Vietnam is finalizing an improved legal framework for public-private partnerships (PPP) projects with the goal of revitalizing infrastructure investment. The new PPP Decree and Investor Selection Decree provide more clarity and incentives than previous regulations, including allowing the choice of foreign law and arbitration for disputes. They also establish procedures for investor-proposed projects and require public updates on project status. Proper implementation will be important for the new regulations to attract more private funding for Vietnam's pressing infrastructure needs.

1. New PPP Decree – Coming Soon:
Enhanced Legal Framework for Infrastructure Projects in Vietnam
Vietnam is finalizing a much improved legal framework for public-private partnerships (PPP) with the
goal to revitalize investment in infrastructure projects. The latest Ministry of Planning and Investment
(MPI) drafts of the PPP Decree and the Investor Selection Decree provide more clarity compared to
previous regulations. Opinions from international advisors, multilaterals, donors and business associations
appear to have had a positive impact on the drafts. The drafts are in the government’s hands now and
hopes are high that they will become law soon. Of course, the new regulations will mean nothing without
proper implementation. The MPI is holding seminars to educate local government officials, who are
expected to administer PPP projects.
A few highlights of the decree include:
More PPP projects forms (e.g., BOO)
Fiscal incentives for investor-proposed projects
Choice of foreign law and dispute settlement
Government guarantees and other incentives
Publication of PPP project status
Why PPP?
Vietnam’s infrastructure development has struggled to keep up with continued economic and population
growth. Energy, waste, water treatment and transportation present major challenges. State budgets are
constrained. Other countries have successfully implemented partnerships between the public and private
sector. Simplified, the idea is that the public sector has the ‘users’ (or customers) and land and can
provide other incentives, such as tax breaks. The private sector can bring in technology, capital, and
efficiency through experience.
Legal framework development
Vietnam has had PPP regulations since 1997 with Decree 62 for domestic investors and Decree 77 in
1998 for foreign investors. In 2009, Decree 108 regulated BOT, BT and BTO projects. Decision 71
started another pilot program for PPP projects in 2010. And in 2011 Decree 24 amended Decree 108.
These regulations were not successful in attracting foreign investment on a PPP basis. Critique included
the lack of understanding of local authorities to support PPP projects. Regulations were not clear enough
and left much room for discretion to officials.
New regulations on the horizon
The new PPP Decree (September 2014 draft) seeks to bring those developments under one decree and
provide more clarity and incentives for private investors. The new Investor Selection Decree (October
2014 draft) guiding the Law on Public Procurement specifically provides incentives for investors who
propose smaller PPP projects (Group C projects).

2. Forms of PPP projects
Besides the previously available forms of BOT (build-operate-transfer), BTO (build-transfer-operate) and
BT (build-transfer), the draft PPP Decree has provisions for BOO (build-own-operate), BTL (build-
transfer-lease), BLT (build-lease-transfer ) and O&M (operate and manage) contracts.
Fiscal Incentives for Unsolicited Projects
The current draft of the Investor Selection Decree provides incentives for investor-proposed
(“unsolicited”) projects that are not on the government’s project lists. For example, unsolicited projects
are still open to competitive bidding, but the proposing investor will receive a 5% advantage (service
price, State capital or other method) over other bidders. However, these advantages may only be
applicable to smaller projects, and we are awaiting further guidance with respect to bigger projects.
Choice of foreign law and dispute settlement
MPI officials confirmed that Vietnamese law shall still remain the basic governing law, but choosing
foreign law can be negotiated. The draft PPP Decree sets out clearly where project contracts can be
governed by foreign law, namely contracts involving a foreign party and government agency guarantee
contracts. Foreign arbitration can be selected for disputes involving a foreign investor and even for
government-backed guarantee contracts. The draft also addresses an argument that Vietnamese courts
have used to prevent the recognition and enforcement of foreign arbitral awards (i.e., the absence of a
“commercial dispute”).
Publication and status updates
Publication obligations are meant to create more transparency for PPP projects. Once a PPP project
proposal is approved, it must be published within 7 days on the government’s national procurement
website (subject to exceptions for sensitive and confidential information). Besides general project
information, the website is to provide updates with regard to the status of implementation. The progress
made by the local authorities and selected investors would be open to public review.
What’s next?
The above highlights are just some of the many improvement we can expect from the new PPP Decree.
Some changes such as the choice of foreign law and dispute resolution through offshore arbitration appear
revolutionary compared to past regulations. If all improvements become law, the new decree could
rejuvenate interest in PPP investment forms. In practice, it will all depend on the quality of
implementation. The MPI is conducting programs to educate local officials and improve transparency
with regard to future PPP projects.
Please do not hesitate to contact Oliver Massmann under Uomassmann@duanemorris.comU if you have any
questions!