Public Private Partnerships as an instrument to development of Vietnam Advantages and challenges.docx

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(Title Page)
Public Private Partnerships as an instrument
to development of Vietnam:
Advantages and challenges
Tang Thien Bao Viet
FA2013 - 1520
VIETNAMESE GERMAN UNIVERSITY
vince.z2301@gmail.com
September 12th
, 2018

II
Table of contents
Table of contents ....................................................................................................................... II
List of abbreviations.................................................................................................................III
1. Introduction..................................................................................................................4
1.1. Rationale of the study ..................................................................................................4
1.2. Previous research .........................................................................................................5
2. Overview of Public Private Partnerships (PPP)...........................................................6
2.1. Concept, definition and misconception........................................................................6
2.2. PPP organization structure.........................................................................................10
2.3. Applied PPP in the world...........................................................................................12
3. Effects on Vietnam.....................................................................................................23
3.1. Overview of PPP in Vietnam.....................................................................................23
3.2. Economic instrument to Vietnam development (Advantages) ..................................28
4. Conclusion .................................................................................................................35
Bibliography............................................................................. Error! Bookmark not defined.
Appendix .................................................................................. Error! Bookmark not defined.

III
List of abbreviations
PPP Public Private Partnership

4
1. Introduction
1.1. Rationale of the study
At present, many countries in the world have successfully implemented the Public Private
Partnership (PPP) model. Experts assert that public-private partnerships are now a trend in the
world and that Vietnam is in that trend. The concept of public-private partnership (PPP) model
is new and has not been implemented clearly in Vietnam, but for other countries in the world
this model has been applied for more than 50 years (The World Bank, 2018)1
.
With the view that only the private sector cannot do or participate in the new PPP model, the
state encourages private participation in most sectors. The PPP model combines the task of
public services with the efficiency of one or more private businesses that allow local
governments to quickly achieve the best international standards in public services, facilitating
for advanced technology transfer. The trend is also gradually approaching Vietnam,
implemented on the policy of unification of the Party and State at the document of the 11th
National Party Congress: "Stabilizing macroeconomic, growth and economic structure,
improvement of quality, efficiency, sustainable development, mobilization and efficient use of
resources, step by step building of modern infrastructure to continue perfecting the socialist-
oriented market economy mechanism. Continue improving to invest in and invest in various
forms of attracting and attracting investment in order to mobilize and effectively use all
resources of domestic and foreign economic sectors and promote internal resources, take
advantage of external forces for development " (Everest-Phillips, 2015)2
.
There are many different interpretations of the public-private partnership model, but the most
common way is that the state and private investors jointly sign a contract to divide the interests,
risks, and responsibilities of each party. in building an infrastructure or providing a public
service. However, not only Viet Nam but many other developing countries always have a gap
between the demand for socio-economic development such as transport, environment etc.
compared with actual potential. In these important areas, the State must always "modernize"
from A to Z leading to overload in many public administration departments, which slows public
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services, low quality. Equal equity in the private sector under the PPP model is a feasible
solution in the current trend. One of the driving forces behind the PPP model is that the state
must have a legal framework in place. However, the legal documents in this field are still rather
modest, not enough to create a solid legal corridor, cannot cause salient business with the public
sector through this cooperation model. More research is needed, a clear regulatory framework
and increased competition by increasing the incentives for private enterprises to encourage their
participation in the public sector following the PPP model. The experience can be consulted
from countries around the world.
With such an approach, the topic " Public Private Partnerships as an instrument to development
of Vietnam: Advantages and challenges" tries to meet some of the requirements that theoretical
and practical issues are reasonable to study.
1.2. Previous research
The PPP model has emerged quite early in the world and the practical application is also
extremely rich. Thus, the PPP model has been studied and written extensively by lawyers
around the world, but it is only orientated without a system because it is the crystallization from
different realities in each country. In Vietnam, this model is still new and the research on its
operation base and legal framework is very limited and has no system. A number of articles and
studies such as Public Private Partnership in transport infrastructure development of Assoc.
Prof. Nguyen Hong Thai; The status and options for mobilizing capital for PPP transport
projects in Vietnam of TS. Ha Khac Hao, 24 November 20093
; PhD thesis: Public Private
Partnership for the development of road infrastructure in Vietnam, by Huynh Thi Thuy Giang
(2012)4
etc. However, there is no topic A comprehensive and in-depth study of the legal
framework of the PPP model in the current context of Vietnam. In addition, research papers
and PPP documents by international economic organizations such as the World Monetary Fund
(IMF), the World Bank (WB), the Asian Development Bank (ADB) are diverse, have a
scientific value, especially can apply the lessons drawn from the practice of developing
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countries have many similarities with Vietnam. This is a very valuable resource to support
students to complete this thesis (Lindborg, 2012)5
.
1.3. The purpose of the study
Derived from practical needs and theories, based on the guidelines, policies and policies of
socio-economic development of Vietnam to aim at "rich people, strong country, just society,
people master, civilization, "the dissertation aims to contribute to the systematic synthesis of
legal norms on the model of public-private partnership in Vietnam, practical research applied
in countries around the world To withdraw lessons learned in Vietnam, and contribute some
recommendations for the improvement of this legislation. For that purpose, the thesis has the
following tasks:
(1) To study the basic theory of public-private partnership model in order to clarify the key
elements of this model;
(2) Analyzing and evaluating the reality of applying the model of public-private partnerships in
the world, lessons learned for applying the model of public-private partnership suitable for
reality in Vietnam in which Advantages and challenges are presented;
2. Overview of Public Private Partnerships (PPP)
2.1. Concept, definition and misconception
2.1.1 Concept and definition
Public sector: All government agencies at the central or local level as well as all corporations,
corporations, corporations owned, managed and operated by the government are considered to
belong to the sector. public works. International donors to support the state budget may also be
considered public sector, (Bennett, 1997)
The private sector includes all profit-making units and businesses not owned or operated by the
government. Charity organizations and nonprofit organizations not owned or operated by the
government are also considered part of the private sector, (Bennett, 1997).
Goods / Services: public goods / services are products and services that meet three criteria:
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(i) Essential products and services for the socio-economic life of the country or population
communities of a territorial area where the State needs to ensure for the common
interests or the maintenance of national defense and security, (Economica, 2011);
(ii) the production and supply of these products and services under the market mechanism
is difficult to cover; (iii) be ordered by the competent agency or organization, assigned
to plan and organize the bidding at prices or charges ordered by the State. Public goods
/ services can be provided entirely by public agencies (purely public) or by the private
sector (purely market) or provided by these two sectors (for ).
Public-Private Partnerships: The most common form of interaction is the government's creation
of an enabling environment (such as providing infrastructure, legal services, maintaining public
order) to attract top private enterprises private and agricultural business, rural. In some cases,
the Government has provided some support and incentives to enterprises or investors in certain
areas and areas of agriculture and rural areas, (Colverson, 2012). In other words, public-private
partnerships are interactions (such as policy issuance and feedback) between the public and
private sector to create a favorable investment environment in which the House The country
can promulgate mechanisms and policies to support and encourage the private sector to invest.
In this connection, the State exercises the role of supporting the private sector in investment
and business development based on private sector feedback and recommendations, (OECD,
2012).
Public-Private Partnership: covers all forms of public-private partnership. Public Private
Partnership (PPP) can include both formal and informal agreements, along with the diversity
of stakeholders' responsibilities in each specific case. Risk and responsibility for decision
making may or may not be shared among partners. Participants in PPC are not required to
contribute financially to their participation, which may be in the form of nonfinancial (usually
inaccurate), (Roman, 2015). Public-private partnerships involve a wide range of actors both in
the public sector (such as state agencies, donors, state-owned enterprises) and the private sector
(such as private companies, non-governmental organizations). government, community
organizations). Public-private partnerships are increasingly common in agriculture, especially
in sustainable agricultural development initiatives and are often managed by memoranda of
understanding between partners. PPC activities often aim to achieve certain social and
environmental goals and are supported by the Government in many forms. In PPC, the public
sector plays a catalytic role in developing relationships among actors in the value chain, most

