Amendment of the PPP Law: A new direction to unlock investment resources

DNHN - To address obstacles in investment through the PPP model, the Ministry of Planning and Investment has submitted a proposal to amend the PPP Law, creating a more favorable legal framework for investors.

Removing investment field restrictions and minimum capital requirements

On the morning of October 30, Minister of Planning and Investment Nguyễn Chí Dũng, on behalf of the Prime Minister, presented a draft law amending several articles in the Planning Law, Investment Law, Public-Private Partnership (PPP) Law, and Bidding Law.

One prominent feature of the PPP Law amendment draft is the removal of restrictions on investment fields and minimum capital requirements. Previously, only five fields were allowed for PPP investment, with minimum capital requirements ranging from VND 100 to 200 billion. This regulation limited investment attraction to small projects with high development potential.

By removing these regulations, the draft law facilitates projects in various fields that align with the needs and conditions of each locality. This not only encourages investors to participate in new sectors but also provides opportunities for localities to implement projects that were previously not permitted.

The draft law also proposes allowing a higher State capital ratio—up to 70% of total investment, particularly for projects where land clearance costs exceed 50% of total investment or in socio-economically challenging areas. This decision significantly reduces the financial burden on investors, encouraging them to engage in high-risk projects.

Increasing the State capital ratio provides a sense of security for private investors while ensuring that projects are executed with high quality and on schedule. This could accelerate the implementation of essential infrastructure projects, meeting the country's economic development needs.

Simplifying investment procedures

Simplifying investment procedures is increasingly crucial for promoting economic development. The new draft law not only focuses on removing field and capital barriers but also emphasizes reforming project assessment and approval processes. Empowering local evaluation councils grants localities more autonomy in investment decision-making, enhancing flexibility and addressing the specific needs of each region.

Streamlining investment procedures directly affects project approval time. Optimized processes reduce waiting periods significantly, enabling investors to quickly execute ideas and initiate projects. This not only promotes capital flows but also creates employment opportunities and stimulates local economic growth.

Moreover, clear and transparent regulations during the assessment process are essential for preventing corruption and waste. Publicized steps allow investors and the public to monitor closely, increasing accountability among agencies in performing their duties.

Finally, a transparent and efficient investment system attracts both domestic and foreign investors, contributing to the economy's sustainable development and raising the nation's global investment standing. This transformation in investment procedures lays the foundation for a more favorable and attractive investment environment in the future.

Reintroducing BT contracts

An important aspect of the draft law is the continuation of Build-Transfer (BT) contracts. This type of contract allows investors to propose infrastructure projects without requiring state budget payments. It opens opportunities for many investors to participate in vital projects, unlocking capital from the private sector and boosting competition in infrastructure investment. In this way, the state reduces its financial burden while expediting the construction of public works to meet society's increasing demands.

However, the Government emphasized the need for a comprehensive reform in the implementation and payment mechanisms for BT contracts to address previous issues. Problems like rising costs, project delays, and payment opacity previously complicated many BT projects. Hence, investor selection needs strict bidding, ensuring fair and transparent evaluation criteria. This approach not only facilitates investors but also protects the interests of the state and community.

Another critical factor is defining clear payment mechanisms for investors, which should be specified from the project planning stage. This ensures timely payments, avoiding prolonged debt situations for investors. Additionally, a robust monitoring and inspection mechanism throughout the contract process can promptly address emerging issues. These measures enhance transparency and improve capital efficiency in infrastructure projects.

Ultimately, reintroducing BT contracts is not only a crucial step in revitalizing investment activities but also part of a long-term strategy to develop national infrastructure. Quality infrastructure projects play a vital role in promoting economic growth, creating jobs, and improving people's living standards. To achieve these goals, the government needs to work closely with investors, fostering a transparent, fair, and sustainable investment environment, thereby contributing to a stronger economy in the future.

Addressing obstacles in transition BOT and BT projects

Currently, around 160 BT projects are struggling with implementation issues, with a total investment of approximately VND 59 trillion. To resolve these challenges, the draft law allows applying the PPP Law to contracts signed before its effective date. This provision allows projects to continue while giving the Government a legal basis to address issues arising during implementation.

Localities like Hanoi, Ho Chi Minh City, and Da Nang have been permitted by the National Assembly to pilot PPP projects in fields not regulated by the PPP Law. This opens opportunities for these regions to maximize the potential of BT contracts and mobilize private sector resources.

Although these amendments are expected to resolve many PPP project issues, there are still challenges to address. Expanding investment fields and removing minimum capital requirements must be carefully evaluated for practical feasibility and project efficiency.

Additionally, clear BT contract management mechanisms are necessary to avoid losses and waste. The reviewing body also recommends detailed guidelines on BT contract procedures to ensure regulations are strictly enforced.

Amending the PPP Law is not merely a legal action but a significant step toward creating a more favorable investment environment for public infrastructure projects. Proposals like removing investment field restrictions, increasing the State capital ratio, and reapplying BT contracts reflect the Government's efforts to unlock resources and drive economic growth.

If effectively implemented, these amendments not only help resolve issues in PPP project execution but also provide strong momentum for future infrastructure development. Close monitoring and evaluation of the new regulations’ impact are essential to ensure they genuinely benefit the economy and community.

Nghe Nhan