Draft law aims to plug holes in PPP model

09:32 | 01/11/2019 Investment

(VEN) - Public-private partnership (PPP) has become an inevitable trend in the context of shrinking state budgets. Although it has contributed to Vietnam’s infrastructure development, the PPP model has revealed shortcomings, especially those associated with its legal framework.

draft law aims to plug holes in ppp model
Very few PPP projects in the field of transport infrastructure attract foreign investors

The highly anticipated draft of a new PPP law will be submitted for comments to the National Assembly at its eighth session in October 2019 and approved at the ninth session in May 2020.

Some 336 PPP projects have been implemented in Vietnam, including 140 BOT (build - operate - transfer) projects. However, PPP provisions are only found in decrees and lower-level regulations, while PPP regulations still overlap each other, hampering project implementation and making PPP less attractive for investors.

According to 2017 figures, 58 percent of all PPP projects in the country appointed investors rather than allowing investors to compete, raising the risk that those chosen might not be able to deliver the project. In addition, many ministries and localities haven’t proposed feasible PPP projects, while general bidding PPPs attracted few investors.

As a result of poor planning by sectors and localities, problems arose in project development, evaluation, approval and implementation. In some cases, the project’s quality and benefits were not commensurate with the investment. In particular, very few PPP projects in the field of transport infrastructure attract foreign investors.

In an attempt to ease the problems, the government instructed the Ministry of Planning and Investment to preside over formulation of a PPP Law. At a PPP Law project meeting of the National Assembly’s Economic Committee, Deputy Minister of Planning and Investment Nguyen Duc Trung said it is necessary to build a stable, non-overlapping legal environment for PPP to attract investors.

Drafters of the law have had to address many issues to ensure it is consistent with other laws. According to the draft, a PPP project must have capital of VND200 billion upward, except for projects applying operations and maintenance (O&M) contracts. Official data indicate that almost 70 percent of implemented and ongoing PPP projects in the country have capital of over VND200 billion each.

The Draft PPP Law contemplates permitting a PPP structure in the following sectors: Transportation: roadways,

railways, inland waterways, maritime, aviation, and seaport infrastructure facilities; Power plants and public lighting

systems; Water treatment infrastructure; Urban zone infrastructure (e.g. parks); Health, education, training, culture,

sports, and tourism facilities; Telecommunication and information technology.

Hoang Chau