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In 2024, the Vietnamese government is taking significant steps to amend and supplement several decrees that guide the implementation of the Investment Law under the public-private partnership (PPP) method. This move aims to address existing challenges and improve the legal framework governing PPP projects in Vietnam. Deputy Prime Minister Tran Hong Ha has approved the proposal from the Ministry of Planning and Investment to make these amendments, as outlined in Official Dispatch No. 2966/VPCP-CN.
Key Amendments and Responsibilities
The Deputy Prime Minister has tasked the Ministry of Planning and Investment with developing a decree to amend and supplement specific articles of Decree No. 35/2021/ND-CP, dated March 29, 2021, which regulates details and instructions for implementing the PPP Law. This updated decree is expected to be submitted to the Government by September 2024.
Similarly, the Ministry of Finance is responsible for drafting a decree to amend and supplement articles of Decree No. 28/2021/ND-CP, dated March 26, 2021, which stipulates the financial management mechanism for PPP projects. Additionally, amendments will be made to Decree No. 69/2019/ND-CP, dated August 15, 2019, which governs the use of public assets to pay investors under Build-Transfer (BT) contracts. The proposed amendments aim to streamline processes and resolve issues in the current PPP framework.
In the process of drafting these amendments, the Ministry of Planning and Investment and the Ministry of Finance will consult with relevant ministries, including Transportation, Industry and Trade, Construction, Justice, Home Affairs, Foreign Affairs, and Natural Resources and Environment, among others. This collaboration ensures that the amendments are comprehensive, address existing issues effectively, and enhance decentralization and the responsibility of agencies authorized to sign BT contracts.
Background and Current Challenges
The PPP Law, passed by the National Assembly on June 19, 2020, and effective from January 1, 2021, is implemented through Decree No. 35/2021/ND-CP and Decree No. 28/2021/ND-CP. Prior to the PPP Law, Decree No. 69/2019/ND-CP was issued to regulate the use of public assets for BT contracts.
Since the PPP Law and its guiding decrees took effect, 24 new PPP projects have been implemented, including 10 approved projects and 14 in the investment preparation phase. Additionally, 295 PPP projects, including 160 BT projects, are being executed under transitional regulations. Most new PPP projects are large-scale national initiatives. However, several limitations and issues have been identified in the implementation of these decrees, necessitating amendments.
Identified Issues and Proposed Amendments
Decree No. 35/2021/ND-CP:
- Investment Scale: The minimum total investment scale for PPP projects is currently too high, hindering the attraction of small-scale projects with potential. The amendment will lower this threshold to facilitate more investments.
- Payment Provisions: The current rule that the contracting agency can only pay up to 50% of the value of completed subprojects using public investment capital creates funding challenges for investors. Adjustments will be made to allow more flexible payment terms.
- Transitional Regulations: Additional regulations will be introduced to address issues in terminating contracts prematurely, payment settlements, and adjusting feasibility study reports and construction designs.
Decree No. 28/2021/ND-CP:
- Financial Analysis Criteria: Existing criteria for analyzing and evaluating financial plans are incomplete, leading to difficulties in assessing project feasibility. The amendment will provide clearer guidelines.
- State Capital Participation: The current regulations on the ratio of state capital in PPP projects are inconsistent with the PPP Law. The amendment will harmonize these ratios.
- Payment Sources for BTL and BLT Contracts: Specific regulations for the payment sources in Build-Transfer-Lease (BTL) and Build-Lease-Transfer (BLT) contracts are lacking. The amendment will address this gap.
Decree No. 69/2019/ND-CP:
- Use of Public Assets: There are no clear conditions for allowing the use of cleared land or government office headquarters for BT projects. The amendment will set these conditions.
- Handling Advanced Funds: Regulations are needed for managing funds advanced by investors for site clearance.
The proposed amendments to the decrees guiding the implementation of the PPP Law are crucial for overcoming existing limitations and enhancing the effectiveness of PPP projects in Vietnam. By addressing these issues, the government aims to create a more favorable environment for attracting investments, thereby fostering economic growth and development.
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