Design, evaluation of and decision on investment in public investment in Vietnam

Vietnam Law has regulations on design, evaluation of and decision on investment in public investment. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what authority has competence to grant decisions on investment in public investment programs and projects? What are Bases for design, evaluation of and decision on investment in public investment programs or projects? Thanks for answering my questions!”

Legal grounds

• 2019 Vietnam Law on Public Investment

Authority to grant decisions on investment in public investment programs and projects

– The Prime Minister shall be accorded authority to issue the decision on investment in the following programs and projects:

+ National target programs and public investment projects of national significance that have already obtained investment policy decisions from the National Assembly;

+ Public investment programs that have already obtained investment policy decisions from the Government;

+ Public investment programs and projects using ODA funds and preferential borrowings from foreign sponsors in the national defence, security and religion fields and others which are regulated by the Government.

– Ministers and Heads of central regulatory authorities shall have the following powers:

+ Grant decisions on investment in group-A, group-B and group-C public investment projects using public investment capital under their jurisdiction, except those projects specified in point c of clause 1 of this Article;

+ Decentralize powers or grant the authorization to issue decisions on investment in group-B and group-C public investment projects prescribed in point a of this clause to their affiliated agencies.

– Chairmen/Chairwomen of provincial-level People’s Committees shall be vested with authority to grant decisions on investment in the following programs and projects:

+ Public investment programs which have already obtained investment policy decisions from provincial-level People’s Councils;

+ Group-A, group-B and group-C public investment projects put under the management of regulatory authorities at the provincial level, except for those projects stipulated in point c of clause 1 of this Article.

– Chairmen/Chairwomen of district-level and commune-level People’s Committees shall be vested with authority to grant decisions on investment in the following programs and projects:

+ Public investment programs which have already obtained investment policy decisions from same-level People’s Councils;

+ Group-B and group-C public investment projects under their respective jurisdiction, except for those projects stipulated in point c of clause 1 of this Article.

– In case of any adjustment in decisions on investment in public investment programs and projects, authority to make decisions on investment in these programs and projects shall be subject to regulations laid down in clause 3 of Article 43 herein.

– The Government shall set forth regulations on decentralization of powers, procedures and processes for making decisions on investment in public investment programs or projects using legitimate revenues of state regulatory authorities and public service units for investment purposes provided that these regulations are consistent with those on the financial autonomy of involved entities.

– Ministers and Head of central and local regulatory authorities granting decisions on investment in public investment programs and projects shall have the burden of ensuring investment efficiency of approved programs and projects.

Bases for design, evaluation of and decision on investment in public investment programs or projects

– Socio-economic strategy and plan.

– Related planning scheme provided for in law on planning.

– Necessity of public investment program or project.

– Objectives of public investment program and project.

– Investment policies that have already been decided by competent authorities.

– Capability of channeling and balancing public investment capital and other funds for implementation of public investment programs and projects.

Procedures for design, evaluation of and decision on investment in national target programs

– Based on the investment policy already obtaining the National Assembly’s decision, the program owner prepares a feasibility study report for that program for submission to the Prime Minister.

– The Prime Minister establishes a State Evaluation Council chaired by the Minister of Planning and Investment to evaluate the intended program.

– The State Evaluation Council conducts the evaluation regarding issues specified in clause 1 of Article 44 and clause 2 of Article 45 herein.

– Based on evaluation opinions of the State Evaluation Council, the program owner prepares a complete feasibility study report for that program and drafts an investment decision for submission to the State Evaluation Council before the Council petitions the Prime Minister to consider granting the decision.

Procedures for design, evaluation of and decision on investment in public investment programs subject to the Government’s investment policy decision

– Based on the investment policy already obtaining the Government’s decision, the program owner prepares a feasibility study report for that program and carries out the evaluation in accordance with law before submission thereof to the Prime Minister.

– The Ministry of Planning and Investment conducts the evaluation regarding issues specified in clause 1 of Article 44 and clause 2 of Article 45 herein.

– Based on evaluation opinions of the Ministry of Planning and Investment, the program owner prepares a complete feasibility study report for that program and drafts an investment decision for submission to the Ministry of Planning and Investment before this Ministry petitions the Prime Minister to consider granting the decision.

Procedures for design, evaluation of and decision on investment in public investment programs subject to the investment policy decision granted by the People’s Council

– Based on the investment policy already obtaining the decision from the People’s Council, the program owner prepares a feasibility study report for that program and carries out the evaluation in accordance with law before submission thereof to the same-level People’s Committee.

– The People’s Committee conducts the evaluation regarding issues specified in clause 1 of Article 44 and clause 2 of Article 45 herein.

– Based on evaluation opinions of the People’s Committee, the program owner prepares a complete feasibility study report for that program and drafts an investment decision for submission to the Chairman/Chairwoman of People’s Committee to seek its decision.

