Investments in the form of public-private partnerships are one form of investment is recognized in the Investment Law 2014 and the provisions detailed in Decree 63 /2018/ ND-CP on investment in the form of partners public private. According to paragraph 1 of Article 3 of the Decree 63 /2018/ND-CP, this is a form of investment is made on the basis of contract projects between state agencies competent and investors, business projects to implementation, management and operation of infrastructure projects, providing public services. This form of investment applies to public projects of the State.

I. Legal basis

– Law on Investment 2014;

– Decree 63/2018/ND-CP on investment in the form of public-private partnerships;

– Circular 88/2018/TT-BTC.

II. Competence to sign contracts

Competent state agencies: Ministries, Department and provincial People’s Committees shall sign project contracts within their functions, mission and authority. These agencies may authorize the signing of contracts for organizations affiliated to ministries, ministerial-level agencies, specialized agencies of the provincial People’s Committees, district-level People’s Committees.

In case the project under the functions, tasks and powers of many ministries, department, provincial People’s Committees, ministries, departments and provincial People’s Committees agree and report to the Prime Minister for assigning one ministry, branches and provincial-level People’s Committees shall act as the state agencies competent to sign and execute project contracts.

III. Funding for project implementation: Since this is a public private partnership investment, there are two types of funding

Equity: is the investor’s contributed capital to implement the project. In addition, investors can mobilize additional capital sources.

The investor’s equity ratio must not be lower than 15% of the total invested capital. For projects with a total investment capital of over VND 1,500 billion, the equity ratio is determined according to the partial progression principle as follows:

– For projects with a total investment capital of up to VND 1,500 billion, the equity ratio must not be lower than 20 % of this capital portion;

– For projects with a total capital of over VND 1,500 billion, the investor’s equity ratio is determined according to the following principles: For the capital portion up to VND 1,500 billion, the equity ratio must not be lower than 20. %; For the capital portion from over 1,500 billion VND, the equity ratio must not be lower than 10%.

Note: State investment capital for project implementation is not included in the total investment capital to determine the equity ratio.

State investment capital for the participation in the project implementation: including capital from the state budget, government bonds, local government bonds, ODA capital and concessional loans from foreign donors. The State’s investment capital is used to: 

– Supporting the construction of works for projects with business activities, collecting fees from users, but the revenues are not enough to recover investment capital and profits;

– Payment to investors providing services under BTL contracts, BLT contracts and other similar contracts;

– Support construction of auxiliary works, organization of compensation, site clearance and resettlement.

IV. Investment project implementation process

Step 1: Proposed investment project

Ministries, departments, provincial People’s Committees or investors can propose an investment project.

Step 2: Appraisal and approval of the project

Criteria and order for project appraisal and approval are detailed in Circular 09/2018/ TT-BKHDT guiding the preliminary project selection, project formulation, appraisal and approval, and Feasibility study report on investment project under the form of public private partnership. The time limit for appraisal and approval of investment policies for a project proposed by the investor (excluding the time to determine the capital source and the ability to balance public investment capital) is up to 30 days from the date of receive complete and valid dossiers (For projects of group B) and maximum 60 days from the date of receipt of complete valid dossiers (For projects of group A).

Step 3: Publish the project

Within 7 days after the project is approved, the project will be announced on the national bidding network system. For a project proposal with contents related to intellectual property rights, trade secrets, technology or capital mobilization agreements to implement confidential projects, the investor shall reach agreement with the Ministries and agencies. , Provincial People’s Committee on the content announced.

Step 4: Prepare, evaluate, and approve the feasibility study report

Implementing entity: For projects proposed by ministries, branches or provincial-level People’s Committees, ministries, branches and provincial-level People’s Committees shall make a feasibility study report of the project as a basis for preparing invitation documents. Contractor selection of investors and negotiation of project contracts. For projects proposed by investors, the investor shall make a feasibility study report on the basis of a written agreement with the ministry, branch or provincial-level People’s Committee.

Subject of appraisal: The State Appraisal Council or the PPP focal point units are led by Ministers, Heads of ministerial agencies, and Presidents of the provincial People’s Committees.

Subjects of approval: Prime Minister, Ministers, Heads of ministerial agencies, Presidents of the People’s Committees of provinces.

Step 5: Select investor, sign an investment agreement, sign a project contract

Method of investor selection: open bidding or contractor appointment.

Step 6: Register investment and set up project business  

The investor shall apply for an investment registration certificate and establish a project enterprise to implement the project according to the enterprise law.

Step 7: Deploy the project

Step 8: Finalization and handover of the project

From the date of completion of the project work, the investor shall make a settlement for the work construction investment capital. The investment capital audit is conducted by an independent auditing organization selected by the competent state agencies and agreed upon by the investors.

For projects of national importance, group A: 09 months;

For group B projects: 06 months;

For group C projects: 03 months.

For project contracts that provide for the transfer of project facilities, the competent state agency and the investor shall agree in the project contract on the transfer conditions and procedures.