Vietnam: 8 notable regulations specified in the Law on PPP Investment 2020

Vietnam: 8 notable regulations specified in the Law on PPP Investment 2020 (Internet image)

1. PPP investment sectors under the law in Vietnam

According to Clause 1, Article 4 of the PPP Law 2020, PPP investment sectors include:

- Transportation;

- Power grids, power plants, except hydropower plants and those subject to the state monopoly requirement as provided in the Law on Electricity;

- Water resources and irrigation; clean water supply; water drainage and wastewater treatment; waste management and disposal;

- Healthcare; education – training;

- Information technology infrastructure.

For fields such as: culture; sport; tourism; science and technology, hydrometeorology; Development services linking production associated with processing and consuming agricultural products;... will not be allowed to continue investing in this form.

2. Minimum investment capital requirement for a PPP project in Vietnam

According to Clause 2, Article 4 of the PPP Law 2020, the minimum investment capital requirement for a PPP project shall be prescribed as follows:

- The minimum capital requirement of not less than VND 200 billion shall be imposed on projects in the following sectors: Transportation;  Power grids, power plants, except hydropower plants and those subject to the state monopoly requirement as provided in the Law on Electricity; Water resources and irrigation; clean water supply; water drainage and wastewater treatment; waste management and disposal;

- In case where projects are executed in areas facing socio-economic difficulties or extreme socio-economic difficulties under the provisions of laws on investment, they must meet the minimum capital requirement of not less than VND 100 billion;

- The minimum capital requirement of not less than VND 100 billion shall be imposed on the projects in the following sectors: Healthcare; education – training;

- Regulations on the minimum capital requirement laid down in point a and b of this clause shall not apply to O&M projects.

3. The Supreme People’s Procuracy and Supreme People’s Court of Vietnam have the authority to sign PPP contracts

Specifically, Article 5 of the PPP Law 2020 stipulates that competent authorities and authorities signing PPP contracts include:

- Ministries, Ministry-level agencies, governmental agencies, central bodies affiliated to political organizations, Supreme People’s Procuracy, Supreme People’s Court, State Audit, Office of the President, Office of the National Assembly, and central bodies of Vietnam Fatherland Front and socio-political organizations; Provincial People’s Committees; Agencies and organizations set up by the Government and the Prime Minister, and assigned make state budget estimates according to the provisions of law on state budget

- Entities and units authorized by competent authorities to sign contracts according to regulations.

In cases where projects fall under the management of multiple competent authorities, or in case of change of competent authorities, these authorities shall report to the Prime Minister to seek his decision to designate an authority as the competent authority.

4. Amendments to classification of PPP projects in Vietnam

Specifically, according to Clause 3, Article 4 of the PPP Law 2020, PPP projects shall be classified by the jurisdiction to issue investment policy decisions, including:

- PPP projects falling under the National Assembly’s delegated authority to grant investment policy decisions;

- PPP projects falling under the Prime Minister's delegated authority to issue investment policy decisions;

- PPP projects falling under the authority to grant investment policy decisions delegated to Ministers, heads of central authorities and other entities specified in clause 1 of Article 5 in this Law;

- PPP projects falling under the authority to grant investment policy decisions delegated to provincial People’s Councils.

Currently, PPP projects are classified into nationally important projects, group A, group B and group C projects according to criteria prescribed in the law on public investment.

5. Amendments to regulations on authority to issue decisions on policies for investment in PPP projects in Vietnam

Specifically, Article 12 of the PPP Law 2020 stipulates the authority to issue decisions on policies for investment in PPP projects as follows:

- The National Assembly shall be vested with authority to issue decisions on policies for investment in PPP projects that meet one of the following criteria:

+ Using public investment capital worth 10,000 billion dong or more;

+ Having substantial environmental impacts or posing potential risks in making serious environmental impacts, including nuclear power plants; using land subject to the requirement for conversion of uses from land for cultivating specialized forests, upstream protection forests or border protection forests which covers an area of 50 hectares or more; from land for protective forests used as wind or sand screens, wave breakers, or sea reclamation land, which covers at least 500 hectares; from land for production forests which covers a minimum area of 1,000 hectares;    

+ Using land subject to the requirement for conversion of uses from arable land covering an area of 500 hectares or more for growing wet rice during at least two cropping seasons;

+ Resettling at least 20,000 inhabitants in mountainous areas or at least 50,000 inhabitants in other regions;

+ Requiring special legal frameworks or policies subject to the National Assembly's decisions.

- Except for the projects specified in Clause 1 of this Article, the Prime Minister shall be accorded authority to grant decisions on investment policies for PPP projects satisfying one of the following criteria:

+ Resettling at least 10,000 inhabitants in mountainous areas or at least 20,000 inhabitants in other regions;

+ Using central budget capital managed by ministries or central agencies with total investment equivalent to that in Group A projects in accordance with the law on public investment, or using ODA loans and preferential loans from foreign sponsors;

+ Investment in new construction: airports and airfields; runways of airports and airfields; passenger terminals of international airports; cargo terminals of airports and airfields with an annual cargo handling performance of 1 million tonnes or more;

+ Investment in new construction: harbors or port areas inside special seaports; wharves and port areas inside grade-I seaports with total investment equivalent to that in Group A projects in accordance with the law on public investment.