Procedures for design, evaluation of and decision on investment in public investment projects

– Procedures for design, evaluation of and decision on investment in public investment projects of national significance shall be subject to the following regulations:

+ Based on the investment policy already obtaining the decision from the National Assembly, the project owner prepares a complete feasibility study report for that project for submission to the governing body before it petitions the Prime Minister to grant the decision;

+ The Ministry of Planning and Investment reports to the Prime Minister to establish the State Evaluation Council to carry out the evaluation of the project;

+ The State Evaluation Council conducts the evaluation regarding issues specified in clause 2 and 3 of Article 44 and clause 2 of Article 45 herein;

+ Based on evaluation opinions, the project owner prepares a complete feasibility study report for that project for submission to the governing body before it grants approval and sends it to the State Evaluation Council;

+ The State Evaluation Council submits it to the Prime Minister to seek the decision on investment in that project.

– Procedures for design, evaluation of and decision on investment in public investment projects not falling in the case specified in clause 1 of this Article and existing without construction components shall be subject to the following regulations:

+ Based on the investment policy already obtaining the decision from the competent authority, the project owner prepares a feasibility study report for that project and submits it to the competent authority to seek its decision;

+ Ministers, Heads of central regulatory authorities and Chairmen/Chairwomen of People’s Committees at any level may establish the evaluation council or authorize their affiliates specialized in management of public investment to carry out the evaluation of the intended project;

+ The evaluation council or the entity specialized in management of public investment conducts the evaluation regarding issues specified in clause 2 of Article 44 and clause 2 of Article 45 herein;

+ Based on evaluation opinions, the project owner prepares a complete feasibility study report for the project for submission to the competent authority to seek its investment decision.

– Procedures for design, evaluation of and decision on investment in public investment projects with construction components shall be subject to law on construction and other regulations of relevant laws, except public investment projects of national significance.

– Principles of, authority over, contents of, procedures and processes for design and evaluation of and decision on feasibility study reports for projects existing in the public-private partnership form shall be subject to law on investment made in the public-private partnership form, except public investment projects of national significance.

– Procedures for design, evaluation and approval of the budget estimate for investment preparatory tasks and planning tasks shall be regulated as follows:

+ Based on investment preparatory tasks and planning tasks obtaining decisions from competent authorities, entities assigned these tasks prepare the budget estimate for these tasks for submission to Ministers, Heads of central regulatory authorities and Chairmen/Chairwomen of People’s Committees at any level to seek their decisions;

+ Ministers, Heads of central regulatory authorities and Chairmen/Chairwomen of People’s Committees at any level may establish the evaluation council or authorize their affiliates specialized in management of public investment to carry out the evaluation of the budget estimate for these tasks;

+ The evaluation council or the entity specialized in management of public investment conducts the evaluation regarding inclusions in the budget estimate provided for in law, such as standards and limits of expenditures on performing these tasks;

+ Based on evaluation opinions, the project owner prepares a complete budget estimate for these tasks for submission to Ministers, Heads of central regulatory authorities and Chairmen/Chairwomen of People’s Committees at any level to seek their approval of that budget estimate.

– Principles of, authority over, contents of, procedures and processes for design, evaluation of and decisions on outward investment in public investment projects shall be subject to the Government’s regulations.

Procedures for design, evaluation of and decision on investment in public investment programs and projects using ODA funds and preferential borrowings from foreign sponsors

– After receiving the investment policy decision, the governing body grants its decision regarding the program or project owner, authorizes the program or project owner to cooperate with the sponsor to prepare the feasibility study report for that program or project for submission to the competent authority to seek its decision on investment in that program or project.

– As for programs and projects under the Prime Minister’s decision-making jurisdiction as provided in point c of clause 1 of Article 35 herein,

+ procedures for design, evaluation of and decision on investment in national target programs or public investment projects of national significance shall be subject to provisions laid down in Article 37 and clause 1 of Article 40 herein;

+ the Ministry of Planning and Investment conducts the evaluation of the feasibility study report for other program or project, and petitions the Prime Minister to consider granting the decision.

– Head of the governing body shall be responsible for conducting the evaluation and granting decisions on investment in these programs and projects under his/her decision-making jurisdiction.

– As for public investment programs and projects using ODA funds and preferential borrowings from foreign sponsors that apply the domestic financial mechanism in the onlending form, designing and evaluating public investment programs and projects shall be subject to 2019 Law on Public Investment, and financial plans of these programs and projects and financial capability of program or project owners must be evaluated in accordance with law on management of public debts and other provisions of relevant laws.

– Entities presiding over the evaluation must collect opinions from other related entities, and must take procedures and processes and sponsor’s opinions into consideration.

Procedures and processes for grant of decisions on investment in urgent public investment projects

– Ministers, Heads of central regulatory authorities and Chairmen/Chairwomen of People’s Committees at any level decide and take responsibility for implementation of urgent public investment projects under their respective jurisdiction.

