Amending certain Decrees detailing investment under the PPP method
Office Dispatch No. 6549/VPCP-CN dated September 13, 2024 of the Government Office proposes: Considering the proposals of the Ministry of Planning and Investment on the development of the Law amending and supplementing a number of articles of the Law on Investment in the form of Public-Private Partnership (PPP) and the Ministry of Finance on amending and supplementing a number of articles of the Decree detailing and guiding the implementation of the Law on Investment in the form of PPP, Deputy Prime Minister Tran Hong Ha agreed with the proposal of the Ministry of Planning and Investment on the development of the Decrees amending Decree No. 35/2021/ND-CP dated March 29, 2021 of the Government and Decree No. 28/2021/ND-CP dated March 26, 2021 of the Government simultaneously with the process of developing and perfecting the contents of the Law amending and supplementing a number of articles of the Law on Planning, the Law on Investment, the Law on Investment in the form of PPP and the Law on Bidding.
The Ministry of Finance closely coordinates with the Ministry of Planning and Investment in the process of developing and perfecting the contents of the Law amending and supplementing a number of articles of the Law on Planning, the Law on Investment, the Law on Investment in the form of PPP, and the Law on Bidding to ensure the resolution of difficulties and problems related to BT contracts as reported by the Ministry of Finance; continue to review and study the amendment of Decree No. 69/2019/ND-CP dated August 15, 2019 of the Government to resolve difficulties and problems related to BT contracts under the authority of the Government simultaneously with the process of developing and perfecting the Law amending and supplementing a number of articles of the Law on Planning, the Law on Investment, the Law on Investment in PPP form and the Law on Bidding.
Limitations and difficulties in implementing the Decrees on PPP investment
The Law on Investment in the form of PPP was passed by the National Assembly on June 19, 2020 and took effect on January 1, 2021. To ensure the implementation of this Law, the Government has issued Decree No. 35/2021/ND-CP dated March 29, 2021 detailing and guiding the implementation of the Law on Investment in the form of PPP and Decree No. 28/2021/ND-CP dated March 26, 2021 prescribing the financial management mechanism for PPP projects.
In addition, before the Law on Investment in the form of PPP takes effect, the Government issued Decree No. 69/2019/ND-CP dated August 15, 2019 prescribing the use of public assets to pay investors when implementing investment projects in the form of build-transfer contracts (BT contracts).
According to the Ministry of Planning and Investment, from the time the PPP Law and its guiding Decrees took effect until the end of 2022, there were 24 new PPP projects implemented in accordance with the provisions of the Law on Investment in the form of PPP (10 projects have been approved, 14 projects are being prepared for investment) and 295 PPP projects (including 160 BT contract projects) are being implemented under the transitional provisions of this Law. Most of the new PPP projects deployed under the provisions of the Law on Investment in the form of PPP are key projects with large scale of the country.
However, there are still some limitations and difficulties in implementing the Decrees on investment in the form of PPP. Specifically:
– Decree No. 35/2021/ND-CP detailing and guiding the implementation of the Law on Investment in the form of PPP: (i) The minimum total investment scale that must be met for PPP projects is larger than the reality and the investment attraction needs of localities, making it difficult to attract small-scale projects with potential, attracting investors through PPP; (ii) Provisions on the contracting agency paying a maximum of 50% of the value of the completed volume for sub-projects using capital investment in PPP projects cause difficulties for investors in arranging capital to implement the entire PPP project; (iii) Transitional provisions and provisions on implementation for PPP projects in general and BT projects in particular need to be supplemented to remove difficulties in contract termination before the deadline, payment, settlement, adjustment of feasibility study reports and adjustment of construction design…
– Decree No. 28/2021/ND-CP prescribing the financial management mechanism for PPP projects: (i) Indicators for analyzing and evaluating the financial plan of the project in each field are not sufficient, leading to confusion in evaluating financial feasibility; (ii) Provisions on the ratio of state capital participation in PPP projects are not consistent with the Law on Investment in the form of PPP; (iii) The source of payment for PPP projects of the build-transfer-lease (BTL) contract type, the build-lease-transfer (BLT) contract type has not been specifically prescribed in the case of public non-business units that are self-sufficient in regular expenditure as the contracting agency…
– Decree No. 69/2019/ND-CP prescribing the use of public assets to pay investors when implementing BT projects: (i) There is no regulation on the conditions for the competent authority to decide to allow the use of land that has been cleared or the headquarters of state agencies to hand over to investors to implement BT projects; (ii) Lack of regulations on handling the part of the cost that investors have advanced to carry out site clearance…
Therefore, it is necessary to consider amending and supplementing a number of Decrees detailing the Law on Investment in the form of PPP to ensure legal basis and practicality as well as the direction of the Government and the Government’s leaders.
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