Some noteworthy novelties of the Law on Investment in the Form of Public-Private Partnership
On 18 June 2020, the National Assembly passed the Law on Investment in the Form of Public-Private Partnership (the “Law on PPP“) with 11 chapters and
101 articles. The Law on PPP will take effect on 01 January 2021 and has some notable novelties as follows:
- Five groups of PPP investment sectors
Article 4.1 of the Law on PPP stipulates five (05) groups of PPP investment sectors, including:
-Power grids, power plants (except for hydroelectric plants and the cases of Statemonopoly as prescribed by the Law on Electricity).
-Irrigation, clean water supply; water drainage and waste water treatment; waste treatment.
-Health; education and training.
-Information technology infrastructure.
- Size of PPP projects
According to Article 4.2 of the Law on PPP, the minimum total investment of a PPP project will be:
-Not less than VND 200 billion in respect of the projects in the sectors of transportation, power grids, power plants (except for hydroelectric plants and the cases of State monopoly as prescribed by the Law on Electricity); Irrigation, clean water supply; water drainage and waste water treatment; waste treatment; and information technology infrastructure.
-Not less than VND 100 billion in respect of the projects which are carried out in areas with difficult or extremely difficult socio-economic conditions as prescribed in the law on investment.
-Not less than VND 100 billion in respect of the projects in the sectors of health; education and training.
- 12 acts which are prohibited during investment in the PPP form
According to Article 10 of the Law on PPP, the following acts are prohibited during investment in the PPP form:
-Issuing an investment policy incompatible with the strategy, master planning or plans; which fails to identify the sources of State capital in the PPP projects which require State capital funding; contrary to the authority, sequence and procedures.
-Approving PPP projects without an investment policy; not in line with an investment policy; contrary to the authority, sequence and procedures.
-Collusion by competent agencies and/or contracting agencies with consultants or investors resulting in an investment decision or approval of PPP projects which causes losses to the State capital and assets and the national resources, damaging or infringing the interests of citizens and of the community.
Failing to ensure fairness and transparency during the selection of investors.
– Disclosing or receiving documents and information regarding the selection of investors.
– Collusion in bidding.
– Transferring shares, capital portions, rights and obligations contrary to the provisions of this Law and the PPP contract.
– Stop supplying products and public services except for the cases stipulated in PPP contracts.
– Giving, receiving or brokering bribes.
– Abusing positions and powers to conduct an act of appropriation, gainseeking or corruption during the management and use of State capital in a PPP project; illegally interfering with the process of implementing a PPP project.
– Forging or falsifying related information, files and documents; deliberately providing false or non-objective information.
– Impeding the detection of or dealing with the violations of the law on investment in the PPP form.
- Specifically regulating the authority to make the investment decision on a PPP
– The National Assembly will make investment decisions on PPP projects satisfying one of the following criteria:
– Projects using public investment capital from VND 10,000 billion.
– Projects with a large impact on the environment or the potential for such large impact.
– Projects using land and requiring to convert the use purpose of wet rice culivation land in two (02) harvest seasons or more in an area of five hundred (500) hectares or more;
– Projects requiring relocation and resettlement of 20,000 people or more in mountainous areas, or 50,000 people or more in other areas;
– Projects which require the application of a special mechanism or policy required to be decided by the National Assembly.
– The Prime Minister will make investment decisions on PPP projects satisfying one of the following criteria:
– Project requiring relocation and resettlement 10,000 citizens or more in a mountainous area or 20,000 citizens or more in other regions.
– Projects using central budget capital with the total investment equivalent to Group A projects under the law on public investment, projects using ODA loans and preferential loans provided by foreign sponsors.
– New construction investment projects: airports or aerodromes; runways of an airport or aerodrome; international airport passenger terminal; airport cargo terminal with an output of one (01) million tonnes per year or more.
– New construction investment projects: port or port area of a special seaport; port or port area of a seaport of Grade I with total investment capital equivalent to a Group A project pursuant to the law on public investment.
– Ministers or heads of central agencies or provincial people’s councils will make investment decisions on PPP projects under their scope of management.