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Vietnam improving PPP framework

Publication Date : 19-03-2014


Vietnam will improve the legal framework to create a favourable environment for investors in, the state and public service users of public-private partnership (PPP) projects, a Ministry of Planning and Investment senior official said.

Le Van Tang, head of the ministry's bidding management department, addressed a consultation workshop held yesterday to discuss the draft decree on PPP.

He said that at present, Vietnam has a set regulations governing cooperation between the State and the private sector, including the 2009 Decree No. 108/2009/ND-CP on investments in build-operate-transfer, build-transfer-operate and build-transfer contracts and the 2010 Decision No. 71/2010/QD-TTg that provided rules on pilot investments in PPP projects.

Tang clarified that the shortcomings of these rules became evident only during their implementation, compelling Vietnam to improve the legal framework governing these areas. The goal is to mobilise the resources of the private sector now that the huge demand for infrastructure spending could not be met by the government, which has been tightening its expenditure. 

Last September, Vietnam's Prime Minister approved the development of a PPP decree that consolidated all rules pertinent to the PPP frmework, including Decree No. 108 and Decision No. 71. So far, three drafts of the PPP decree have been introduced and the fourth draft is expected to be submitted for the Justice Ministry's review next month. It will later be submitted to the government for approval in May.

Minister of Planning and Investment Bui Quang Vinh, who is also the leader of the drafting committee of the PPP decree, said those reviewing and preparing the decree should consider themselves investors so they could gauge expectations.

Under the third draft decree released yesterday, the PPP investment was defined as the implementation of projects based on a contract on the rights, responsibilities, and risk allocation between an authorised state agency and the investors in the construction, restoration, modernization, expansion, management and operation of infrastructure facilities, and the provision of public services in the transportation, water supply and drainage, power generation and healthcare sectors.

It also provides for a separate chapter on investor selection and the signing of investment agreements and project contracts,  as well as a chapter on the responsibilities of parties with respect to project preparation and implementation.

Tang said the procedures for the PPP projects would be more simplified to make them more favourable for investors.

"Any public investment projects that can be executed under the form of PPP investment will be given priority," Tang added.

Under the draft, investors in PPP projects are entitled to incentives, support and investment guarantees. Incentives include reliefs on corporate income tax and import tax, if proponents will import materials they will need for PPP projects.

Investors will also be exempted from land use fees for the areas earmarked by the state for PPP projects or from paying land rent for the entire term of the project implementation.

The PPP decree will not impose the proportion of the state's contribution in PPP projects, as it will be determined based on the cost of the projects. Under existing rules, particularly Decision No. 71, the state's contribution is set up to 30 percent of the project cost.

As per Decision No. 71, investors are not encouraged to submit the PPP project proposal and only the Prime Minister can approve PPP projects. The PPP decision is expected to fix the shortcomings of the existing rules and make the PPP rules at par with international practices.


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