Public Investment Law No. 49/2014 / QH13 issued on June 18th, 2014, effective January 1st, 2015 and Decree No. 15/2015 / ND-CP on investment in the form of public-private partnership issued February 14th, 2015, effective April 10th, 2015 has been expected to help overcome one of the biggest obstacles in the attraction of investment in private sector, from both domestic and foreign investment in public-private partnership (PPP) projects.
The key matter is that the new laws would share the risks that investors face in terms of capital, fees structures and fees amount determination. It is important that the regulation has been changed that only requires the minimum of owner’s equity of not less than 15% of the total investment of the regular project; and not lower than 10%, if the project investment is over 15 trillion VND.The investors may transfer part or all rights and obligations under the project contract to the lender or other investors if the transfer does not affect the objectives, scope, technical standards, progress of the project, and must meet the conditions for investment and business in accordance with provisions the law on investment and other conditions agreed in the project contract signed with the competent state agency.
Investment in PPP has now been expanded to vast areas requiring significant investment including transportation infrastructure, power plant, water, health, the environment management, education, vocational training, culture, sports and science and technology projects, economic zones, industrial zones.
The investment contracts in the form of public-private partnership are defined in Vietnam as following.
BOT Contract
“Build – Operate – Transfer contract” (referred to as BOT contract) means a type of contract to build an infrastructure project between a competent state agency and an investor; after completing the construction, the investor shall be entitled to operate it for a specified period of time; eventually, the investor shall transfer it to the Vietnam competent state agency.
BTO Contract
“Build – Transfer – Operate contract” (referred to as BTO contract) means a type of contract to build an infrastructure project between a competent state agency and an investor; after completing the construction, the investor shall transfer it to the competent agency, and shall be entitled to operate it for an agreed period of time.
BT Contract
“Build – Transfer contract” (referred to as BT contract) means a type of contract to build an infrastructure project between a regulatory agency and an investor; after completing the construction, the investor shall transfer it to the competent agency, and then the investor will be allotted a land parcel used for carrying out another project.
BOO Contract
“Build – Own – Operate contract” (referred to as BOO contract) is a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall take ownership of this project and have the right to operate it for a specified period of time.
BTL Contract
The Build – Transfer – Lease contract (referred to as BTL contract) means a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall transfer it to the regulatory agency and shall be entitled to provide services on the basis of operation of such project for a specified period of time; the competent agency shall lease and make payment for the investor’s services.
BLT Contract
“Build – Lease – Transfer contract” (referred to as BLT contract) means a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall have the right to provide services on the basis of operation of such projector a specified period of time; the competent agency shall lease and make payment for the investor’s services according to the regulation; when the lease term expires, such project shall be transferred to the competent agency.
O&M Contract
“Operation & Management contract” (hereinafter referred to as O&M contract) means a type of contract to operate the project between a competent agency and an investor for a specified period of time.
The law on Public Private Partnership in Vietnam creates an important legal basis in the management of public investment. However, this is only the beginning of an inevitable trend that attract resources from private sectors. The laws has been evolving and there will be changes in the coming time which ANT Lawyers will monitor and provide relevant update.
We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.
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