8
among enterprises and smallholder farmers and / or farmer representative economic
organizations, (Muneera, 2012).
PPP (Public Private Partnerships) is a model of public-private partnerships in the provision of
services and public goods. Under the PPP model, the State develops "requirements" (list of
infrastructure projects to be provided, types of public services to be provided), identifying
necessary "standards" (in terms of scale, quality, investment, time etc.), the private sector is
encouraged to invest in the supply of public goods and services and is "paid" for quality of
service. The "payment" varies depending on the type of PPP contract, (Nordtveit, 2004).
Researchers agree that the UK is one of the pioneers in the successful implementation of the
PPP model. This method has been successfully implemented in many countries around the
world. This model is applied in many areas of public services such as: toll roads, railways,
airports; To build or invest in upgrading hospitals and schools; Construction, operation and
maintenance of office buildings of state agencies; Scientific research institutes (equipped with
laboratories and production facilities); Legacy mining and even prison services detain
prisoners, (Rondinelli, 2002).
Investment in the form of public-private partnership means the State and investors jointly
implement the project on development of infrastructure and provision of public services on the
basis of project contracts, according to Decision No. 71 / 2010 / QD-TTg on promulgation of
regulations on pilot investment in the form of public-private partnerships (The Prime Minister,
2010)6
.
Public Private Partnership (PPP) is the transfer of private sector investment projects that are
traditionally government-funded projects. This definition emphasizes the PPP investment but
there are two aspects to be considered:
(1) Private investors assume responsibility for providing services through the project;
(2) Some of the risks associated with the project will be transferred from the public sector
to the private sector.
However, PPP is very different from abandoning state assets or contracting services outward.
That's because the PPP involves joint operating between the state and the private sector, quite
clearly the spirit of a joint venture, (Vietnam Development Report 2009, World Bank)7
.
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Although Vietnam already has a provisional definition of "investment in the picture
Public private partnerships from 2010, but so far there are many ways to understand different
views on this investment in Vietnam. In some places, the industrial partners" projects are
considered as 'socialization' projects or 'the state and the people work together. At times, public
private partnership projects are considered purely investment projects that take profit from the
private sector.
PPP can be understood as a public-private partnership whereby the state allows the public to
invest in public services or facilities. Under the PPP model, the State will establish standards
for the provision of services and private sector incentives to be provided through a quality
service payment mechanism. PPP is a combination of the following elements:
(i) a public-private partnership based on a long-term contract for the provision of public
goods or services;
(ii) Reasonable allocation of benefits, costs, risks and responsibilities between the two
regions;
(iii) Expected results are the quality of goods / services and the use of funds.
(iv) The private sector partner in the design, construction, funding and operation;
(v) Payment made throughout the contract period; and
(vi) Property ownership remains with the public sector and the private sector transfers the
assets to the public sector at the end of the contract period.
2.1.2 Misconception
Moreover, "socialization" or "the state and the people working together" had been introduced
in Vietnam for a long time in the Party resolutions but have not had a clear definition and a
legal mechanism to ensure the implementation. "Socializing" or "the state and the people
working together" generally understand that the state expects organizations and individuals
outside the state agency system to replace or cooperate with the home sector Water to
participate in some activities / services of the state. In fact, in one case, the term "socialization"
used in Vietnam has the same meaning as the "private partnership" or "public-private
partnership" of the World Bank or Other countries.
In many cases, however, the term "socialization" is used in cases where the state calls for
"corporate social responsibility" in state affairs. While "socialization" in many other countries

10
is a concept of psychology, it refers to "the psychological development of an individual
integrating into social life".
In other cases, the "public-private partnership" or "socialization" investment model is
implemented in the form of privatization of assets or commercial advantage of the State, for
example: BT (Build-Transfer) or BOT (Build-Operate-Transfer projects for infrastructure in
exchange for "urban project land". Thus, the nature of the "partnership" or "coordination" of
"public-private partnership" project is not consistent with the definition of Decision 71/2010 /
QD-TTg8
or the World Bank mention.
Due to the lack of agreement on "concept" or in other words lack of a sufficient legal corridor
for "public-private partnership" or "socialization" cooperation activities, government agencies
have applied inconsistency in investment policy and legislation regulating a project with the
cooperation of the private sector. It can be seen that many investment projects in infrastructure
and in other fields, such as education, health and culture, are called in the form of "socialization"
in order to avoid conditions and procedures for a public-private partnership project. Only in a
small number of projects, often on a large scale, requires the approval of the Ministry of
Planning and Investment to be labeled a "public-private partnership" and included in the
Portfolio calling for investment.
Moreover, there seems to be a fundamental difference between the concept of "investor" in the
"public-private partnership" model of Vietnam and the world. In Vietnam, the term "private"
seems to refer to "investors" regardless of whether the capital is "state" or "private". In Vietnam,
many "public-private partnerships" completely become "public- public partnerships" because
Vietnamese state-owned enterprises are involved in public-private partnerships. Meanwhile,
the concept of "private" of the world is aimed at the "private sector" with the aim of promoting
the strength of the private sector in the "public" projects as mentioned above.
With the limitations of conceptual, policy and regulatory ambiguity in this area, a "begging"
mechanism should be created in "public-private partnership" projects. Investors in the private
sector cannot equally negotiate with the state on contracts, support mechanisms or the form and
level of incentives provided by law.
2.2. PPP organization structure
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The PPP model is implemented through contracts between public sector organizations
(including local governments) and private parties (usually a Special Purpose Vehicle
Company). Theoretically there are two types of PPP contracts:
- The private party is assigned to perform certain functions of the public sector.
Corresponding to these types of contracts, the private party will be paid by the State,
local governments for fees, or private parties are allowed to collect fees / charges for
the use of the services provided under PPP contract.
- The private party is assigned to use the assets of the State and local authorities for the
purposes of commercial business. The private party will then have to fulfill certain
financial obligations under the PPP contract.
Figure 1: PPP organization structure
There are also cases where a PPP contract is a combination of the two. Under this principle,
each country has its own regulations for each type of contract depending on the needs and
capabilities of the government.
The advantage of this model is that it benefits the State, citizens and investors. Citizens are
better served with goods and services, and the state can take advantage of financial resources,
management experience and risk sharing with investors. Investors take risks but profit. When

