What is a PPP project? What is the process of implementing a PPP project in Vietnam?

Hello, Lawnet would like to answer as follows:

1. What is a PPP project?

According to Clause 9, Article 3 of the Law on Public – Private Partnership Investment 2020, PPP project is a set of proposals related to the investment to provide public products and services through the implementation of one or the following activities:

- Construction, operation and business of infrastructure works and systems;

- Renovation, upgradation, expansion, modernization, operation and business of available works and systems;

- Operation and business of available infrastructure works and systems.

Investment sectors according to the PPP method in Vietnam

According to the provisions of Clause 1, Article 4 of the Law on Public – Private Partnership Investment 2020, PPP investment sectors, including:

(1) Transportation;

(2) Power grids, power plants, except hydropower plants and those subject to the state monopoly requirement as provided in the Law on Electricity;

(3) Water resources and irrigation; clean water supply; water drainage and wastewater treatment; waste management and disposal;

(4) Healthcare; education – training;

(5) Information technology infrastructure.

Investment scale of PPP project in Vietnam

According to Clause 2, Article 4 of the Law on Public – Private Partnership Investment 2020, minimum investment capital requirement for a PPP project shall be prescribed as follows:

- The minimum capital requirement of not less than VND 200 billion shall be imposed on projects in the sectors specified in points a, b, c and dd of clause 1 of this Article. 

- The minimum capital requirement of not less than VND 100 billion shall be imposed on the projects in the sectors specified in point d of clause 1 of this Article;

- Regulations on the minimum capital requirement laid down in point a and b of this clause shall not apply to O&M projects.(O&M contract means the contract under which a PPP project investor or enterprise is assigned the right to operate and manage part or the whole of existing infrastructure works and systems within a predetermined term; upon expiry of such term, the PPP project investor or enterprise terminates the contract according to Point d of Clause 1, Article 45 of the Law on Public – Private Partnership Investment 2020)

Note: In case where projects are executed in areas facing socio-economic difficulties or extreme socio-economic difficulties under the provisions of laws on investment, they must meet the minimum capital requirement of not less than VND 100 billion;

How are PPP projects classified?

According to the provisions of Clause 3, Article 4 of the Law on Public – Private Partnership Investment 2020, PPP projects shall be classified by the jurisdiction to issue investment policy decisions, including:

- PPP projects falling under the National Assembly’s delegated authority to grant investment policy decisions;

- PPP projects falling under the Prime Minister's delegated authority to issue investment policy decisions;

- PPP projects falling under the authority to grant investment policy decisions delegated to Ministers, heads of central authorities and other entities specified in clause 1 of Article 5 in this Law;

- PPP projects falling under the authority to grant investment policy decisions delegated to provincial People’s Councils.

Thus, a PPP project is a form of public-private partnership to develop infrastructure through mobilizing resources from the private sector. At the same time, PPP projects specify the minimum scale, investment fields, and project classification according to the authority to decide on investment policies.

2. What is the process of implementing a PPP project in Vietnam?

According to Article 11 of the Investment Law 2020 and guided by Article 23 of Decree 35/2021/ND-CP, the PPP project implementation process is prescribed as follows:

Implement investment projects according to the public-private partnership (PPP) method

According to the provisions of Clause 10, Article 3 of the Investment Law 2020, public - private partnership investment refers to a form of investment carried out by the fixed-term cooperation between the state and a private-sector investor through conclusion and execution of a PPP project agreement in order to call for private sector involvement in a PPP project.

Unless otherwise provided in Clause 2 of this Article, the PPP project process shall be prescribed as follows:

Step 1: Making and assessing pre-feasibility study reports, decisions on investment policies and project announcement;

Step 2: Making, evaluating feasibility study reports, and approving projects;

Step 3: Selecting investors;

Step 4: Establishing PPP project enterprises and concluding PPP contracts;

Step 5: Implementing PPP contracts.

Implement PPP projects applying high technology

- For PPP projects using high technologies on the list of high technologies prioritized for investment in development thereof under the provisions of the law regarding high technologies and using new technologies according to the provisions of technology transfer law, PPP project process shall be subject to the following regulations:

Step 1: Making and assessing pre-feasibility study reports, decisions on investment policies and project announcement;

Step 2: Selecting investors;

Step 3: Selected investors prepare feasibility study reports;

Step 4: Assessing feasibility study reports, and approving projects;

Step 5: Implementing steps prescribed at point d and dd of Clause 1 of this Article.

Implement PPP projects according to architectural plans

- In case the PPP project has a work subject to architectural plan competition as prescribed by architecture laws:

Step 1. Research report on project feasibility

+ The pre-feasibility study report must describe the legality, necessity, selection method and relevant contents of the competition as the basis for issuance of the decision on investment guidelines;

Step 2. Determine the cost of architectural plan examination

+ The costs of architectural plan competition shall be determined in accordance with applicable regulations of the Ministry of Construction on projects funded by state budget and included in the project’s total investment.

+ In case the project is proposed by the investor, the investor shall be responsible for these costs.

Step 3. Organize competition for architectural plans

+ After the decision on investment guidelines is issued, The competent authority shall carry out the competition in accordance with architecture laws:

- For projects under public investment plans that are considered to be converted into PPP projects, follow the process of implementing investment projects under the public-private partnership (PPP) method or deploying PPP projects applying high technology.

Thus, the PPP project implementation process has similar main steps but has differences depending on the specific type of project.

Best regards!