Introduction to PPP contract and how it works in Vietnam

by QuynhHuong

Hence the popularity of PPP contracts, people might have heard about this type of contract. Yet, not many understand what exactly is PPP contract is. Therefore, in today’s article, LSX will give you the “Introduction to PPP contract and how it works in Vietnam”.

  • 2020 Public-private partnership investment law

What is PPP contract

PPP contract is an abbreviation of an investment contract in the form of corporate partnership thus Clause 16 Article 3 of the 2020 Public-private partnership investment law. Basically, this is the type of contract signed between a competent state agency and an investor, project enterprise. When investing in this form, investors sign contracts with competent state agencies and Vietnamese investors to implement, manage and operate the project.

Types of PPP contract

Accordingly, there are 7 types of contracts in the form of public-private partnership, including:

  • (BOT) Build-Operate-Transfer Contract
  • (BTO) Build-Transfer-Operate Contract
  • (BT) Build-Transfer Contract
  • (BOO) Build – Own – Operate Contract
  • (BTL) Build – Transfer – Lease Contract
  • (BTL) Build – Lease – Transfer Contract
  • (O&M) Business-Management Contract

Build-Operate-Transfer Contract (BOT)

Firstly, a BOT contract means a contract between a competent state agency and an investor for the construction of infrastructure works. After completing the work, the investor is entitled to operate the work for a certain period of time. At the end of the time limit, the investor shall transfer the work to a competent state agency.

Build-Transfer-Operate Contract (BTO)

Secondly, means a contract between a competent state agency and an investor for the construction of infrastructure works. When completing the work, the investor transfers it to a competent state agency and will have to operate the work for a certain period of time.

Build-Transfer Contract (BT)

Thirdly, a BT contract means a contract signed between a competent state agency and an investor for the construction of infrastructure works. The investor transfers that work to a competent state agency and pays with the land fund for the implementation of another project

Build – Own – Operate Contract (BOO)

Fourthly, BOO means a contract between a competent state agency and an investor for the construction of infrastructure works. After the completion of the work, the investor owns and will have to operate the work for a certain period of time.

Build – Transfer – Lease Contract (BTL)

Subsequently, BTL means a contract between a competent state agency and an investor for the construction of infrastructure works. After completing the work, the investor transfers it to a competent state agency and is entitled to provide services based on operating and exploiting that work for a certain period of time; competent state agencies hire services and make payments to investors.

Build – Lease – Transfer Contract (BLT)

Later, we have a BTL contract. In fact, a BTL contract means a contract signed between a competent state agency and an investor for the construction of infrastructure works. After completing the work, the investor will have to provide services based on operating and exploiting that work for a certain period of time; competent state agencies to hire services and make payments to investors. Afterward, the investor transfers the work to a competent state agency.

Business-Management Contract (O&M)

Lastly, an O&M contract is a contract between a competent state agency and an investor to do business; in part or the whole of work within a certain period of time.

Content of PPP contract

Due to the requirement of law, a PPP contract must contain the following elements:

  • Objectives, scale, location, duration and progress of project implementation; project construction time
  • Technical requirements, technology, quality of project works, products or services provided
  • Total investment capital and financial plan of the project
  • The value of the contract, the conditions for performing the contract; principles for handling when the planning of the land fund to be paid is adjusted leading to a change in the value of land use rights
  • Conditions of land use and other works
  • Compensation, site clearance, resettlement
  • Requirements on inspection, supervision and quality management during the construction process; acceptance test, settlement of completed projects
  • Inspection, operation, maintenance, business and exploitation of project works; project transfer
  • Ensure safety and protect the environment
  • Conditions and procedures for receiving the project of the lender
  • Distribution of risks and responsibilities of the parties in the contract including competent state agencies, authorized agencies (in case of signing authorization) and investors; principles of handling when disputes arise; events of force majeure
  • Other fixed contents in the contract

Lastly, thank you for paying attention. Hope this article “Introduction to PPP contract and how it works in Vietnam” could help you solve your problem. If you have any questions, please contact Lawyer X for quick and best legal services: 0833102102.

Related questions

What is the definition of foreign investment?

Foreign investment means that organizations and individuals of one country bring capital in different forms into another country to conduct business activities for profit. Foreign investment is made in the form of direct investment or indirect investment.

Aside from PPP, is there any other way of foreign investment in Vietnam?

Accordingly, there are 3 other ways: BCC contract; capital contribution, purchase of shares, purchase of contributed capital; establishment of an economic organization.

Are investors under the PPP contract entitled to any incentives?

Yes, they are. The incentives will be based on the provisions of Article 3 of Decree 30/2015/ND-CP.

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