12
implementing a PPP project, the inadequacies arising from procurement, project management,
operation and maintenance of the public project are as limited as possible. With the strict terms
of the PPP contract, in addition to the risk involved, the private party must ensure that the work
is executed and timely operated in accordance with the criteria signed. In addition, when
implementing the PPP model, the Government (or local government) will reduce investment
costs and management burden in some areas of public goods and services, focusing on
implementing some key tasks to contribute to the implementation of local economic
development policy.
2.3. Applied PPP in the world
2.3.1 Popular form of Public-private partnerships are in the world
There are many different interpretations of the public-private partnership model, but the most
common way is that the state and private investors jointly sign a con-tract to divide the interests,
risks, and responsibilities of each party in building an infrastructure or providing a public
service. Between the two extremes of the state or the private sector, the remaining forms, though
more or less, are involved in both. There are five common public-private partnerships in the
world.
Firstly, Franchise is the form by which the infrastructure is built and owned by the state, but
delivered (usually through auctions) to private operators and operators.
Secondly, slightly different from the franchise, in the Design-Build-Finance-Operate (DBFO)
model, the private sector will build, Operates the building but it remains state-owned.
Thirdly, Build - Operate - Transfer or BOT is a model in which the company im-plementing
the project will stand for construction and operation of the facility for a certain period of time,
then transferred entirely to the state. This model is quite popular in Vietnam.
Fourthly, slightly different with the BOT model, in the build-transfer-operate (BTO) model.
Ownership of infrastructure is transferred to the state immediately after the construction, but
the company implementing the project still retains the right to ex-ploit the project.
Finally, it is Build - Own - Operate or BOO. In this model, the company implementing the
project will stand out building, own and operate it. The BOO model is very popular for power
plants both in Vietnam and in the world.

