Vietnam Regulatory Brief: Investments in Public-Private Partnerships, Agriculture, and Construction Cost Management

Requirements for Public-Private Partnership (PPP) Investments

Decree No. 15/2015/NĐ-CP came into effect on April 10, 2015 and provides more transparent guidance on the requirements for the selection of investment projects in the form of Public-Private Partnerships (PPP).

To be more specific, projects proposed by ministries, provincial people’s committees and regulatory bodies have to fulfill the following requirements:

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• Conform to the program or the plan for the development of sectors/regions and the plan for local socioeconomic development;
• Conform to the investment sectors including projects relating to the construction, improvement, operation and management of infrastructural works; and the supply of public equipment and utilities;
• Prove that the investor has the capacity to attract and acquire commercial capital, and has the techniques and experience needed for project management;
• Have the ability to constantly and stably provide qualified products that meet the consumers’ needs;
• Have a total investment capital of at least VND 20 billion, except for projects under an Operation and Management (O&M) contract and projects listed in Point e Clause 1 Article 4 of this Decree; and
• Have a total investment capital of at least VND 20 billion, except for projects under an O&M contract, and projects related to infrastructure works (for agriculture and rural development) and services (for enhancing the correlation of agricultural production with farm product processing and sale). Additionally, projects with a high return on investment will take priority in the selection process.

Investments in Agriculture and rural areas to receive State-budget support

Circular No. 30/2015/TT-BTC, dated March 9, 2015, lays out the payment principles of state-budget support, encouraging enterprises to invest in agriculture and rural areas. The Circular will come into effect on April 27, 2015 and replace Circular No. 84/2011/TT-BTC.

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Key points of the new Circular include the following:

• The State budget will support the project after the advance payment of its investment items or its tender package is paid. Projects will receive 70 percent of the support upfront and the other 30 percent after the projects are completed.
• In case that only one item of the project is granted support, the State Budget will make a one-time payment to the project once it is completed.

Construction Investment Cost Management

The Vietnam government has also announced Decree No. 32/2015/NĐ-CP, which will come in to effect May 10, 2015 and will replace Decree 112/2009/NĐ-CP. The new Decree focuses on the management of construction costs, including total construction investment

Key regulations of the new decree include the following:

• Construction costs must be calculated correctly and sufficiently for each project, construction and contract, conformable to design requirements, technical instructions, construction conditions, market prices at that time, and the construction site.
• Investors may hire cost management advisors that are qualified to estimate, examine, control, and manage construction costs in terms of construction project management.
• Construction costs shall be managed according to criteria agreed by investment deciders and investors during corresponding stages of cost estimation including contents, methods, time of determination of total investment, construction estimate, etc.

Import and Export: A Guide to Trade in Vietnam
In this issue of Vietnam Briefing Magazine, we provide you with a clear understanding of the current business trends related to trade in Vietnam, as well as explaining how to set up your trading business in the country. We also attempt to give perspective on what will be Vietnam’s place in the Association of Southeast Asian Nations (ASEAN) in 2015, and look at some of the country’s key import and export regulations.

Using Vietnam’s Free Trade & Double Tax Agreements
In this issue of Vietnam Briefing we explore how Vietnam’s Free Trade Agreements – and especially those via its membership in ASEAN – will affect foreign investment into Vietnam. We also go a step further and examine the specific, bilateral Double Tax Agreements that Vietnam has enacted, and how these can be further used to minimize profits and withholding taxes that would otherwise be levied upon foreign investors.

Developing Your Sourcing Strategy for Vietnam In this issue of Vietnam Briefing Magazine, we outline the various sourcing models available for foreign investors – representative offices, service companies and trading companies – and discuss how to decide which structure best suits the sourcing needs of your business.

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