What is public investment? Classification of public investment projects in Vietnam

What is public investment? Classification of public investment projects in Vietnam (Internet image)

1. What is public investment?

Public investment program refers to a combination of goals, duties and solutions designed to carry out socio-economic development objectives in accordance with the Law on Public Investment 2019.

2. Classification of public investment projects in Vietnam

According to Article 6 of the Law on Public Investment 2019, the public investment projects can be classified by their characteristics as follows:

- Projects with construction constituents constitute investment projects in new construction, renovation, upgradation and expansion of existing investment projects, including purchase of project-controlled assets and equipment;

- Projects without construction constituents refer to investment projects in purchasing assets, acquiring transferred land use rights, procuring, repairing and upgrading equipment, machinery and other projects that are not prescribed in point a of this clause.

Note: Public investment projects may be classified by the level of significance and scale into investment projects of national significance, group-A, group-B and group-C investment projects according to criteria referred to in Article 7, 8, 9 and 10 of the Law on Public Investment 2019.

3. Criteria for classification of group-A investment projects in Vietnam

Article 8 of the Law on Public Investment 2019 stipulates the criteria for classification of group-A investment projects as follows:

Except investment projects of national significance specified in Article 7 of the Law on Public Investment 2019, projects falling under one of the following criteria shall be classified as group-A investment projects:

- Those projects falling into the following circumstances, irrespective of the gross investment:

+ National defence and security projects rated top secret;

+ Hazardous and explosive production projects;

+ Investment projects in construction of infrastructure of industrial parks, export processing zones and hi-tech parks;

- Those projects with the gross investment worth 2,300 billion dong or greater in the following fields:

+ Transport, including bridges, seaports, inland ports, airports, railways and national highways;

+ Electric power industry;

+ Oil and gas production;

+ Chemical, fertilizer and cement production;

+ Machine manufacturing and metallurgy;

+ Mining and mineral processing;

+ Construction of residential buildings;

- Those projects with the gross investment worth 1,500 billion dong or greater in the following fields:

+ Transport, except those projects specified in point a of clause 2 of Article 8 of the Law on Public Investment 2019;

+ Water resources and irrigation;

+ Water supply and drainage, waste treatment and construction of other technical infrastructure;

+ Electrical engineering;

+ Production of communication and electronic equipment;

+ Pharmaceutical chemistry;

+ Production of materials, except those projects specified in point d of clause 2 of Article 8 of the Law on Public Investment 2019;

+ Mechanical engineering projects, except those projects specified in point dd of clause 2 of Article 8 of the Law on Public Investment 2019;

+ Post and telecommunications;

- Those projects with the gross investment worth 1,000 billion dong or greater in the following fields:

+ Agricultural, forestry and aquacultural production;

+ National parks and nature reserves;

+ Technical infrastructure of new urban zones;

+ Industry, except for those projects in the industrial sectors specified in clause 1, 2 and 3 of Article 8 of the Law on Public Investment 2019;

- Those projects with the gross investment worth 800 billion dong or greater in the following fields:

+ Health, culture and education;

+ Scientific research, information technology, radio and television broadcasting;

+ Treasure;

+ Tourism, sport and physical activities;

+ Civil construction, except construction of residential buildings specified in point g of clause 2 of Article 8 of the Law on Public Investment 2019;

+ Projects developed in the national defence and security field, except those projects specified in clause 1, 2, 3 and 4 of Article 8 of the Law on Public Investment 2019.

4. Procedures for grant of decisions on investment policies for group-A public investment projects in Vietnam

Article 24 of the Law on Public Investment 2019 stipulates the procedures and documentation requirements for grant of decisions on investment policies for group-A public investment projects under the jurisdiction of provincial-level People’s Councils as follows:

- The provincial-level People’s Council shall assume the following responsibilities:

+ Authorize their specialized agencies or district-level People’s Committees to prepare pre-feasibility study reports;

+ Establish an Evaluation Council composed of the President or Vice President of the provincial-level People's Committee as the Council’s Chair, the agency specialized in management of public investment at the provincial level as the Council’s standing commissioner, and related agencies as the Council’s members, in order to carry out the evaluation of pre-feasibility study reports, funding sources and capital balancing capacity;

+ Command entities specified in point a of this clause to prepare complete pre-feasibility study reports on the basis of evaluation opinions.

- Provincial-level People’s Committees shall petition same-level People’s Councils to consider granting investment policy decisions, including such contents as investment objectives, scale, gross investment, location, timelength, schedule of implementation of a project and design of funding plans.

4.  Procedures for grant of decisions on policies for investment in public investment programs and projects using ODA funds in Vietnam 

Article 25 of the Law on Public Investment 2019 stipulates the procedures and documentation requirements for grant of decisions on policies for investment in public investment programs and projects using ODA funds and preferential borrowings from foreign sponsors as follows:

- Ministries, central and local regulatory authorities recommend public investment programs and projects using ODA funds and other foreign preferential borrowings to the Ministry of Planning and Investment, the Ministry of Finance and other related entities as per law.

- The Ministry of Finance presides over identifying factors of eligibility for preferential treatment, assessing impacts of ODA and preferential borrowings granted by foreign sponsors with respect to debt safety ratios, and determining the domestic financial mechanism under the Law on Public Debt Management.

- The Ministry of Planning and Investment consolidates opinions from Ministries, central and local regulatory authorities concerned, assesses the necessity of each public investment program and project, makes the preliminary assessment of feasibility, socio-economic efficiency and environmental impacts (if any), and impacts of each public investment program or project on the mid-term public investment plan, chooses to recommend appropriate programs and projects to the Prime Minister to seek his decision.

- The Prime Minister considers granting approval of recommended programs or projects.

- As for national target programs or public investment projects of national significance, procedures and processes for granting investment policy decisions shall be subject to provisions laid down in Article 19, 20 and 21 of the Law on Public Investment 2019.

- As for public investment programs put under the Government’s decision-making authority, procedures and processes for granting investment policy decisions shall be subject to provisions enshrined in Article 22 of the Law on Public Investment 2019.

- Regarding group-A public investment projects, procedures and processes for grant of investment policy decisions shall be subject to provisions enshrined in Article 23 of the Law on Public Investment 2019.

- As for public investment programs or projects put under the Prime Minister’s decision-making authority as provided in point b, c and d of clause 4 of Article 17 of the Law on Public Investment 2019, procedures and processes for granting investment policy decisions shall be subject to the following regulations:

+ Governing body sends the Ministry of Planning and Investment an investment policy recommendation report;

+ Ministry of Planning and Investment presides over evaluating the submitted investment policy recommendation report, funding sources and capital balancing capacity before making representations to the Prime Minister;

+ Prime Minister considers granting the investment policy decision.

- As for public investment programs or projects not put under the decision-making authority of entities and persons prescribed in clause 1, 2, 3 and 4 of Article 17 of the Law on Public Investment 2019, procedures and processes for granting investment policy decisions shall be subject to the following regulations:

+ Governing body collects opinions from the Ministry of Planning and Investment, the Ministry of Finance and other related entities about an investment policy recommendation report;

+ Based on these opinions, governing body undertakes the evaluation and decides whether an investment policy decision is made.

- Public investment programs or projects using non-refundable ODA funds and not associated with borrowings shall be exempted from the requirement for preparation of project recommendation reports.

Ngoc Nhi

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