New Law on Public-Private Partnership in Vietnam

On June 18, 2020, the National Assembly of Vietnam passed the long awaited Law on Public-Private Partnership (PPP Law) which establishes an umbrella legal framework for all PPP projects and aims to attract more private investment to the development of Vietnam’s infrastructure. The PPP Law will take effect on January 1, 2021, and replace the previously issued PPP regulations under Decree 63/2018/ND-CP of May 4, 2018 (Decree 63). Although it was hoped that the PPP Law would usher in a legal framework on PPP more in line with international practices and address the shortcomings of Decree 63, the PPP Law does not go as far as many market commentators had anticipated, and may not drive private sector developers, investors and lenders to support PPP to the extent that Vietnam’s authorities had intended. Time will tell. This article looks at some of the key changes under the Law, some positive and some less so, with respect to making the PPP framework more appealing to private sector developers, investors and lenders.

Sectors eligible for PPP projects

The PPP Law has narrowed the sectors eligible for PPP projects (Permitted Sectors) and, notably, the Prime Minister no longer has the discretion to permit any additional sectors for PPP investment. The regulated sectors are now as follows: 

(i) transportation;

(ii) power plants and power transmission lines, except hydropower plants and monopoly cases of the State under the Law on Electricity;

(iii) irrigation works, clean water supply, water drainage and wastewater treatment, and waste treatment;
(iv) healthcare, education and training; and,

(v) information technology infrastructure.

Minimum investment requirements

The PPP Law imposes the following minimum investment capital requirements for PPP projects, with the Ministry of Planning and Investment noting in forums the preference for larger scale projects:

(i) VND 100 billion (approximately USD 4.35 million) for PPP projects in healthcare, education, and training;

(ii) VND 200 billion (approximately USD 8.7 million) in other Permitted Sectors, but VND 100 billion if the projects are located in areas with difficult socio-economic conditions or extremely difficult socio-economic conditions (as defined in the Investment Law); and,

(iii) no minimum investment capital is required for PPP projects implemented under Operations and Maintenance (O&M) contracts.

https://vietnamlawmagazine.vn/new-law-on-public-private-partnership-in-vietnam-27533.html

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