Decree 35: Guidance on 4 forms of investor selection for PPP projects in Vietnam

Decree 35: Guidance on 4 forms of investor selection for PPP projects in Vietnam (Illustration)

1. Forms of competitive bidding

First, it should be understood that competitive bidding is a form of investor selection in which there is no limit to the number of participating investors and that open bidding must be applied to all PPP projects.

except in the form of competitive negotiation; appointing investors and selecting investors in special cases.

In Clause 2, Article 34 of Decree No. 35/2021/ND-CP, the form of open bidding shall be applied in one of the following cases:

• International competitive bidding with prequalification if at least 06 interested investors submit their EOI, at least 01 of which is established under foreign laws;

• Domestic competitive bidding with prequalification if at least 06 investors that are established under Vietnam’s law submit their EOI;

• International competitive bidding with prequalification if fewer than 06 investors submit their EOI, at least 01 of which is established under foreign laws;

• Domestic competitive bidding with prequalification if fewer than 06 investors that are established under Vietnam’s law submit their EOI.

The detailed process of investor selection for open bidding shall comply with the diagram specified in Section I of Appendix V attached to Decree 35/2021/ND-CP.

2. Form of competitive negotiation

Article 38 of the Law on Public – Private Partnership Investment 2020 (effective from January 1, 2021) and Clause 3, Article 34 of Decree No. 35/2021/ND-CP stipulates 3 cases of applying the competitive negotiation form as follows:

• The project surveys investors' interest in the project when there are special factors that need to be applied: innovative solutions to shorten the progress; complete construction of works and infrastructure systems within a certain period of time; achieve high energy saving and environmental protection for projects in the group with a high risk of adverse impacts on the environment according to the law on environmental protection, with no more than three investors who meet the requirements for project implementation; (Note: In case, after the survey, there are more than 03 investors who meet the project implementation requirements, the determination of investor selection form shall be carried out in the form of open bidding)

• High-tech application projects on the list of high technologies prioritized for development investment in accordance with the law on high technology;

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  New technology application projects in accordance with the law on technology transfer.

Regarding the detailed process of investor selection for competitive negotiation, follow the diagram specified in Section II of Appendix V attached to Decree 35/2021/ND-CP.

3. Form of Investor designation

In Article 39 of the Law on Public – Private Partnership Investment 2020, the appointment of an investor shall be applied in the following cases:

• The project needs to meet the requirements for national defense and security and to protect state secrets.

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  The project needs to immediately select a replacement investor according to regulations to ensure continuity during project implementation.

From there, the project-approving authority decides to appoint an investor. In the case of appointing an investor for a project that needs to meet the requirements of national defense, security, and protection of state secrets, before appointing an investor, it must be approved by the Prime Minister on the basis of the opinions of the Ministry of National Defense and the Ministry of Public Security.

Regarding the detailed process of investor selection for competitive negotiation, follow the diagram specified in Sections IV and V of Appendix V attached to Decree 35/2021/ND-CP.

4. Investor selection in special cases in Vietnam

In the event that a PPP project has specific and separate conditions that cannot be applied to investor selection forms, open bidding; During competitive negotiations and appointment of an investor, the competent authority shall submit it to the Prime Minister for consideration and decision on an investor selection plan.

In Clause 2, Article 40 of the LLaw on Public – Private Partnership Investment 2020, the dossier to be submitted to the Prime Minister includes the following contents:

• Basic information about the project

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  An explanation of specific and separate conditions of the project;

• Investor selection plan in special cases, including: steps for investor selection; Specific solutions to solve the specificity and distinctiveness of the project are proposed to ensure the investment efficiency of the project.

Note: For projects applying to select domestic investors but needing to promote the use of advanced technology and techniques and good international management experience, if domestic investors enter into joint ventures with investors established under foreign laws or use partners who are foreign contractors to participate in bidding, the investor must be in the country and must be the leading member of the consortium. The language used in investor selection is Vietnamese.

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