New ponits in the PPP Law

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At the 9th Session Program, the National Assembly XIV continues the 9th Session, the XIV National Assembly, on June 18, the Law on Public Private Partnership (PPP) was passed with 92, 75% approval from the National Assembly Deputies.

The Law on Public Private Partnership (PPP) consists of 11 chapters and 101 provisions on public-private partnership investment, state management activities and related authorities, organizations and individualsregarding the public-private partnership investment activities.

The PPP Law is designed to create a strong legal framework to ensurethe contractual obligations of the parties over the term of the PPP project contract.

This provision is also a joint statement expressing the State’s commitment to the legal aspect of domestic and foreign investors, creating security for investors and the State to invest in PPPprojects.

The PPP Law has new contents. The fields of the PPP Law was shortened to concentrate the investment on 5 essential areas: Transportation; electricity grids, power plants; irrigation, clean water supply, drainage, sewage treatment, waste; health, education and training; Information technology infrastructure.

Regarding investment scale, in order to concentrate resources and avoid spreading, the PPP Law stipulates the implementation of PPP investment for projects with a total investment of VND 200 billion, except for projects in projects in geographical areas with difficult and extremely difficult socio-economic conditions or in the field of health, education and training (from VND 100 billion).

Different from the previous regulations, PPP projects are classified according to the Law of public investment, the PPP Law stipulates the classification of projects associated with the authority to decide investment policies (National Assembly; Prime Minister; Minister, heads of central agencies and provincial-level People’s Councils).

PPP Law stipulates 3 levels of the Appraisal Council (state, inter-sector and grassroots) of PPP projects corresponding to 3 levels to decide investment policy of PPP projects to ensure the tightness, efficiency and feasibility before PPP projects come to market, attract investment.

Regarding the state capital in PPP projects, the Law clearly stipulates the state capital in PPP projects and the plan to manage each form of support and participation in state capital.

In particular, the Law stipulates that the limit of participation in PPP projects must not exceed 50% of the total investment of the project.

PPP Law regulates the integration of investor selection (previously in the Bidding Law), to ensure the consistency, integrity and continuity of the process of implementing a PPP project.

Regarding the mechanism for sharing the increasing-decreasing revenue, the PPP Law stipulates that the sharing mechanismincreases revenue (when revenue increases by more than 125%), decreases revenue (when revenue decreases by less than 75%) to minimize risks for PPP projects, especially risks due to changes from the State. This is considered as a new and important mechanism.

Besides the traditional capital mobilization channel from banks, the PPP Law allows businesses of PPP projects to issue corporate bonds to raise capital to implement PPP projects.

The Law on Public Private Partnership takes effect from January 1, 2021




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