Government gives guidelines on Public-Private Partnership agreement

The government has issued a decree on investment in the form of public-private partnerships (PPPs), which sets out five conditions for a PPP project.

Accordingly, in order to get approval, a PPP project should be relevant to the development master plans of the relevant sector and region and the socio-economic development plans of the area where the project is to be carried out.

Secondly, the project should meet legal conditions relevant to the field of investment.

Thirdly, the project should be capable of attracting and absorbing investor’s capital, technology and management experience.

Fourthly, the project should be capable of supplying products and services continuously at stable quality and meeting the needs of consumers.

Fifthly, the project must have a minimum investment capital of 20 billion VND (952,000 USD), excluding those in the form of Operations and Maintenance (O&M) and those operating in agricultural and rural infrastructure, and production services related to agricultural product processing and sales.

Projects not listed on development plans of sectors and regions or local socio-economic development plans require approval from authorised bodies and provincial People’s Committees.

Priority will be given to projects meeting the above requirements and have the ability to recovery capital from business activities.

The decree also stipulates in detail the investor’s ownership capital and mobilised capital. For projects with a total investment capital up to 1.5 trillion VND (71.4 million USD), the investor’s ownership capital must be at least 15 percent of the total capital. The percentage of ownership in projects with capital exceeding 1.5 trillion VND must be at least 10 percent.

Government funds are not included in the calculation of the total investment capital to determine ownership ratios.

Source: ITA