PPP pronouncement to attract investment in Viet Nam

 

The Tendering Management Department under the Ministry of Planning and Investment introduced a decree, governing private-public-partnership (PPP) projects in Viet Nam, at a meeting in Ha Noi.

 

The Director of the Department, Le Van Tang, said Viet Nam needs more capital to build and develop local infrastructure, PPP is considered an effective channel for attracting capital from the private sector.

 

For this reason the Government had issued a decree on February 14 regarding the same which had been in use from April 10 and will better guide all the stakeholders in PPP's projects.

 

It will also substitute the former legal framework for PPP mentioned in other Government documents. The decree has not only resolved the limitations of the former documents, but also introduced more international principles to lure foreign investors for this type of investment in Viet Nam.

 

At the same time PPP projects, which use private capital, will moderate wasteful spending and corruption in infrastructure construction.

 

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 multiply 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 inspires 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 feasibility 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.

 

The projects had been allocated 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 have a good effect on socio-economic development.

 

They would be mostly agriculture-related projects, implemented by local investors. Projects under type C can skip some procedures, such as making a feasible study report, registering for an investment license 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.

 

When he was enquired about the private investors, especially foreigners he said  “I believe that foreign investors will pay attention to PPP projects in Viet Nam.

 

When we drafted the decree, we held a conference in Singapore to invite comments from the country's investors. We also received a lot of counselling from the World Bank, the Asian Development Bank, Japan Bank for International Co-operation and other big international credit institutions. We have also worked closely with Tony Blair's Association in Ha Noi for the PPP draft since early 2014.”

 

He added “Last week, we travelled to San Francisco, the commercial and financial centre of Northern California, United States. The community of investors there welcomed the decree, commenting that it sounded attractive to them.

 

We were also asked to provide more information by a Japanese financial newspaper so that it can disseminate the news to investors in Japan.”

 

Together with the decree, the local Civil Code will also be amended by next year. Once finished, it will work better with the investment policy of Viet Nam. According to him it will provide a big boost and attract more private investors to PPP projects.