Over the last two decades, Vietnam has made significant progress in economic growth and poverty reduction, which is fuelled by investment expansion and trade opening. To maintain sustained growth and development in the context of fast global economic changes and macro-economic fluctuations, Vietnam’s Socio-Economic Development Strategy for 2011-2020 has identified three major breakthroughs to accelerate Vietnam’s development namely: market-economy institutions, human resources and infrastructure. It is estimated that over the next 10 years, the investment need for the development of essential infrastructure in Vietnam (such as transportation, electricity, water supply, health care, etc) is approximately 400 billion US$ while the state budget is expected to cover approximately 50% of that amount. In this context, public-private partnership (PPP) model becomes one of effective ways to mobilize capital and expertise from private sector for infrastructure development.

Perceiving further promoting PPP as an important element in the public investment restructure, the Government has establised a National Steering Committee on PPP led by Deputy Prime Minister Hoang Trung Hai in order to provide due directions on the PPP program of Vietnam. Beside that, to develop a more comprehensive, transparent and effective legal framework on PPP, for the first time, the single definition of investment in the form of PPP is regulated in many laws such as: the Amended Law on Procurement (passed by the National Assembly on November 26th 2013), and the draft of the Revised Law on Investment, Law on Public Investment, Law on State Budget and Law on Construction.

In September 2013, the Government has assigned the MPI to develop a Decree on PPP (PPP Decree) which consolidates Decree No. 108/2009/ND-CP on investment in the forms of Build-Operate – Transfer (BOT), Build-Transfer-Operate (BTO) and Build-Transfer (BT) contracts and Decision No. 71/2010/QD-TTg on the regulation on pilot investment using public private partnership model to overcome the shortcomings of the two documents. The Drafting Committee of the PPP Decree headed by Mr. Bui Quang Vinh - Minister of Planning and Investment are urgently developing a draft decree on the spirit of “Put yourself in the position of investors, aware of the Vietnam’s legal framework and economic situation to draft the Decree” to resolve constraints of the current legal framework for PPP and develop the most favourable mechanism and policies to encourage domestic and international investors, financial institutions to invest in PPP projects in Vietnam.

One of the highlights of the draft Decree is the provision on sectors for PPP projects. Not only those in physical infrastructure, expanded sectors now consist of agriculture, irrigation, and other social sectors which are encouraged for socialization such as education, health service, environment, sports, culture and so forth.

To select qualified investors particularly with appropriate financial and project management capacity, the provisions on investor selection in the PPP  Decree will be developed in accordance with relevant regulations of the Amended Law on Procurement. Provisions on preparation of PPP projects will be developed in a way to clarify criteria and procedures for selection of projects. PPP Decree is also expected to specify responsibilites of the State and investors in a PPP project. Principle of risk allocation related to site clearance or changes in policies and master plan is also prescribed in PPP Decree. These regulations are expected to contribute to bulding a transparent investment environment and create favourable conditions for investors in implementing PPP projects.

Along with the PPP Decree, the Government is currently developing other guiding documents on PPP such as a Circular on Project Development Fund and a Decree guiding the Amended Law on Procurement on investor selection (including investor selection for PPP projects).

Through these above mentioned motives, the Government has deliberated a strong political determination to develop a competitive, transparent and equal playing field which is compatible with domestic investment environment and international practices for prospective investors to deliver PPP projects in pulic infrastructure and services in Vietnam.