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In most public infrastructure projects (except the BOO model), private ownership is only
symbolic. For example, a bridge is owned by a BOT enterprise, but when there is no user, the
BOT business can hardly do anything about the bridge. In ad-dition, in many cases it is difficult
to determine how a project is implemented, es-pecially in ways 2, 3 and 4.
Revenue to cover operating and operating expenses is primarily due to:
(1) Charging users for such fee-charging projects as transportation and / or
(2) Firms that operate when hiring them perform some types of non-revenue services such
as hospital management or hospital sanitation, for example, or projects with incomes that are
not sufficient to cover costs. For projects with user fees, the state decides the price.
2.3.2 Advantages and disadvantages of the PPP model
According to an analysis by the Asian Development Bank in the Public-Private Partnership
Handbook9
, published in 2008, three motives for adopting the PPP model are revenue to tap
into private capital, increase the efficiency of using available resources, and generate
motivation and accountability.
From the perspective of the state, the greatest advantage of public-private partner-ships is the
reduction of the burden as well as the risk to the budget. For example, for a BOT project, private
investors have to bear the financial burden as well as operational risk.
Moreover, the PPP model helps to address the problem of inefficiency. For the purpose of
profitability, private investors must find ways to make the project more efficient. In addition,
with the participation of the private sector, creativity, ac-countability and transparency are
likely to improve.
The biggest disadvantage of the PPP model, however, is that the costs are higher as private
investors demand a higher return. In many cases, the design of a finan-cial mechanism and the
mechanism for dividing responsibility, determining the level of fees or subsidies of the state
are extremely complex. Moreover, the con-flict between public and private interests is also a
problem. For a certain purpose, for example, wanting another plot or project, the private
investor draws up projects that after very little construction, not even a user is absolutely
possible.
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2.3.3 Experiences from Developed countries
The PPP model was applied in the construction of canals in France in the 18th cen-tury, the
bridges in London in the 19th century or the famous Brooklyn bridge in New York in the 19th
century. This has only really started to spread in the world since the early 1980s and it has
played a role in developing infrastructure in devel-oped countries. He is a pioneer in this model
with the famous privatization pro-grams of Prime Minister Margaret Thatcher. However,
according to the Yescombe statistics, in the nearly 20 years (1987-2005), only 725 new
investment projects with a total investment of over 100 million pounds were made under the
PPP model. The total value of these projects is just £ 47.5 billion (about $ 70 billion) (Gilroy,
2006)10
.
This is a very modest level of a country with a GDP of trillions of dollars. In other countries
such as the United States, Australia, France, South Korea etc., the PPP model is also used in
many infrastructure construction projects and public service delivery. However, no country in
this model has a dominant role in relation to other forms of infrastructure construction. Over
the 3 year period from 2003-2005, the total value of PPP projects under the G7 method was
less than $ 100 billion (PWC, 2015)11
.
2.3.3.1 Experiences from Japan
Public-private partnership contracts in economic development are expressed differently
through different stages of development. Since 1950, when the concept of PPP has not been
established, there is public-private partnership in investment in infrastructure development and
provision of essential services in Japan. In this period, the State plays a key role in providing
public services, and is the main source of financing for the private sector to perform this task.
Private companies, particularly in the four power sectors, coal, steel, and shipping, have
received significant financial backing from the government, including investment channels
through organizations public finance, typically the Japan Development Bank. These public
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financial institutions were established to separate the implementation of state public policies
from business functions of commercial banks, and to receive investment from government and
resources. Support from foreign countries to invest in development for private companies in
developing infrastructure and providing essential services.
By the 1980s, public-private partnerships had developed in the direction of privatization,
whereby the private sector's tendency to provide public services was previously undertaken by
the state to reduce the burden. The Government finances, and at the same time, facilitates the
improvement of the quality of public services. In the 1990s, the concept of private sector
management was applied to public sector management to enhance public sector accountability
and efficiency in the face of overall public sector reform (Calabrese, 2008)12
.
Since 2000, the public-private partnership has been developed and improved. Public-private
partnerships are understood to be part of public sector reform to overcome financial shortfalls,
maximize benefits, and provide better public services at the lowest cost. The main content of
public-private partnerships is the sharing of risk and responsibility between the state and the
private sector, with the primary responsibility for risks being that of the private sector. The state
is also responsible for providing financial support to the private sector to ensure feasibility of
the project and mitigate problems for the private sector. The cooperation mechanism has
changed and gradually shifted from the management of the law to the management of the
contract. In addition to traditional ways of cooperating, over the past 10 years there have been
many measures, regulations and policies to promote different models of public-private
partnerships, notably the Law on the Promotion of Innovations Private Financing 1999. In
implementation of this Law, there are about 310 PPP projects under the form of Private
Financial Initiatives (PFI) as of 2008 (Rachael N, Benon C., and & Pross. N., 2013)13
.
2.3.3.2 United Kingdom: Select only those projects that produce superior value
The UK is one of the first countries to successfully build and implement a PPP project. As early
as the 1960s, the United Kingdom took initial steps to establish a PPP mechanism for public
service delivery projects, and since the 1980s it has been widely applied.
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This will start with the need for public service reform and modernization, while improving the
efficiency of procurement of public services as well as increasing the competitiveness of the
sector. In addition, the PPP project helped to eradicate consumerism in both the public and
private sectors when implementing the project, improving the transparency of the cost of public
services.
PPP in the UK is understood to be as simple and effective as: The public sector pays only if the
service requirements are provided and paid annually. In the UK there is a refinancing
mechanism for PPP projects. Accordingly, this agency may consider securing finance for a
project or financial structure platform with a minimum value of £ 20 million (Adighibe, 2015)14
.
As a matter of fact, banks often do not offer incentives for projects with a duration of more than
five years, whereas PPPs typically have a minimum deployment period of 15-20 years. As a
result, the UK has set up bank alliances to save the situation, attracting more banks to take on
long term projects.
With the view that only the private sector can not do or can not participate in the new state, the
state encourages private participation in most sectors in the form of private sector investment.
all the facilities for the works then the state lease. Thus, the facilities are still private and the
state rents and manages only. A general assessment of the quality of PPP projects in the UK
shows that this model has been implemented effectively, the factors that make it successful are
that the government has timely reforms to ensure market development. PPPs include: the
appropriate legal and institutional frameworks at the national, regional and municipal levels
that act as safeguards for potential partners. It ensures that government spending is thoroughly
reviewed and publicly disclosed; Has adequate assessment tools associated with the program
management process to ensure that the project is completed on time without compromising
quality; have agencies such as the Partnership UK and the Ministry of Finance working to assist
the Government in overseeing or providing technical support to sector ministries. provision of
infrastructure and public services; High value projects will receive financing commitments
under the Private Financial Initiative (PFI); Empower the National Audit Office to
independently oversee PPP projects.
2.3.3.3 Canada: Sharing responsibility and risk
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The most commonly used form of PPP in Canada is the DBFM model (design - construction -
funding - maintenance), rarely operating because of the policy in Canada. The state always
wants to retain ownership, not transfer it to the private sector (there are only two roads in
Canada that are subject to fee-charging).
In addition, according to the DBFM model, the regulations on maintenance responsibilities of
the works are clearly stated, usually throughout the contract period (25 - 35 years), subject to
pre-defined transfer conditions. At the same time, contractual agreements based on the
usefulness of the facility and partner is paid back. The government or sponsor only commences
payment upon completion of the construction. Subsequent payments will be subject to a
deduction if service and maintenance are not covered by the contract.
Thus the application of this form in Canada has brought a great advantage that is to create
confidence for investors in the implementation of projects by the state committed to pay
investors 30-50% of the price. The project will be completed within the next 25-30 years
(Understanding Public Private Partnerships in Canada, 2008)15
.
With such a mechanism, the return of capital of investors will be ensured, the long payment
period of the contract will reduce the pressure on the state budget, and transfer responsibility
for maintenance and operation for the first If you do not want to reduce your profits and
overcome the situation of investors after the construction of the project, neglect the quality of
services and maintenance. Moreover, it is with the commitment to make payments from the
state, Canada has minimized the rampant creation of toll stations. At the same time, based on
the planning, functional agencies will propose projects and select models for investment in PPP.
2.3.3.4 India: Commitment to support from the Government
From 1990 to 2002, pilot PPP projects in India were implemented but there was no clear policy,
legal, and organizational framework. One of the early pilot PPP projects is the Delhi-Noida
PPA project, which has a US $ 100 million investment, a 30-year franchise and a 20%
guaranteed return on investment (Rachel, 2010)16
.
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By 2005, India began to have an official PPP framework by establishing a PPP focal point and
issue "Guidance for the Construction, Validation and Approval of PPP Projects" with the
Ministry of Public Works. A sample PPP file is also available, such as the type of bidding
document, proposal form, franchise form, PPP request form (Rachel, 2010)17
.
One of the most important forms of documentation is the franchise model (MCA). Each of the
PPP fields, such as national highways, provincial roads, docks, railways, subways and urban
railways, has separate model contracts. Since the MCA was introduced, these models have been
used extensively to invest in tens of billions of dollars a year.
In India, the use of MCAs is believed to have significantly strengthened the trust of top officials
of ministries, agencies, and local governments to sign PPP contracts knowing that the projects
are completely legal and comply with clear standards.
India was the first country to set up the Financial Stability Facility (VGF) and to do it properly.
The VGF Fund addresses the following issues: limited ability to pay for PPP services; leverage
finite government funds to improve infrastructure quality, for example, if 20% of the PPP
investment comes from the VGF, then one for the public sector leverages 4 more copper from
the private sector; promote the principle of user pay; Ensure selection of private partners based
on market ...VGF support in India is limited to 20% of the total project cost. Line agencies can
fund 20% of the project.
In order to receive funding from the VGF, the relevant government agency must certify that it
is not possible to increase the use of taxes, fees, and project duration to address PPP funding
shortages; The investment cost of the project is reasonable, cannot be reduced to address the
shortage of PPP funds.
In general, the biggest lessons learned from the experience of these countries are the division
of the responsibilities and tasks of each party involved in the PPP investment project and the
effective selection of the project. As a result, the deployment process becomes smooth and easy
to manage.
2.3.3.5. Republic of Chile
The success of PPPs in Chile is due to the Government's transparent, clear and fair bidding
process, a strong legal framework for stable and predictable PPPs; franchise agreements
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encourage compliance with defined expectations and levels of service; The Republic of Chile's
Foreign Investment Law protects investors and guarantees the financing of private investment.
The three characteristics of the franchise agreement that are crucial to the success of the
Republic of Chile's PPP contract are transparency, predictability and accountability. With
transparency of franchise rights and the process of awarding contracts, contract requirements
are publicized and applied equally to all contractors. Predictability is ensured that the private
sector knows exactly what their rights and responsibilities are and can adequately value it.
Accountability is important, so the government through franchise can enforce uniform
standards.
2.3.3.6. South Africa
In 2000, South Africa formed a PPP unit that acted as the focal point for the coordination and
management of PPP programs, and the PPP unit reports were submitted to the Budget
Department and the State Treasury. The PPP unit carries out PPP-related consultancy tasks,
including 11 professional staff. The main functions of the PPP unit include: formal approval in
three different preparation phases of the project to ensure compliance with the Treasury
regulations, intensive technical support to the department in indicating Develop policy, guide
specific PPP bidding processes and PPP contract terms, trainings, workshops, raise public
awareness of PPP through editions, website conferences and project management funds that
provide funding for government transaction costs, (Worldbank, Building Capacities for Public
Private Partnerships, 2006).
PPP procedures and regulations are governed and regulated by the Public Finance
Administration (PFMA) Act 1999 to regulate the financial management of the government and
the provincial level. The objective of the PFMA is to ensure fair use of funds, identifying
stakeholder responsibilities in the financial area. The treatment is managed by the Treasury at
the national and provincial levels. The PPP Center has been set up to provide guidance to
provincial and private sector stakeholders regarding PPP procedures and regulations,
(Worldbank, Public-Private Partnership Units, 2007).
2.3.3.7. South Korea
In Korea, the PPP model was officially launched in 1994 along with the promulgation of the
Law on the Promotion of Private Investment in Infrastructure. When the law was put into
practice, more than 100 different infrastructure projects were implemented in the form of PPPs.
However, in the first four years, only 42 projects were completed.

