Draft Law on Public Private Partnership (PPP) Investment

The Ministry of Planning and Investment (MPI) is in the process of developing a draft Law on PPP Investment further improve and upgrade PPP regulations.

According to the MPI in Vietnam, the PPP investment has been deployed since 1997 upon the issuance of the Government’s Decree No. 77/ND-CP regulating investments in the form of BOT contracts applying to domestic investment. After a number of revision to gradually align with international practices, PPP activities and provisions on investor selection are now stipulated in Decree No. 63/2018/ND-CP and Decree No. 30/2015/ND-CP.

According to Report No. 25/BC-CP dated 30/01/2019 of the Government reviewing the implementation of PPP projects, as of now, there are 336 signed PPP projects (including 140 BOT projects, 188 BT projects and 08 projects applying other types of contracts). Also according to this Report, through PPP model, private investment capital has been mobilized to address the urgent need for infrastructure investment.

In addition to these achievements, practical implementation shows that PPP regulations need to be improved or further upgraded, therefore, the formulation of a Law on PPP Investment is necessary in the current context.

New policies proposed in the Draft Law

Learning from international experience, practical application in Vietnam and recommendations from ministries, branches, localities, business community, credit institutions, donors, MPI proposes to add the following policies in the Draft Law:

Regarding the scale of application for PPP project, the MPI has consulted widely with relevant stakeholders on the necessity of regulating a specific limit for PPP Investments. Based on comments received, the majority agreed on the necessity of PPP investment limit and recommended to apply PPP regulations to Group B projects and projects of higher investment scale. According to the current draft Law on Public Investment, projects in areas such as traffic, electricity ... with the scale of VND 240 billion to under VND 4,600 billion are classified as Group B projects. In addition, according to statistics, the majority of PPP projects implemented have a total investment of over VND 200 billion (233/336 projects - 69.34%; if not calculating BT projects, in which projects of over VND 200 billion reached 113 out of 148 BT projects - 76.35%). Therefore, the MPI proposed to apply a limit for PPP investment at VND 200 billion.

Regarding PPP project classification, the Draft Law stipulates projects shall be classified by project size in association with investment approval authority, as follows:

1. a) The National Assembly approves the investment policy of projects using public investment capital of VND 20,000 billion or more.
2. b) The Prime Minister approves the investment policy of the following projects: Projects having a total investment of VND 4,500 billion or more (except for projects specified at Point a, Clause 2 of this Article); Project having a total investment of less than VND 4,500 billion but using public investment capital allocated from the central budget of VND 1,500 billion or more.

Except for projects specified at Points a and b of this Clause, ministers, heads of ministerial-level agencies, agencies attached to the Government, heads of other central agencies and presidents of provincial-level People's Committees shall approve investment policies for projects under their responsibilities and powers.

Regarding the selection of investors, the draft Law has revised some contents on investor selection to match the actual conditions of the country and taking into account experiences in the world, specifically as follows: Simplify investor selection process, issuance of bidding documents, required documents based on the approved feasibility study report. The contents of the investor selection plan (such as the method and form of investor selection; the time of investor selection) shall be approved simultaneously in the feasibility study report (Article 22 of the Draft Law).

The Ministry of Planning and Investment is currently collecting comments on this Draft Law at the Ministry's Portal.