LAWYER IN VIETNAM DR. OLIVER MASSMANN - VIETNAM – THE GOVERNMENT RELEASED NEW GUIDANCE FOR PPP PROJECT INVESTORS

1. VIETNAM – THE GOVERNMENT RELEASED NEW GUIDANCE
FOR PPP PROJECT INVESTORS
On 8 July 2020, Vietnam welcomed its first ever Law on Investment in the form of Public-Private
Partnership (“PPP Law”), incorporating recommendations suggested by Duane Morris. Recently on 29
March 2021, the Government issued Decree No. 35/2021/ND-CP guiding the implementation of Law on
Investment in the form of Public-Private Partnership 2020 (“Decree 35”). Below are key provisions
investors should know when contemplating engaging in this investment method.
1. Investment capital of PPP projects
Decree 35 specifies in details the required minimum total capital for each of the sectors eligible for PPP
investment:
Transportation: at least VND 1500 billion (approximately USD 65 million)
Power grid, power plant: at least VND 1500 billion, with the exception of renewable energy - at least
VND 500 billion (approximately USD 21 million)
Irrigation, water supply and drainage, treatment of wastewater and waste: at least VND 200 billion
(approximately USD 8 million)
Healthcare: at least VND 100 billion (approximately USD 4 million)
Education, training: at least VND 100 billion
Information technology infrastructure: at least VND 200 billion
2. PPP projects appraisal council
For each project, there will be two appraisal councils: the interdisciplinary appraisal council and the
grassroot-level appraisal council.
An interdisciplinary appraisal council is to be established by the Prime Minister at the proposal of the
Ministry of Planning and Investment (“MPI”). The Chairman of the appraisal council shall be the
Minister of the MPI, while the Deputy Chairman and other key positions are to be held by representatives
from relevant ministries and government agencies.
A grass root-level appraisal council is to be established by Ministers, heads of government agencies or
Chairman of the provincial people’s committee at the proposal of the standing agency of the appraisal
council. The standing agency shall be the Department of Planning and Investment or a government unit
responsible for PPP project management.
For projects self-proposed by investors, the investors are in charge of appraising the project.
3. Surveying interests in PPP projects
During the preparation of the Feasibility Study Report, the competent authority shall organize a survey of
the interest of investors and lenders, except for projects approved by the Prime Minister for direct
appointment of investor. The survey notice shall be published on the Government Procurement Portal as
well as relevant government websites so that investor could register for their interest online. The
competent agency could then organize a conference or roadshow to introduce the project and discuss on
project contents with investors. The result of the survey will serve as a basis to determine prequalification
and selection of domestic and international investors.
4. Modes of investor selection

2. Open bidding: International open bidding is applicable if there are at least one investor established under
foreign law has registered interest in the project. Domestic open bidding is applicable when all registered
investors were incorporated under Vietnam laws.
In case domestic open bidding applies but the project needs to promote the use of advanced technologies
and techniques as well as good international management experience then the bidding documents can
state investor’s wish for a partnership with foreign investors or for using foreign contractors to participate
in bidding. The domestic investor must be the head of the partnership and the language used in investor
selection must be Vietnamese.
Competitive negotiation: Used when there are less than 03 investors meeting the project implementation
requirements or when the project apply new and advanced technology.
Investor appointment: Applicable to projects that need to meet the requirements of national security or
projects that require immediate substitution of investors to ensure continuity in the project
implementation process.
5. Deposit for project execution
For projects with total invested capital of less than VND 300 billion: deposit amount ranges from 1,5% to
3%.
For projects with total invested capital of at least VND 300 billion: deposit amount ranges from 1% to
1,5%.
6. The following standard project documents are published:
a) Pre-Feasibility Study Report, Decision on Investment Policy of PPP project
The Pre-Feasibility Study Report must contain the following information:
_ Needs of project investment
_ Basic information about the Project: project objective, capacity, location, demand for land, water
surface and other resources (if any), compensation plan
_ Preliminary explanation on technical design
_ Primary assessment of the socio-economic efficiency, environment impact of the Project
_ Project financial plan: Capital structure including investor capital, PPP project enterprise capital (equity,
loan and other legal sources of capital), state capital in PPP project (if any); Prices and charges for public
products and services (for projects with direct collection from users)
b) Feasibility Study Report, Approval of PPP Project
c) Guidelines for creation of PPP Project Contract
Among other things, the PPP Contact must include details on the Special Purpose Vehicle and Means of
raising capital and bond issuance.
Regarding the Special Purpose Vehicle, the contract must state the obligations of the investors to
contribute equity capital according to the agreed schedule as well as rights and obligations of an investor
when transferring capital and consequently their own rights and obligations under a PPP project contract.
In respect of capital increment, the contract must include application of capital mobilization through the
issuance of bond or other legal capital. Conditions, principles, time and method of issuing bonds of the
project enterprise along with value of capital raised through the issuance of bonds and other legal capital
must also be specified.
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3. For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann
under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris
Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign
lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.