- Ministers, Heads of central authorities and other agencies shall be authorized to grant decisions on investment policies for PPP projects under their management, except for the projects under the authority of the National Assembly and the Prime Minister.

- Provincial People’s Councils shall be accorded authority to make decisions on policies for investment in PPP projects under their jurisdiction, except for the projects under the authority of the National Assembly and the Prime Minister.

6. Amendments to regulations on equity contribution in Vietnam

According to Article 77 of the PPP Law 2020, investor's equity contribution must be at least 15% of total investment in a project, excluding State capital used for supporting the building of construction works and infrastructure systems and State capital paid for compensation, site clearance, support, resettlement; support for construction of temporary works Investors must make equity contribution according to the schedule agreed upon in the PPP contract.

Currently, according to Decree 63/2018/ND-CP, the rate of equity shall be determined according to the following rules:

- With regard to a project funded by total investment of up to VND 1,500 billion, the equity shall account for at least 20% of such total investment;

- With regard to the project funded by total investment of more than VND 1,500 billion, the rate of equity is determined according to the following rules: the rate shall account for least 20% for the portion of equity up to VND 1,500 billion; and the rate shall account for at least 10% for the portion of equity more than VND 1,500 billion.

7. Procedures for handling of petitions arising from investor selection activities in Vietnam

According to Article 96 of the PPP Law 2020, the procedures for settlement of petitions about issues arising in the process of selection of investors shall be subject to the following regulations:

- The investor sends a written petition to the bid solicitor from the date of occurrence to the date prior to the announcement of the results of investor selection;

- The bid solicitor must send a written document stating settlement of the petition to the investor within 07 working days from the date of receipt of the written petition from the investor;

- In case where the bid solicitor does not have a written document stating settlement of the petition or the investor disagrees about petition settlement results, the investor shall have the right to send the petition to the competent authority within 05 working days from the deadline for sending their reply or the date of receipt of the bid solicitor's written document on settlement of the petition;

- The competent authority must send a written document stating settlement of the petition to the investor within 07 working days of receipt of the written petition from the investor.

Procedures for settlement of petitions pertaining to investor selection results shall be subject to the following regulations:

- The investor must send a written petition to the bid solicitor within 10 working days of receipt of the notification of investor selection results;

- The bid solicitor must send a written document stating settlement of the petition to the investor within 15 working days of receipt of the written petition from the investor;

- In case where the bid solicitor does not have a written document stating settlement of the petition or the investor disagrees about petition settlement results, the investor shall have the right to send the written petition to the competent authority and the standing organ of the Petition Settlement Advisory Board within 05 working days from the deadline for sending their reply or the date of receipt of the bid solicitor's written document on settlement of the petition.

The central-level Petition Settlement Advisory Board shall be established by the Minister of Planning and Investment; the Petition Settlement Advisory Board at the Ministry, central authority, other body level shall be established by Ministers, heads of central authorities or other bodies; the Petition Settlement Advisory Board at the local level shall be established by the President of the provincial People's Committee;

- Upon receipt of the written petition, Petition Settlement Advisory Boards shall have the right to request investors or bid solicitors and concerned entities to provide information to consider and report in writing to competent authorities on methods and contents of the response to the petition within 30 days of receipt of the written petition from the investor;

- Where necessary, the Petition Settlement Advisory Board shall, based on the investor's written petition, request the competent authority to consider temporarily suspending the bid. In case of acceptance of the petition, within 05 working days of receipt of the written document from the Petition Settlement Advisory Board, the competent authority must send a written notification of temporary suspension of the bid. The written document stating temporary suspension of the bid must be sent to the bid solicitor or the investor within 05 working days from the date of issuance of the written notification of temporary suspension of the bid. The duration of temporary suspension of the bid shall range from the date of the bid solicitor's receipt of the written notification of temporary suspension to the date of the competent authority's issuance of the written document stating settlement of the petition;

- The competent authority must issue the decision on settlement of the petition regarding results of investor selection within 10 working days of receipt of the written opinion from the Petition Settlement Advisory Board.

Note: If an investor submits a petition directly to a competent authority without compliance with the petition settlement procedures prescribed, the written petition shall not be considered for further action.

8. Specific regulation on forms of handling of violations arising from PPP investments in Vietnam

According to Article 98 of the PPP Law 2020, violations arising from PPP investments will be handled as follows:

- Prohibit organizations and individuals that commit prohibited acts related to PPP investment

- Cancel or suspend the bids, refuse to recognize the results of investor selection or declare that decisions of competent authorities, contracting parties or bid solicitors are null and void when detecting any violation against the Law.

- Cancel or suspend contracts whenever detecting any breach of contract or regulations laid down herein and other relevant legislation.

- In addition to sanctions against violations above, entities and persons committing violations against the law on PPP investments shall be disciplined or subject to administrative penalties or criminal legal proceedings, depending on the nature and extent of their violations.

More details can be found in the Law on Public – Private Partnership (PPP) Investment 2020, which comes into force from January 1, 2021.

Le Vy

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