20
Studies on this issue pointed to shortcomings in the 1994 Law and a new public-private
partnership law enacted in 1999 in place of the old laws. This law has improved the forms of
contracting, the handling of individual projects, and mandated the feasibility study of the project
and other risk management systems and the establishment of a PPP Research and Development
Center (PICKO), (Kim, 2001).
The center was merged with the Center for Private Investment Management (PIMAC) after the
Public Private Partnership Law was amended in 2005. Under the Public Private Partnership
Law, PIMAC Issue an annual PPP plan, which contains specific and practical guidelines for the
application of PPP projects, and publishes a PPP Implementation Handbook to create
transparency and attention. of the private sector.
In 2001, the government issued a 10-year plan for the implementation of PPP, demonstrating
the determination of the Korean government to focus on PPP projects. In addition, Korea has
been promoting incentives for PPP projects in the form of tax exemptions. In many contracts,
the government can guarantee sales of up to 90%, thereby stimulating private investment as
they barely bear the revenue risk that this risk transfers largely to the government, (Worldbank,
2007).
2.3.3.8. Philippines
The government of the Philippines has promoted private sector participation in traditional
infrastructure projects such as energy, transportation, water, non-traditional infrastructure such
as information. , communications technology, health and real estate development since 1987.
PPPs enabled the resolution of the energy crises of the early 1990s and helped to improve the
quality of road networks, transport links loading and social services in the country.
The government has created an institutional structure to support the private infrastructure
program. Each agency has a Build-Operate-Transfer (BOT) center that is responsible for
coordinating the design and implementation of its projects. Country, province and city
government selected projects under the framework. Agencies prepare a list of priority projects,
approved by the Coordination Committee and the National Economic Investment Authority.
The Government has set up a BOT (Build-Operate-Transfer) Center to carry out the following
tasks: gathering all nominated projects eligible for development under the BOT framework;
Provides advice to foreign investors doing business in the Philippines in the field of
infrastructure projects; provide technical assistance and training for central and local
government officials on the design and implementation of the project; Focusing and promoting

21
the BOT Philippines program and specific projects through advertising materials and road
programs, (Abdul Quium, 2003).
In order to attract private sector participation in infrastructure development, the Government
has developed a comprehensive communication strategy program for publicity and
transparency in dealing with the private sector, the campaign launched one month in advance
to explain and provide actionable measures. To ensure that the media has been informed of the
bid, the Government prepares a video presentation of the procurement rules and procedures for
opening tenders, which are open to the public. The Philippine government considers that the
project's success is primarily due to the design of a transparent procurement process and
awareness among stakeholders, (Abdul Quium, 2003).
2.3.4. Experiences from Developing countries
In developing countries, the PPP model has been popular since the early 1990s, especially in
Latin America. According to World Bank statistics, for the 20 years (1990-2009), there were
4,569 PPP projects in developing countries with a total investment capital of $ 1,515 billion.
This includes the privatization of SOEs (Rana, 2018)18
. Total investment is only equivalent to
1% of GDP for developing countries over the past two decades. With an investment of 5 to 6
percent of GDP, PPP investments account for only about 20 percent. This is a rather modest
figure.
In terms of investment trends, over the past 20 years there have been two major waves. The
first wave occurred in the mid 1990s, culminating in 1997 with a committed $ 109 billion. This
is the period in which the privatization process took place in Latin American countries.
However, expectations about the role of the private sector in solving the problem of
infrastructure and the provision of public services have fallen sharply as problems have arisen
(McKenzie, 2002)19
.
One of the leading scholars on infrastructure, Professor Gomez Ibanez, says the privatization
of infrastructure has gone too far. In fact, the results of encouraging the private sector to engage
in the provision of public services or infrastructure were not as expected. After the massive
deployment of projects in the mid 1990s, the defect was revealed in the early 2000s. Revenue
is not sufficient to cover the required costs and returns. As a result, the quality of services is
18
19

22
even lower before it is transferred to the private sector and in many cases the state must
nationalize and self supply public services or infrastructure. The second wave is in recent years
as the PPP model has become more common in South Asian, European, Central Asian and
African countries. It peaked in 2008 with a total committed capital of $ 163 billion (World
Economic Situation and Prospects 2018, 2018)20
.
In terms of territory, the PPP model is most popular in Latin America for the past 20 years. At
the peak of the first wave, the region accounted for 80% of committed capital. At present, these
countries are still leading the world. For East Asia and the Pacific, this model is not very
progressive. In terms of investment structure by sector, energy and telecommunications are the
two sectors with the highest proportion. The share of the transportation sector has been on the
rise recently, but still much lower than the two.
As classified by the World Bank, the new construction projects accounted for the largest share
with 53.4%. The type of rehabilitation, operation and transfer of existing projects whereby the
private sector will invest in upgrading existing projects or services, then hiring them to operate
for a certain period of time and finally returned to the state accounted for a significant
proportion with 17.5%. The ownership transfer pattern (wholly or in part) for the private sector
accounted for 27.8%. Rental or management contracts accounted for a modest share of only
0.4%.
After eliminating privatization, BOO projects accounted for more than half, while the rest were
BOT. In developing countries, the franchise model or operating lease is not widespread due to
the limited legal and regulatory capacity of government agencies (World Economic Situation
and Prospects 2018, 2018)21
.
Governments in most developing countries (including Vietnam) face the challenge of meeting
the growing demands of industrial parks and economic zones in investing and upgrading
technical infrastructure for promotion and investment, especially for FDI projects. Meanwhile,
funds available from traditional sources that rely heavily on taxation and public sector
governance to implement infrastructure projects are still limited. As such, partnership with the
private sector is an attractive alternative for enhancing and improving infrastructure for
development.
20
21

23
3. Effects on Vietnam
3.1. Overview of PPP in Vietnam
3.1.1. Public private partnership model in Vietnam with pilot project
In countries around the world, this type of PPP is not new, but it has been around for 50 years,
but in Vietnam it is still in the early stages of the transition. Pilot models, such as the first Dau
Giay - Phan Thiet expressway, are being delivered to the Ministry of Planning and Investment.
The question is why domestic and foreign private sector wants to participate in infrastructure
projects that require large capital and slow recovery time.
As described above, the PPP model has been practically available in Vietnam since the early
1990s. For example, the Phu My Hung new urban project was implemented in a combination
of BOT and land conversion for infrastructure. . This can be seen as the model of public-private
partnership as well as land exchange for the most successful infrastructure in Vietnam.
Compared with many plots of land and other resources allocated to private investors, the State
has almost nothing to gain. In this project, the state has earned about 60% of the financial
benefits from the project, a modern road and a model urban model (Shira, 2015)22
.
In addition, many other public-private partnerships have been implemented since the 1990s,
including BOT for Co May, BOT for Phu My, Phu My Power, and many power plants. Small
and medium is being implemented under the BOO mode. In Vietnam, according to World Bank
statistics, in the period 1994-2009, 32 projects were implemented under the PP model with total
committed capital of $ 6.7 billion. Like other countries, the BOT and BOO models make up the
major share. The two sectors that make up the largest share are electricity and
telecommunications.
Especially, after the Decision 71/2010 / QD-TTg on the promulgation of the pilot regulation on
investment in the form of PPP was issued and officially came into effect on January 15, The
Government has assigned the Ministry of Transport to pilot the PPP project at the Dau Giay -
Phan Thiet expressway project, with a total budget of VND14,355 billion and a construction
22

