Investment policies and decisions on investment in public investment programs and projects in Vietnam

Vietnam Law has regulations on Investment policies and decisions on investment in public investment programs and projects. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what authority has competence to to issue decisions on policies for investment in programs and projects in Vietnam? What are Requirements for granting decisions on policies for investment in public investment programs and projects? Thanks for answering my questions!”

Legal grounds

• 2019 Vietnam Law on Public Investment

Authority to issue decisions on policies for investment in programs and projects

– The National Assembly shall be vested with authority to issue decisions on policies for investment in the following programs and projects:

+ National target programs;

+ Investment projects of national significance.

– The Government shall be vested with authority to make decisions on policies for investment in public investment programs using the central budget allocations, except those specified in point a of clause 1 of this Article.

– The Government shall be authorized to set out regulations on power decentralization, procedures and processes for making decisions on investment policies for public investment programs or projects using legitimate revenues from state regulatory authorities and public service units for investment purposes in compliance with regulations on the financial autonomy of entities.

In case where those public investment programs or projects specified in this clause use state budget allocations, authority, procedures and processes for making decisions on these programs or projects shall be subject to provisions laid down herein.

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

+ Public investment projects specified in clause 1 of Article 8 herein; other group-A public investment projects using the central budget allocations under the jurisdiction of Ministries or central regulatory agencies;

+ Public investment programs and projects using ODA borrowings and preferential borrowings from foreign sponsors, except national target programs and public investment programs specified in clause 1 and 2 of this Article;

+ Public investment programs and projects using non-refundable ODA aids that fall into the following situations: Group-A and group-B public investment programs and projects; public investment programs and projects associated with regulatory policy framework; public investment programs and projects that are developed and implemented in the national defence, security and religion fields; sector-specific approach programs; procurement of goods subject to the Prime Minister’s permission; Vietnam’s participation in regional programs and projects;

+ Technical support projects using ODA funds and preferential borrowings from foreign sponsors for preparations for investment projects.

– Ministers and Heads of central regulatory agencies shall be accorded authority to make decisions on policies for investment in group-B and group-C public investment projects under their management, except those projects specified in clause 4 of this Article.

– Provincial-level People’s Councils shall be accorded authority to make decisions on policies for investment in group-A projects under their jurisdiction, except those projects specified in clause 4 of this Article.

– People’s Councils at all levels shall be vested with powers to make decisions on policies for investment in group-B or group-C public investment programs and projects using the local budget’s allocations, including target transfers from the superior budget and legitimate funding sources under their jurisdiction, except those public investment projects prescribed in clause 4 of this Article.

Where necessary, People’s Councils shall be accorded authority to make decisions on assign People’s Committees at the same level to make decisions on policies for investment in projects specified in this clause in line with developmental objectives, guidelines, financial capacity and specific conditions of localities.

– In case of adjustments in policies for investment in public investment programs and projects, authority to make decisions on policies for investment in public investment programs and projects shall be subject to regulations laid down in clause 1 of Article 34

Requirements for granting decisions on policies for investment in public investment programs and projects

– Conform to relevant socio-economic development strategies, plans and planning schemes in accordance with law on planning that have already obtained decisions or approval from competent authorities.

– Avoid overlapping between public investment programs and projects already obtaining investment policy decisions or investment decisions.

– Meet the capacity for balancing public investment capital and channeling other funding sources for use in public investment programs and projects using multiple sources of funding.

– Correspond to capabilities of borrowing funds and repaying public or Governmental debts and local government’s debts.

– Ensure socio-economic efficiency, national defence and sustainable development.

– Tasks and projects exempted for the investment policy decision requirement, including:

+ Investment preparatory tasks;

+ Planning tasks;

+ Urgent public investment projects;

+ Public investment projects belonging to national target programs;

+ Constituent projects belonging to those projects already obtaining the competent authority’s investment policy decisions.

Procedures and processes for granting decisions on policies for investment in national target programs and public investment projects of national significance

– Entities assigned to make preparations for investment in programs and projects shall assume the following responsibilities:

+ Assign their subordinates to prepare investment policy recommendation reports for national target programs and pre-feasibility study reports for public investment projects of national significance;

+ Establish a council to evaluate investment policy recommendation reports and pre-feasibility study reports;

+ Completely prepare investment policy recommendation reports and pre-feasibility study reports for submission to the Prime Minister.

– The Prime Minister may establish the state evaluation council chaired by the Minister of Planning and Investment and tasked with evaluating reports on recommendation of investment policies for national target programs and prefeasibility study reports for public investment projects of national significance.

– The Government shall seek the National Assembly’s decision on policies for investment in national target programs and public investment projects of national significance.

– The National Assembly’s competent agency shall evaluate documents on national target programs and public investment projects of national significance proposed by the Government.

– The National Assembly shall consider adopting resolutions on policies for investment in national target programs and public investment projects of national significance. These resolutions shall have the following main contents: objectives, scale, total investment capital, main technologies, location, time and schedule of, mechanism, method for and policies on implementation thereof.

Documents on decisions on policies for investment in national target programs and public investment projects of national significance

– Government’s report.

– Investment policy recommendation report for national target programs and pre-feasibility study report for public investment projects of national significance.

