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New Decree on Public-Private Partnership State Bank of Vietnam Workshop

04 January 2017, Hanoi

OLIVER MASSMANN- PARTNER

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TOPICS

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1. General Introduction of the new Decree 2. Positive Changes 3. Specific Issues 4. Discussion

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PART I: GENERAL

INTRODUCTION OF THE NEW

DECREE 3

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General Introduction

• On 14 February 2015 the Government issued Decree No.

15/2015/ND-CP on Public-Private Partnership Investment Form

(PPP Decree)

• PPP Decree has come into effect since 10 April 2015

• It replaced two previous regulations:

Decree No. 108/2009/ND-CP of the Government dated 27 November 2009

on BOT, BTO and BT investment forms;

Decision No. 71/2010/QD-TTG dated 9 November 2010 of the Prime

Minister on pilot PPP investment regulations.

• PPP Decree establishes a legal framework for both the PPP

and the BOT/BTO/BT project regimes.

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Who in PPP? How to set up?

• Investor:

Project enterprise

• Authorized state agency:

Ministry

Provincial People’s Committee

• Guaranteeing body:

Party appointed by Prime Minister

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General PPP Process

Screening Project

Proposal

Feasibility Study

Bidding Contract Implement

ation

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PART II: POSITIVE CHANGES

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Broader Application

PPP Decree removes the requirement that a PPP project

must be an important and large – scale project;

New sectors: agriculture, education, culture, sports,

construction of Government workplaces, social

housing and cemeteries, science and technology

facilities, economic and industrial zones, public sector

services.

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Contract forms:

4 more forms of PPP investment: BTL, BLT, BOO

and OM

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Form of payment Contract type

User Fee BOT, BTO, BOO

Availability payment BTL, BLT

Service Fee OMC

Project swap BT

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Private Sector Investment Capital

• Old regulations: investment capital by

investors: at least 30% of the investment

capital

• PPP Decree: at least 15% of investment

capital up to VND 1,500 billion plus at least

10% of the portion of investment capital

exceeding VND 1,500 billion

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Government Contribution

• Old regulations: limit the state capital

contribution to no more than 49% for BOT

and 30% for PPP

• PPP Decree: No limit

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Selection of Investors

• Old regulations: competitive tendering was

always required for the selection of investors

for PPP.

• PPP Decree: selection by open tender or

direct appointment

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Unsolicited projects

• Investors now may

propose projects that are

not listed on the list of

projects announced by the

authorized state agencies,

as long as they satisfy all

the eligibility conditions

of PPP projects.

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Step – in rights

• Old regulations:

lending banks’ step in

right must be subject

to approval from

relevant competent

governmental

authority

• PPP Decree: no

approval needed.

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Selection of Foreign Laws

• Old PPP Pilot Decision:

foreign law to be applied

on a case by case basis

• PPP Decree: permit the

parties to select foreign

laws in all cases.

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PART III: SPECIFIC ISSUES

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Foreign Currency Convertibility

• No clear commitment on 100% foreign

currency convertibility. The amount of

foreign currency guaranteed to be convertible

will be determined on a case by case basis.

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Land

• PPP project companies: land rent exemption

or reduction.

• Land Law: no mortgage of land use rights if

they are exempted from paying rent on the

land.

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Negotiation Time

• No time limit for

negotiation and

signing of project

contracts

risk of lengthy negotiations

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Thank you very much!

Oliver Massmann

OMassmann@duanemorris.com

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