24
period of 36 months. The first investor is BITEXCO Group Limited Liability Company with
60% equity in the company implementing the project. The second investor holds 40% of the
equity and will be selected through competitive international bidding.
On October 26, 2012, the Prime Minister issued a separate mechanism for the Dau Giay - Phan
Thiet project (Decision No. 1597 / QD-TTg on the issuance of the "First Management and
Implementation Mechanism Construction of Dau Giay - Phan Thiet expressway will be piloted
in the form of public - private partnerships.) With the bid participation of seven wellknown
international investors for infrastructure projects with large investment capital The attraction of
this form of cooperation in the provision of public goods, as well as the expectation of the
success of the project, is all but a matter of concern. This means that the project has not yet
been deployed at the present time.
In 2010, according to statistics from the Foreign Investment Agency, the Ministry of Planning
and Investment, the total number of newly licensed foreign direct investment projects is 969,
of which 6 are BOT, BT and BTO.
By the end of 21/12/2010, the investment projects in the form of 100% foreign capital
accounted for 8% of the total number of projects; Joint ventures accounted for 7% of total newly
licensed projects; Forms of shares and cooperation contracts are 4% and 1% of the total number
of newly licensed projects. Thereby, the forms of investment under the BOT, BT and BTO
contracts are developing in a positive way.
One of the major challenges for PPP investment in Vietnam is the incomplete legal corridor,
which is lacking in consistency. In fact, the lack of consistency of laws, the lack of proper
guidance documents are the factors that contribute to the failure of PPP projects. Particular
attention should be paid to the financial obligations imposed on the Government's financial
support, the interest rate mechanism, as well as the state agency responsible for the
implementation of PPP projects. In addition, the key issue for mobilizing investors to
implement the PPP model is the opportunity to seek profit from PPP projects. However, some
companies are still concerned about the constraints on government loan guarantees and the
contribution of 30-70 in a PPP project.
The PPP model, which has been widely disseminated in Viet Nam in the form of BOO and
BOT, is still too modest and needs to be implemented, especially in legal matters. Therefore,
measures should be taken to improve the attractiveness of domestic and foreign investors,

25
making good use of capital from foreign and domestic investors in an effective and profitable
way for two parties.
In summary, international statistics show that the PPP model is only one of the modes of
investment in infrastructure, and it has a modest role in many countries around the world.
Therefore, the implementation of this model in Vietnam is necessary. However, it should not
be expected, especially when the BOT and BOO models are familiar in Vietnam and deployed
them also need certain conditions.
In short, PPPs are not new in Vietnam. This model can contribute to the construction of
infrastructure or public service delivery, but it should not be expected to be a magic wand to
solve infrastructure bottlenecks in Vietnam. In fact, one of the reasons for the shortage and
overload of infrastructure in Vietnam is that many of the structures have been built or are
ineffective (very few users), either too expensive or due to both.
In order to solve the infrastructure bottlenecks, it is necessary to do the right project and
eliminate the unreasonable costs. To do this, a scientifically validated project evaluation
process, coupled with open and transparent procurement procedures, is a must.
3.1.2. Legal status of PPP in Vietnam
3.1.2.1 System of legal documents on PPP
Currently, in the legislative framework governing PPPs in Vietnam, the two most promulgated
legal documents are the Law on Investment and the Law on Procurement. On June 11, 2014,
the National Assembly promulgated the Investment Law No. 67/2014 / QH13 (effective as of
July 1, 2015) with specific provisions on PPP in Article 27.
Investment in the form of PPP contracts: "Investors and project enterprises sign PPP contracts
with competent state agencies for execution of investment projects on new construction or
renovation, upgrading or expansion. , management and operation of infrastructure works or
provision of public services. The Government shall stipulate in detail the fields, conditions and
procedures for implementation of investment projects in the form of PPP contracts. " Tendering
Law No. 43/2013 / QH13 dated 26/11/2013 (effective as of 01/07/2014) with the legal
provisions have been focused, systematic adjustment.

26
Accordingly, the bidding for the selection of investors for PPP projects falls within the scope
of the 2013 Bidding Law (Clause 3, Article 1 of the Bidding Law 2013)23
. In addition, the State
Budget Law provides for the overall development investment budget from the state budget. The
Law on the Elaboration of the State management regulations applicable to investment projects
involving construction activities, including the competence for elaboration and approval of
construction investment projects. A separate legal document regulating PPPs and still in effect
at the time the trainees completed this thesis is the Prime Minister's Decision No. 71/2010 /
ND-CP on promulgation of the Regulation piloting investment in the form of public-private
partnerships.
3.1.2.2 Decision No. 71/2010 / QD-TTg promulgating regulations on pilot in-vestment in
the form of public-private partnerships.
Decision 71/2010 / QD-TTG is the legal basis for the initial implementation of public and
private sector investment projects, opening up a stronger mobilization of private capital
investment in infrastructure construction. According to the pilot regulations, the
implementation of the projects still has some difficulties and problems that need to be solved,
namely: Regulations on the equity of the investor in the total investment of the project. The
equity of the investor in the project must be at least 30% of the private sector's share of the
project.
The limitation of the State's participation in a PPP project shall not exceed thirty (30) per cent
of the total investment capital of the project, irrespective of the characteristics of each project,
some potential PPP projects, requiring the participation of the State in excess of 30%, have not
been accepted;
The mechanism of capital allocation and capital management is not clearly defined.
Excluding the commercially attractive criteria of projects classified as PPPs in order to ensure
access to finance from Lenders, underestimation, importance, role the role of the lender;
The responsibility for risk sharing between the State and investors has not been mentioned in
case of risk.
23

27
3.1.2.3 Decree No. 15/2015 / ND-CP on investment in the form of new public-private
partnerships will be effective from 10 April 2015.
On 14/02/2015, the Government has issued Decree No. 15/2015 / ND-CP on investment in the
form of public-private partnership, effective from 10/04/2015. Decree No. 15/2015 / ND-CP is
an extension of Decision 71/2010 / QD-TTG with the following new points:
(i) to expand 05 (five) possible PPPs;
(ii) the investor's equity ratio should not be less than 15% of total investment;
(iii) the limitation of state capital in the PPP project, but clearly state investment capital
involved in the project implementation;
(iv) the conditions for selection of PPP projects are added;
(v) regarding the incentives for investors;
(vi) regarding the guarantee of the performance of contractual obligations PPP. Article
46 of Decision 71 states that the Government may appoint a guarantor, but the
Government itself is not the guarantor. Article 57 of Decree 15 changing the
guarantor must be the Government; The government only appoints the agency to
represent the government guarantee; (vii) clearly defining the direction of settlement
if disputes occur: Article 63 of Decree No. 15/2015 / ND-CP.
Further Analysis of Investment Disputes between Government and Foreign Investors: This
dispute is increasingly common in the process of globalization and international economic
integration. The phenomenon is also posing to Vietnam many issues of perfecting the
mechanism to effectively solve this type of dispute.
For the first time in a Decree, after the 2005 Investment Law, there are regulations on dispute
resolution between the Government of Vietnam and foreign investors. However, the provision
of restriction on the "Vietnamese Court" or "Vietnamese Arbitration" or the "Arbitration
Council established by the parties that still have the preference for "competent authority" in the
dispute. Will it be transparent, effective, attractive enough, attract foreign investors to
participate? Clause 4, Article 12 of the 2005 Investment Law stipulates that "disputes between
foreign investors and Vietnamese State management agencies related to investment activities
in the Vietnamese territory shall be settled through arbitration or court unless otherwise agreed
upon in the contract signed between the representative of a competent state agency or a foreign
investor or in an international treaty to which Vietnam is a contracting party.

