmission lines;
• Infrastructure facilities for healthcare, education, training, vocational training, culture, sport and related services; working headquarters (offices) of state agencies;
• Infrastructure facilities for trade, science and technology, hydrometeorology, economic zones, industrial zones, high-tech zones, and concentrated information technology zones; information technology applications;
• Agricultural and rural infrastructure facilities and development services for connecting production with processing and sale of agricultural products; and
• Other sectors as decided by the Prime Minister.

Eligible PPP projects: Besides the eligible PPP projects as approved and announced by the authorised state agency, the investor/project enterprise may also propose another potential project if such project fully satisfies the following conditions:

• Conformity with the regional developmental master plan, the local socio-economic developmental plan and the investment sector as prescribed;
• Conformity with the investment sectors applicable for PPP;
• Be capable of attracting and accessing commercial capital sources, technology and managerial experience of investors as well as of continuous and stable production of products and services which satisfy quality standards and user demand; and
• Total investment capital must be at least VND20 billion, except for certain exceptional projects in accordance with Decree 15.

Required capital contribution: An investor is required to contribute equity and raise other capital sources to implement the project as agreed in the project contract. The required equity rate of the investor must not be less than 15 percent of the total investment capital (excluding the state participating portion), or in case of a project over VND1,500 billion (approx. US$69.76 million), a progressive rate (saying 15 percent of the portion up to VND1,500 billion, and 10 percent of the portion over VND1,500 billion). Decree 15 also contains regulations of sources and use of state investment capital for PPP project implementation.

Selection methods of investor: To implement an approved PPP project, investor/project enterprises will be selected through open tendering or direct appointment. The selected investor shall then take part in the negotiation with the authorised state agency to sign the project contract, or in case an investment registration certificate for the project is required, to first sign an investment agreement in order to confirm the contents of the draft project contract as well as rights and obligations of the contracting parties in conducting licensing procedures for obtainment of such investment registration certificate, and the establishment of the project enterprise, if applicable.