Vietnam plans PPP policy changes

06 September 2019 - 12:00 am UTC

Vietnam’s new public-private partnership (PPP) law will include risk sharing and foreign currency guarantee mechanisms as part of the government efforts to invite foreign investors.

 

The policy changes are aimed at encouraging private sector participation in infrastructure PPPs, Vice Minister of Planning and Investment (MPI) Nguyen Dub Trung said in a government statement yesterday (5 September).

 

The draft bill will be submitted to the National Assembly for discussions in October and final approval in May 2020, Trung said.

 

“Current PPP projects are not attractive enough for foreign investors, so there will be mechanisms such as foreign currency conversion guarantees as well as revenue risk sharing in the draft PPP Law,” he said. Projects need to be approved by the National Assembly and Prime Minister to be eligible for the foreign currency guarantee, while the maximum ratio of revenue to be covered by the risk-sharing mechanism is capped at 50%. ​​​​​​

 

The agency has also considered applying a minimum threshold for the project sizes to better achieve efficiency in view of the high transaction costs associated with these projects. One option will be setting a minimum size threshold for PPPs at about VND 1.2trn (USD 52m) for Group A projects in the revised draft law, and at VND 200bn for Group B projects.The other option will be to maintain the current regulations, with a separate process for small-scale PPP projects. 

 

So far, about 336 PPP projects have been implemented in the Southeast Asian country, including 140 in the BOT model, according to the MPI.

 

The Vietnamese government has tried to control its debt levels in recent years, making private capital increasingly important for infrastructure development.

 

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