– Ministers, Heads of central regulatory authorities and Chairmen/Chairwomen of People’s Committees at any level grant investment decisions according to the following procedures and processes:

+ Authorize their specialized affiliates or entities having competence to take charge of conducting project survey and preparing the project recommendation report;

+ Authorize entities specialized in management of public investment or entities having competence to carry out the evaluation of the project;

+ Direct entities specified in point a of this clause to prepare a complete project recommendation report for submission to the competent authority to seek its decision as provided in Article 35 herein.

– Ministers and Heads of central regulatory authorities report to the Government on implementation of an urgent public investment project. Chairman/Chairwoman of People’s Committee reports to the same-level People’s Council on implementation of the urgent public investment project in the upcoming meeting.

Modification of public investment programs and projects

– Modification of a program shall be made:

+ in case of adjusting objectives and changing requirements for implementation thereof in the socio-economic development strategy and plan and other related planning scheme as provided for in law on planning;

+ in case of adjusting or ceasing the investment policy under the competent authority’s direction;

+ due to causes of force majeure resulting in changes in investment objectives, scale, expenses for and duration of implementation of a public investment program.

– Modification of a project shall be made:

+ in case of adjusting or ceasing the investment policy under the competent authority’s direction;

+ in case of adjustment in the planning scheme resulting in direct impacts on the project;

+ due to causes of force majeure resulting in changes in investment objectives, scale, expenses for and duration of implementation of a public investment project;

+ under the impact of emergencies arising from natural disasters, conflagration or other force majeure events upon expiry of the project’s insurance policy;

+ if factors creating more financial or socio-economic efficiency arise by reason of such modification and such efficiency is evaluated by the competent authority;

+ if the price index quoted during the time of implementation of the project is higher than the price index used for calculation of the allowance for depreciation included in the project’s gross investment that is decided by the competent authority.

– The regulatory authority mandated to make its decision on investment in a public investment program or project shall be authorized to issue a decision to modify that program or project, and shall be responsible for its own decision.

– The regulatory authority may modify a public investment program or project only when that program or project has already undergone the evaluation, inspection or assessment as provided herein.

– In case where the modification results in any increase in the gross investment greater than the one already obtaining the investment policy decision from the competent authority, the project must follow procedures and processes for grant of decisions on modification of investment policies before receipt of the decision on modification of the project from the competent authority.

– Contents of, procedures and processes for design and evaluation of modification of public investment programs and projects shall be subject to the Government’s regulations.

Contents of feasibility study reports of public investment programs and projects

– A feasibility study report of a public investment program shall have the following main subject matters:

+ Necessity of investment;

+ Assessment of the current status of sectors and industries specified in the program’s objectives and scope; urgent issues that need to be solved in the program;

+ General objectives, specific goals, outcome and main indicators defined in each stage;

+ Scope and scale of the program;

+ Constituent projects belonging to the program that need to be implemented to attain the program’s objectives, priority order and schedule of implementation of constituent projects;

+ Estimated gross investment necessary to implement the program, distribution of funds specific to objectives, constituent projects and schedule of implementation, funding sources and capital mobilization plans;

+ Anticipated duration and schedule of implementation of the program;

+ Solutions to implementing the program; regulations and policies applied to the program; capability of integrating and coordinating with other programs;

+ International cooperation requirement (if any);

+ Arrangements made to implement the program;

+ Assessment of the overall socio-economic efficiency of the program.

– Feasibility study report of the project without construction components shall contain the following main subject matters:

+ Necessity of investment;

+ Assessment of relevance of the project to the related planning scheme provided for in law on planning;

+ Analysis and determination of objectives, tasks and output of the project; analysis and selection of the appropriate scale; investment phasing; selection of investment form;

+ Analysis of natural conditions, economic and technical conditions and selection of investment destination;

+ Plans for management, operation and use of the project;

+ Environmental impact assessment and environmental protection measures;

+ General plan for compensation, site clearance and residential resettlement;

+ Proposed schedule of implementation of the project; main timeline of investment;

+ Determination of gross investment, funding structure and capital mobilization plans;

+ Determination of costs incurred from operation, maintenance, overhaul and major repair at the stage of operation and exploitation of the project;

+ Arrangements necessary for management of the project, including determination of project owner, analysis and selection of form of project implementation management, relationship and responsibilities of persons and entities regarding the process of implementation of the project and design of the machinery for management and operation of the project;

+ Analysis of investment efficiency, including efficiency and impacts in socio-economic, national defence and security aspects; capital recovery capacity (if any).

– Contents of feasibility study reports of projects with construction components shall be subject to law on construction and other provisions of relevant laws.

Documentation requirements for, contents and time of evaluation of, and grant of decisions on policies for investment in, public investment programs and projects

– Documentation requirements for evaluation of public investment programs and projects shall include:

+ Report form submitted to apply for evaluation of the public investment program and project;

+ Feasibility study report of the public investment program and project;

+ Other relevant documents.

– Documentation requirements for grant of decisions on public investment programs and projects, contents of, time of evaluation of and decision on public investment programs and projects shall be subject to the Government’s regulations.

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