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Official Gazette

Thursday, August 13, 2020

New policies proposed to encourage investment in PPP projects

Updated: 17:21’ - 25/12/2013

The state contribution to a public-private partnership (PPP) project would be increased from 30 percent of the total investment capital to 50 percent, according to a Ministry of Planning and Investment-drafted decree.

The 73-article draft, which is actually a combination of Prime Minister Decision No. 71/2010/QD-TTg on the pilot application of the PPP investment form and Government Decree No. 108/2009/ND-CP governing build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) projects, also says that the state contribution would be made in the forms of capital, assets, land use rights value and other financial sources. Meanwhile, other supports like government guarantees and foreign-currency balance assurance would be excluded.

However, the amount of state capital contributed to a PPP project must not exceed 30 percent of its total investment. This sum of money, which would come from state budget funds, government bonds, local administration bonds, official development assistance, concessional loans and other sources, might only be used as additional capital for project implementation and spent only after half of the project’s total investment is disbursed. Note that under draft, funds for compensation, ground clearance and resettlement or for building support works would be neither calculated into the project’s total investment nor regarded as state contributions.

In addition to BOT, BTO and BT contracts, the draft also adds new forms of investment, including build-own-operate (BOO), design-build-finance-maintain-operate-transfer (DBFMOT), build-finance-operate-maintain (BFOM), and operate-maintain (O&M).

According to Tran Hao Hung, head of the Ministry of Planning and Investment’s Legal Department, although these new investment forms have not yet governed in any legal documents, investors are eager to apply them in reality. For example, investors of Dau Giay-Phan Thiet and Ninh Binh-Bai Vot expressway projects are applying for permission to carry out their projects in the forms of DBFMOT and BFOM. Meanwhile, the forms of BOO and O&M have actually applied to some small-scale water plant and electricity projects.

“Therefore, the addition of these new investment forms would help create a complete and uniform legal framework for the implementation of infrastructure projects,” Hung said.-

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