28
For example, in the Bilateral Trade Agreement signed between Vietnam and the United States
(2000), Article 4 provides that one of the modes of dispute settlement at the Arbitration Center
is established pursuant to the 1965 Convention on Privileges. Dispute between the State and
the foreign citizen (ICSID Convention) is in accordance with arbitration procedures of this
Center if both parties are members of the ICSID.
ICSID - The International Center for Settlement of Investment Disputes (ICSID) was
established in 1966 on the basis of the 1965 Washington Convention (also known as the ICSID
Convention) is an effective legal framework for settling disputes. Foreign investors are
particularly interested in the country in which they intend to invest, as a favorable condition for
investors.
The reason is that ICSID gives investors the opportunity to directly prosecute a country without
going through a political or diplomatic way. Furthermore, the ICSID arbitration award can only
be considered by the arbitrator ICSID. In addition, ICSID has created a wealth of case law,
accompanied by a rich collection of analyzes and critiques of many scholars and lawyers
worldwide. For Viet Nam, ICSID is a sign of strengthening Vietnam's international
commitment to protecting the interests of foreign investors and attracting FDI flows in Vietnam.
3.2. Economic instrument to Vietnam development (Advantages)
After more than 30 years of renewal, Vietnam has achieved many achievements in economic
development, in which the economic growth rate is always high compared to other countries in
the region and in the world. The economic structure is adjusted in the direction of
modernization, increasing the proportion of industry and services, reducing the proportion of
agriculture and international economic integration deepening.
However, in order to maintain the momentum of growth and become an industrialized country
in the coming years, this is a difficult task for Vietnam in the context of demand for energy,
infrastructure for growth is increasing.
The most positive impact of the PPP pilot regulation will be the opening up of opportunities
and conditions for the mobilization of private and foreign capital to invest in infrastructure
reduce the burden on the state budget, It also takes advantage of the capacity, technology and
experience of investors (The World Bank, 2018)24
.
24

29
The Ministry of Planning and Investment, as the standing body of the Government's PPP
Steering Committee, has made great efforts to improve the PPP policy in order to attract more
private investment to invest in infrastructure. In the process of institutional improvement, the
Ministry of Planning and Investment has received the attention and support of donors to have
a good and professional PPP approach.
In addition, the National Assembly has assigned the Government to study the development of
the PPP Law in order to confirm Vietnam's determination to remove difficulties and legal
restrictions related to this form. In addition to improving the legal framework, supporting the
implementation of specific PPP projects is also important in the future. For successful PPPs, it
is important to recognize that this is a longterm partnership between the public and private
sectors that must share benefits and risks. In particular, risk sharing is very important, while at
the same time allocating reasonable resources, ensuring fair competition, best control of project
risks, benefiting both parties.
There are many reasons for cooperation with the private sector in the development and delivery
of infrastructure services:
(1) Increased efficiency in the distribution, operation and management of infrastructure
projects. There are additional resources to meet the growing needs of investing in infrastructure;
(2) Have the opportunity to access and capture advanced technologies (both hardware and
software);
(3) Proper planning and development enables better screening and selection of partners, and
assists in deciding the structure of the project, as well as making appropriate choices for the
public;
(4) Technology on the basis of cost considerations throughout the life cycle of the project,
(Public-Private Partner in Infrastructure, 2011)25
.
The PPP model becomes attractive to developing country governments as it is considered as an
off-budget mechanism for infrastructure development such as:
(a) Help strengthen the provision of essential infrastructure services;
(b) Applying the PPP model may not require any immediate cash expenditure thereby
helping to reduce the burden of design and construction costs;
(c) Allows transfer of many project risks to the private sector;
25

30
(d) The PPP model helps to make better choices for the design, technology, construction,
operation and quality of infrastructure services.
3.3. Vietnamese PPP is facing challenges (Disadvantages)
However, like many foreign direct investment projects, this form of PPP is also facing a barrier
when implementing how to manage this capital source.
In addition to barriers to capital management, there are now other barriers to investment projects
that have not yet been prepared and have not been specifically analyzed. All are only 30% and
70% generic. Therefore, many unknown projects will bring harmony effect to investors and the
Government. Thought, when the project is difficult to implement, with low recovery, the State
should have more open policy, not rigid regulation.
Previously, the infrastructure of the State must spend 100%, if we can mobilize 50%, the State
to spend 50% also acceptable. Experience the Malaysian experience, there are 70% public
projects, 30% private, a work that counts for 90 years to recover capital, investors return the
capital 30 years ago handed over to the government. In addition, the legal mechanism related
to bidding for investment projects is still to be discussed (Jha, 1999)26
.
The second issue is the bidding between investors to participate in the PPP form, the bidding is
also facing many difficulties. Because an investor when engaged in investment they have to be
quite long prepared, even there are 5 years projects. But now its legal framework exactly that
is still based on Decree 78 is the most legal basis because it is a decree, but Decision 71 is just
a decision of the Prime Minister.
There are important economic, social, political, legal and administrative aspects that need to be
carefully assessed before accepting a PPP contract. Key limitations of PPP include:
(1) Not all PPP projects are feasible due to political, legal, or commercial feasibility;
(2) The private sector may not be interested in a PPP project because of high risks stemming
from the participant's perceived capacity for a PPP project or perhaps a technical, capacity
limitation finance, management level of project implementation;
26

31
(3) A PPP project can cost more than a regular project, unless additional costs (financial
costs and project operating costs) can be offset by increasing the efficiency of the project,
(Eduardo E., Ronald F. and Alexander G., 2014)27
.
Changes in the management and control of the assets of the infrastructure through a PPP project
may not be sufficient to improve its economic performance unless other necessary conditions
are met. These conditions may include the appropriate operating environment, administrative
reform, and changes in operational practices as well as management of the operation of the
infrastructure;
(4) Typically, the success of a PPP project depends very much on the effectiveness of
management and coordination among the parties involved in the PPP contract.
In addition, the lack of government funding is seen as a major factor in considering a PPP
project. The extra costs of a PPP project are usually higher than the public sector's borrowing
costs, and the administrative costs associated with the management of the PPP contract. The
transaction costs of PPP projects are also considerable.
In short, the shortcomings of PPPs and their causes: Firstly, the state plays a "supportive" role,
so it does not promote the strength of the government. Secondly, there is no clear and
enforceable legal, institutional and legal framework. Thirdly, the financial strength of domestic
investors is weak. Fourthly, foreign investors with strong financial capacity, high expertise but
very sensitive to the investment environment are not clear so they do not want to invest. Fifthly,
in a collaborative relationship, the risk is not properly shared. Sixthly, macroeconomic is
instability.
3.4. Lessons learned for Vietnam
Through the experience of some European countries, Latin America, Asia and South East Asia,
the following lessons can be learned:
Most countries have determined that the budget is not the main source of funding for
infrastructure development, and that the government is actively seeking the participation of the
private sector and foreign investors. There is no standard PPP format and each country has its
own strategy depending on the context, institution, funding and nature of the project, (Nataraj,
2007).
27

