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Improved PPP legal framework pledged

Update: March, 19/2014 - 08:24
The Dau Giay-Phan Thiet Expressway project is one of the first transportation projects carried out under the public-private partnership investment form in the country. Viet Nam plans to improve its legal framework to attract private sector investment in infrastructure projects. — Photo

HA NOI  (VNS)—  Viet Nam will improve the legal framework for creating favourable conditions for benefiting investors and state and public service users in public-private partnership (PPP) projects, a Ministry of Planning and Investment senior official has said.

Le Van Tang, head of the ministry's Bidding Management Department, addressed a consultation workshop held yesterday to discuss the draft decree on PPP.

He further added that currently, Viet Nam has set regulations over the co-operation between the State and private sector, including the 2009 Decree No. 108/2009/ND-CP on the investment in forms of build-operate-transfer, build-transfer-operate, and build-transfer contracts and the 2010 Decision No. 71/2010/QD-TTg on promulgation of regulation on pilot investment in PPP form.

However, Tang clarified that the shortcomings were revealed during the implementation of the regulations, which impelled Viet Nam to improve the legal framework in this field, especially when it has a huge demand for infrastructure development but has tightened its public spending and wanted to mobilise its resources from the private sector.

Last September, the Prime Minister approved the development of a PPP decree that consolidates the Decree No. 108 and Decision No. 71. So far, three drafts of the PPP decree have been introduced and the fourth draft is expected to be submitted for the Justice Ministry's appraisal next month. It will thereafter be submitted for receiving the Government's approval in May.

Minister of Planning and Investment Bui Quang Vinh, who is also the leader of the drafting committee of PPP decision, said that compilers must consider themselves as investors to gauge expectations.

Under the third draft decree introduced yesterday, the PPP investment was defined as the implementation of projects based on a contract on the rights, responsibilities, and risk allocation between an authorised state agency and the investors for investment, construction, restoration, modernization, expansion, management and operation of infrastructure facilities, and provision of public services in sectors including transportation, water supply and drainage, power plans, and healthcare.

The draft also has a separate chapter on investor selection and signing of the investment agreement and project contract as well as a chapter on the responsibilities of parties with respect to project preparation and implementation.

Tang remarked that the procedures for the PPP projects would be more simplified and favourable for the investors.

"Any public investment projects that can be executed under the form of PPP investment will be given priority," Tang added.

Under the draft, investors and the project enterprise shall be entitled to incentives, support, and guarantees in investment, corporate income tax, and import tax, if they import goods to implement a PPP project.

Moreover, they shall be exempted from land use fees for the areas of land allocated by the state or be exempted from paying land rent for the entire term of the project implementation.

The PPP decree will not impose the proportion of the state's contribution in PPP projects and the contribution will be identified based on certain financial foundation of the projects. In contrary, under the Decision No. 71, the State's contribution can be at the most 30 per cent of the project's investment, which may detract investors from huge projects.

As per Decision No. 71, investors are not encouraged to submit the PPP project proposal and only the Prime Minister can approve PPP projects. The PPP decision is expected to fix the shortcomings to be at par with international practices. — VNS

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