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New PPP Decree issued

Released at: 16:59, 26/02/2015

New PPP Decree issued

Stipulations on sectors, rights and responsibilities contained in Decree.

by Minh Tuyet

Decree No.15 on Public-Private-Partnerships (PPP), issued on February 14, stipulates a wide range of sectors open to PPP investment, such as traffic, electricity, health care, and education.

Investors must take responsibility to add their own capital and raise capital to conduct projects in the contract, in accordance with the Decree. The Decree also states that the equity of investors cannot be less than 15 per cent of the total investment capital.

Regarding projects over VND1.5 trillion ($70.2 million), equity is determined by a progressive computation method. Where capital is over VND1.5 trillion, the equity held by the owner must not be less than 15 per cent. For capital exceeding VND1.5 trillion, the equity held by the owner must not be less than 10 per cent.

State capital when conducting a project includes capital from the State budget, State public bonds, local public bonds, and ODA and preferential loans, according to the Decree. State capital will be used to support investors in making repayments when profits are not yet forthcoming.

Furthermore, State capital will be used to support construction and compensation for land clearance and resettlement. The invested capital of the State is not included in the total invested capital.

According to the Decree, the investors and enterprises are given favorable conditions when conducting PPP projects, such as collecting enough money and service costs. Others relate to corporate income taxes and goods export and import taxes when conducting projects. When being assigned land, the land cost will be cut or be zero during the time conducting the project.

Depending on demand for each project, the government will appoint State agencies to act as guarantors, supply materials and consume product, as well as taking other responsibilities to support investors and enterprises.   

Another favorable condition is that investors are allowed to mortgage the property and land use rights. The mortgage time cannot be longer than the contract term except when having other negotiations over the contract.

Other favorable conditions relate to buying foreign currencies, maintaining public services, and equity ownership.

The Decree also stipulates dispute resolution between State agencies and investors, enterprises and economic organizations, and enterprises within a project. This is welcomed, as the previous Decree No.71 in 2010 lacked a legal framework in this regard.

The new Decree will come into effect on April 10. Decree No.108 in 2009 on BOT, BTO and BT, Decree No. 24 in 2011 clarifying Decree No.108, and Decision No.71 in 2010 will then be invalid.

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