Return on equity framework for investors in PPP projects in the education sector
(1) Cost of equity of the investor
The maximum cost of equity (taking into account risk and inflation factors) is determined according to the following formula:
i = iv + f
Where:
i: cost of equity of the investor;
iv: lending interest rate for mobilized investment capital, determined based on reference to medium- and long-term lending rates of at least 3 state-owned commercial banks for similar projects, serving as a basis for formulation of the financial plan in the pre-feasibility study report and feasibility study report (if any). Such a lending rate is determined at the most recent time within 3 months before the preparation of the pre-feasibility study report or feasibility study report;
f: inflation rate, determined based on the average Consumer Price Index (CPI) of the most recent 10 years as announced by the Statistics Office, with consideration given to excluding years with significant CPI fluctuations.
(2) Return on equity framework of the investor
Based on the law, socio-economic conditions, and project-specific characteristics, the return on equity of the investor in the financial plan of the pre-feasibility study report and feasibility study report shall be determined within the following framework:
- The maximum return on equity of the investor shall not exceed the cost of equity (i) specified in (1);
- The minimum return on equity of the investor shall not be lower than the lending rate for mobilized investment capital (iv) specified in (1).
(3) The return framework specified in (2) shall be used as a basis for preparing the pre-feasibility study report and feasibility study report and shall not be adjusted during the investor selection process.
See more details in Vietnam’s Circular No. 35/2026/TT-BGDDT effective as of June 6, 2026.
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