Vietnam Adds New Forms of Public-Private Partnership
HANOI – Starting April 10, 2015, the forms of build, own, and operate (BOO); build, transfer, and lease (BTL); build, lease, and transfer (BLT); and, operate and manage (O&M) will be added to the list of acceptable types of Public-Private Partnership (PPP) allowable in Vietnam.
The Vietnamese Government announced the new changes in Decree No. 15/2015/NĐ-CPI, which consolidates the two previous regimes which were laid out in Decree 108 and Decision 71. The new partnership forms will be in addition to the existing forms: build, operate, and transfer (BOT); build, transfer, and operate (BTO); and build-transfer (BT).
Decree 15 reflects the strong commitment of the Vietnamese government in promoting infrastructure development. As such, a number of tools have been set up to support the PPP projects, these include:
- Project Development Facility – co-funded by the Asian Development Bank and Agence Francaise de Developpement (French Development Agency) – is intended to fund project preparation activities including:
- Pre-feasibility studies
- Full feasibility studies
- The engagement of transaction advisors who will structure deals to bring to the private sector for bidding
- A non-refundable grant from the World Bank’s Viability Gap Fund (VGF) is available to the bid winner.
- A list of 127 National Projects – categorized into five areas: technical infrastructure, social infrastructure, agriculture, processing and preserving and production-service – which are priority areas for foreign investment until 2020.
The new decree also sends a positive signal to potential foreign investors in terms of financial support. The new regulation will remove the limit on state funding, which previously was restricted from 30 percent to 49 percent. However, investors will need to propose projects to the appropriate government bodies for consideration. Contribution levels will be determined on case-by-case basis.
Additionally, PPP project companies are entitled to exemptions or reductions on land use fees and/or rental fees. At the same time, investors are granted the right to mortgage properties, land use rights, and trading rights on project facilities. Land use rights will be unchangeable during the term of project.
The Vietnamese Ministry of Planning and Investment has estimated that, from now until 2020, a total capital of around US$170 billion will be needed to develop its infrastructure network.
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