PM Approves PPP Pilot Program for Transportation Infrastructure

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Nov. 22 – Vietnam’s government has approved guidelines for a new public-private partnership (PPP) pilot program that will initially serve as a model for all projects involved in the development of the nation’s transportation infrastructure.

In order for a project to be eligible for the PPP program under the new regulations, it would need to be identified as “essential” to economic development, follow the prerequisite conditions of scale, prove a capacity to recover investment capital and efficiently use financial resources, show potential for taking advantage of the private investor’s technology, and have managerial or operating experience and expertise.

Opportunities are expected to include transportation infrastructure areas such as airports, public transit systems, roads and seaports.

The regulations further stipulate that funds raised by the private partner can include its own equity and financing from both domestic and foreign sources, but that the acquisition of capital absolutely cannot result in public debt.

Furthermore, the private partner can finance up to 70 percent of its investment, but any borrowing of funds is done so without any government guarantee. Contributions from the state cannot account for more than 30 percent of the project’s total investment, unless prior approval is attained from the prime minister.

Private enterprises investing in this PPP program will receive preferential tax treatment and will be exempt from land use fees. Imported material and equipment necessary for the project would also receive preferential tax treatment in concordance with the Law on Import and Export Taxes.