32
The factors that influence the success of PPPs are not different between developed and
developing countries, that is, they must have a comprehensive and transparent legal framework;
select qualified partners; Maximize benefits for partners, stabilize the macro environment, and
allocate risk effectively.
The Government plays an important role in promoting and developing public-private
partnerships, demonstrating its role as the subject that creates the most favorable investment
environment for freeing up resources and engaging the public. other components and forces in
society.
These lessons are a reference for using the PPP model in the process of reforming the public
sector in general and administrative reform in particular in Vietnam. The Government, with its
tools, should consider doing some of the following, (Ndandiko, 2010):
Firstly, to perfect the system of mechanisms and policies to create a legal basis for the
mobilization of private capital. In this way, in most countries, the mechanism and policy of
mobilizing capital attaches great importance to bringing into full play the potentials and
strengths of internal resources. At the same time, attention should be paid to seizing
opportunities and favorable conditions for the implementation of mechanisms, The policy of
attracting external resources, especially ODA and FDI. Combined internal and external forces
in planning, implementing mechanisms and policies.
Secondly, in most countries a specialized PPP management unit is established to oversee the
contracting process and the procurement process. Vietnam should consider setting up a policy
research agency as well as acting as a focal point for state management, staffing and advising
and supporting the parties in the implementation of PPP projects. This body may be called the
PPP Center, whose main tasks are: policy research relating to PPP, standardization and the
provision of guidance materials for PPP projects. advance investment projects in the form of
PPP investment, training human resources to participate in and manage PPP projects.
Third, have the most appropriate project risk allocation policy for each party with a process for
monitoring, dividing, transferring and controlling risk by: analyzing project risks before
launching tenders, setting up dedicated units or centers in the field of risk allocation to review,
monitor and advise project investors. To promulgate new policies and regulations that are
appropriate for both parties to balance benefits and risks as well as to distribute them equally
to both.

33
Fourthly, to increase publicity, transparency and competition in the development of the bidding
process so as to ensure the selection of qualified investors as well as in recruitment and selection
for leadership positions. Use and evaluation, treatment of cadres, civil servants and officials
assigned to PPP.
Fifth, the government's support policy should be feasible, attractive to investors, diversified in
many forms, such as support for: investment capital (initial capital or capital ); operating costs
(maintenance fees, fees, etc.); adopt appropriate tax incentives to increase the attractiveness of
the project; guarantee loans, guarantee minimum revenue, exchange rates ...; Commit to
compensate for losses incurred when the force majeure event occurs to protect the investor (by
means such as permitting the extension of the franchise or offsetting costs in cash or other
supports).
3.5. Suggested solution for PPP in Vietnam to sustainable development
3.5.1.Call for investment
At present, the calculation of investment efficiency, in order to harmonize the interests between
the Government and investors, is still an obstacle. In addition, Vietnam should also have
additional forms of tax support, foreign exchange etc. So it is necessary to have a team of
experts how accurate and from which to call for investment, then there are mechanisms: tax
mechanism, revenue sources, foreign currency exchange.
3.5.2. Complete the PPP legal framework.
In the longer term, the development of a PPP law is necessary to legalize the applicable and
stable PPP legislation, but more importantly, the PPP legislation allows for the definition of
specific PPPs. This is only applicable to PPP projects, which are not specified or regulated in
the Law on Investment, the Law on Procurement, the Law on Construction ... The PPP Law
will be the basis for ensuring the rights and interests of the PPP. Private investors are guaranteed
the highest, thereby encouraging investors to participate in the field of capital requirements and
many potential risks, not clearly shared.
In the long term, Vietnam should prepare steps to accede to the 1965 Washington Convention
- resolving disputes through the ICSID, a condition of attracting foreign investors to participate

34
in the playground is protected by a transparent and effective mechanism. In the short term, the
development of documents guiding Decree 15/2015 / ND-CP and / or supplementing Decree
15 also has some issues to note:
(1) There should be more specific regulations on the coordination mechanism between the
competent State agencies in the implementation, management, supervision ... PPP projects. At
the same time, there must be sanctions for those who do not fulfill their responsibilities and /
or violate the regulations in the course of implementation.
(2) There should be a regulation on political risks in PPPs, which is higher than the
government's guarantee that investors can be completely assured. Regarding the risks arising
from the responsibility or under the control of the state, the state will only consider in a number
of specific cases, on the basis of the project without mentioning the political factors that affect
project implementation (strike, demonstration, riot etc.). Obviously the cases arising for
political reasons are completely outside the control of investors and can lead to serious
consequences damage to investors etc.
3.5.3. Strengthening capacity of PPP government agencies
The stipulation of the management and coordination responsibilities of the ministries and
branches on investment in the form of PPPs has been separately stipulated in Chapter X
"Responsibilities for state management of investment in the form of public-private
partnerships". However, there should be a specialized interdisciplinary body with the
participation of each relevant ministry and branch to carry out the role of coordinating and
advising on mechanisms and policies as well as recommendations for effective solutions.
There should be a project on awareness raising, knowledge of PPP as well as understanding of
law and capacity of project implementation, contributing to improve the level of management
staff to ensure proper awareness of the first type, this is to promote its advantages. Moreover,
the government should establish a Monitoring Committee for PPP projects to ensure that
projects are implemented in accordance with the standards of this model, avoiding the obvious
disadvantages. In addition, the organization of the operation and maintenance of the project
should be compact, systematic, scientific, avoiding both redundant and missing.
Based on the scientific basis to decide on the investment plan and the risk / benefit sharing
scheme, there should be a compulsory regulation on in-depth research, analysis, forecasting and
quantification of impacts on implementation. This is based on the decision on the benefit/ risk

35
sharing mechanism, the pricing mechanism for the service, the management plan, the
monitoring mechanism and the appropriate incentive mechanism for each case to either ensure
the requirements of the State or the legitimate interests of investors.
3.5.4.Ensure necessary conditions for the PPP project to be implemented
Along with the development of the PPP Act, other relevant laws should be reviewed, amended
and supplemented at an appropriate time, to create consistency and consistency within the legal
framework; Ensure budget conditions for the preparation and implementation of PPP projects
in accordance with commitments and timelines, especially the participation of the State, the
cost of compensation for ground clearance. In addition, other relevant contents according to the
characteristics of each project should also be considered, ensuring the objectivity and equity in
attracting investment in the form of PPP.
4. Conclusion

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