Decree 15/2015/ND-CP on Public-Private Partnership Investment Form

Policies name Decree 15/2015/ND-CP on Public-Private Partnership Investment Form
Legislation type Decree of goverment
Issue organization Vietnam Government
Field, industry Investment
Content

The PPP decree will introduce other types of contracts, together with the existing Build, Operate and Transfer (BOT), Build to order (BTO) and Build and Transfer (BT). They are Build, Own and Operate (BOO), Operate and Management (O&M), Build, Lease and Transfer (BLT) and Build, Transfer and Lease (BTL).

In addition, it will also expand the field of investment. With PPP projects, private investors can invest in transportation infrastructure and services, construction for different kinds of projects, from the water and sewage system to real-estate, offices, industrial zones, to cemetery construction.

It also encourages those who want to invest in agriculture and rural development, such as building infrastructure services that connect agricultural work and the production chain.

The State will also offer a viability gap funding for PPP investors. The fund is granted once to projects that are economically justified, but fall short of financial viability. It will help an unviable project become bankable.

We had divided projects into three categories: A, B and C, depending on the scale and capital requirement of the projects. Projects type A and B must follow all investment and tendering procedures in Viet Nam.

The projects under type C are defined by their smaller scale, and would have a capital of less than VND120 billion (US$5.6 million), but still have a good influence on socio-economic development.

They would be mostly agriculture-related projects, executed by local investors. Projects under type C can skip some procedures, such as making a feasible study report, registering for an investment licence or carrying out the pre-tendering process. So they will cost less time and money.

The decree will also pave the way for unsolicited investors boosting their creativity and honouring their contribution for local development. Those investors will be offered a 5 per cent incentive on policies, which is higher than others in the projects.

PPP projects can help avoid the history that State-owned constructors and investors only shake hands to work with each other for their own advantages, ignore the quality of the projects.

First of all, if a State-owned company wants to qualify as a PPP project, it must collaborate with a private company to set up a joint venture company.

Secondly, all the investors, including unsolicited investors must go through a tendering process to acquire these projects. Selectors will choose the best and most effective proposal with the most reasonable price, instead of choosing investors offering the lowest price.

Most of the unsolicited investors are extended support (as much as 5 per cent in incentives over the solicited investors) for winning the tender. But if they still fail in the tender, they must pay for all the self-research for the project themselves. In case they pass the feasibility study of the project, the winner of the tender will return it to unsolicited investors.

Thirdly, disputes will be solved by taking into account not only the local laws, but also international laws and arbitration procedures. This has been done to attract more foreign investors to the PPP projects and to be fair to all stakeholders.

In order to further help investors, especially foreign investors, the State will make no changes in the land use purpose during the entirety of the project, even when the investor is changed. The State will also support site clearance for the projects.