New PPP decree coming soon in Vietnam

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New PPP decree coming soon in Vietnam

According to sources, Vietnam's decree on investment in the form of public private partnership (PPP) is being completed and will be issued soon.

Vietnam has had PPP regulations since 1997 with Decree 62 for domestic investors. However these regulations have not attracted foreign investment on PPP basis. This new PPP decree seeks to provide more clarity and incentives for private investors by bringing all the PPP regulations under only one decree.

The current Vietnam PPP regulations are composed by:

  • Decree 62 for domestic investors - 1977
  • Decree 77 for foreign investors - 1978
  • Decree 108 regulated BOT, BTO and BT projects - 2009
  • Decree 24 amended decree 108 - 2011

To prevent corruption and make the process more transparent, investors seeking to pursue a PPP investment project will be selected by open international tendering.

Other new features of the draft law are:

a) PPP Project forms: The previously available forms of PPP projects were build-operate-transfer (BOT), build-transfer-operate (BTO), and build-transfer (BT). The new decree is expected to add the following forms of PPPs: build-own-operate (BOO), build-transfer-lease (BTL), build-lease-transfer (BLT) and operate and manage (O$M).

b) Fiscal Incentives for Unsolicited Projects: The current draft of the Investor Selection Decree provides incentives for unsolicited projects that are not on the government's project lists. The proposing investor will receive a 5% advantage over other bidders. However, these advantages may only be applicable to smaller projects, and a decision is awaited for bigger projects.

c) Choice of foreign law and dispute settlement: Vietnamese law shall still remain the basic governing law, but choosing foreign law can be negotiated. The draft PPP Decree sets out clearly where project contracts can be governed by foreign law, namely contracts involving a foreign party and government agency guarantee contracts.

d) Publication and status updates: Publication obligations are meant to create more transparency for PPP projects. Once a PPP project is approved, it must be published within 7 days on the government's national procurement website.

According to the Vientnam's Ministry of Planning and Investment, the estimated capital needed for infrastructure construction in Vietnam by 2020 is calculated as U$400 billion, of which half is planned to be mobilized from the private sector. Energy, waste, water treatment and transportation present major challenges.

Vietnam's Ministry of Transportation has recently announced an investment plan for the development of the Long Thanh Airport though a PPP project. The total project investment is estimated at US$7.5 billion.

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