Out-Law / Your Daily Need-To-Know

Public Private Partnerships in Vietnam: an introduction

Out-Law Guide | 30 May 2011 | 4:03 pm | 2 min. read

This guide was last updated in January 2013.

In this first of four guides we outline the background to and key features of Vietnam's Public Private Partnerships programme.

The new regime

On 9 November 2010 the Prime Minister of Vietnam authorised the issue of detailed regulations covering the piloting of investment in the form of Public Private Partnerships (PPPs) in Vietnam. The PPP Regulations are not prescriptive. Instead they provide a wide base for the delivery of the Vietnamese Government's ambitious infrastructure plans.

Vietnam's economy has consistently been one of the fastest growing in the world and it has become a favoured location for manufacturers of products such as clothing, footwear and electronics in recent years. Companies benefit from low costs, political stability and good transportation networks. It is therefore not surprising that in recent years the Vietnamese Government has invested heavily in new infrastructure – for example, power generation, transport, telecoms and water and wastewater.

It is likely that official development assistance will eventually be unable to keep up with the pace at which Vietnam's economy is growing. The PPP programme to be implemented under the new regulations is intended to attract non-Government investment to deliver public infrastructure to sustain the country's economic development.

The PPP Regulations became effective on 15 January 2011 and will continue to be implemented over the next three to five years. After this time, it is intended that they will be replaced by a Government Decree on PPP Investment in Vietnam.

What is in the Regulations?

The PPP Regulations define a public private partnership as occurring when "the State and investor jointly implement projects on development of infrastructure or provision of public services on the basis of project contracts". These 'project contracts' are further defined as "a contract signed between a competent state agency and an investor under which the State franchises investment in and operation of a work or provision of a public service to the investor within a specified period of time". Each project contract will stipulate responsibilities, obligations and powers for both parties depending on the nature of the project.

Under the PPP Regulations, the Ministry of Planning and Investment (MPI) has a central role in co-ordinating and implementing the programme. It has established a PPP Task Force to assist with this. MPI's ultimate role is to prepare and deliver a framework for the new PPP programme.

The PPP Regulations expressly refer to the well-known EU principles of competitiveness, fairness, transparency and economic efficiency, as well as conformity with Vietnamese law and international practices. However, there is no mention of implementing regulations or guidance.

The regulations stipulate that PPP contracts should include:

  • term or length;
  • termination;
  • variations;
  • funder step-in provisions;
  • performance guarantees;
  • transfer of project assets;
  • assignment.

International support

The Vietnamese Government has received financial support for feasibility and other studies from the World Bank. It has retained development agency JICA and other consultants to advise it on the structural building blocks for the programme, and has had delegation visits from countries with an established PPP track record – including the UK – to gain insight and understanding of the risks and pitfalls.