– Evaluation report of the State Evaluation Council.

– Other relevant documents.

Procedures for and subject matters of evaluation of policies for investment in national target programs and public investment projects of national significance

– Evaluation procedures shall be regulated as follows:

+ Not later than 60 days prior to the date of opening of a National Assembly’s meeting, the Government sends documents on its investment policy decision for national target programs or public investment projects of national significance to the body presiding over evaluation;

+ The body presiding over evaluation has the right to request the Government and other related entities or persons to report on issues pertaining to national target programs or public investment projects of national significance; carry out the field survey of issues related to national target programs and public investment projects of national significance;

+ Entity or person requested to carry out evaluation by the presiding body is responsible for fully providing all information and documents required for an evaluation.

– Subject matters of an evaluation shall be composed of the followings:

+ Satisfaction of criteria for identification of national target program or public investment projects of national significance;

+ Necessity of investing in public investment program or project;

+ Compliance with law;

+ Relevance to related socio-economic development strategies, plans and planning schemes in accordance with law on planning;

+ Basic parameters of public investment program or project, including objectives, scale, investment form, scope, location and area of land necessary for implementation of such program or project, timelength and schedule of implementation, alternatives for main technologies, environmental protection approaches, funding sources, capital recovery and debt repayment capability;

+ Assessment of socio-economic efficiency and maintenance of national defence and sustainable development;

+ Assessment of relevance to land use planning, land distribution and zoning plans included in the related or other planning scheme related to natural resources, residential mobility, agricultural resettlement and residential settlement plans for domestic public investment projects of national significance;

+ Assessment of level of risk that an outward investment project of national significance may run in a host country.

Procedures and processes for granting decisions on policies for investment in public investment programs under the Government’s jurisdiction

– A program owner shall have the following responsibilities:

+ Authorize the entity directly put under their control to prepare an investment policy recommendation report;

+ Authorize a competent entity to carry out the evaluation or establish a Council to evaluate the investment policy recommendation report;

+ Completely prepare the investment policy recommendation report for submission to the Prime Minister.

– The Prime Minister may establish an interagency Council or authorize the Ministry of Planning and Investment to preside over or cooperate with related entities in evaluating the investment policy recommendation report.

– The program owner prepares a complete investment policy recommendation report according to opinions received from the evaluation prescribed in clause 2 of this Article for submission to the Government.

– The Government reviews inclusions in the report before issuing its decision on investment policy for the public investment program, including objectives, scope, scale, total investment capital, timelength, schedule, mechanism and solutions as well as policies for implementation of the intended program.

Procedures and documentation requirements for grant of decisions on investment policies for group-A public investment projects under the Prime Minister’s jurisdiction

– Ministers and Heads of central and local regulatory agencies shall have the following responsibilities:

+ Authorize their directly affiliated units and specialized agencies to prepare pre-feasibility study reports;

+ Authorize competent entities to carry out the evaluation or establish a Council to evaluate pre-feasibility study reports;

+ Command entities specified in point a of this clause to prepare complete pre-feasibility study reports for submission to the Prime Minister.

Concerning group-A public investment projects using ODA funds or preferential borrowings granted by foreign sponsors and those projects specified in clause 1 of Article 8 herein, pre-feasibility study reports shall be completely prepared by provincial-level People’s Committees and then submitted to same-level People’s Councils to obtain their opinions before being represented to the Prime Minister.

– The Prime Minister shall be accorded authority to make a decision on establishment of an interagency Council or mandate an agency to preside over the evaluation of pre-feasibility study reports as a basis to issue a decision on the investment policy for the intended project.

The interagency Council or the body presiding over an evaluation may invite any qualified or experienced organization or individual to join in the evaluation of pre-feasibility study reports or may request the project owner to designate any qualified and experienced organization or individual to join in the evaluation of pre-feasibility study reports.

– Ministry of Planning and Investment shall be vested with authority to preside over the evaluation of funding sources and capacity for balancing funds and file results of such evaluation to the interagency Evaluation Council or the body presiding over evaluation.

– The interagency Evaluation Council or the body presiding over evaluation which is stated in clause 2 of this Article shall submit evaluation opinions to Ministries, central and local regulatory authorities so that they prepare a complete pre-feasibility study report for submission to the Prime Minister.

– Prime Minister shall be vested with authority to issue an investment policy decision, including such contents as investment objectives, scale, gross investment, structure of funding sources, location, timelength, schedule of implementation of a project and design of funding plans.

Procedures and documentation requirements for grant of decisions on investment policies for group-A public investment projects under the jurisdiction of provincial-level People’s Councils

– The provincial-level People’s Council shall assume the following responsibilities:

+ Authorize their specialized agencies or district-level People’s Committees to prepare pre-feasibility study reports;

+ Establish an Evaluation Council composed of the President or Vice President of the provincial-level People’s Committee as the Council’s Chair, the agency specialized in management of public investment at the provincial level as the Council’s standing commissioner, and related agencies as the Council’s members, in order to carry out the evaluation of pre-feasibility study reports, funding sources and capital balancing capacity;

+ Command entities specified in point a of this clause to prepare complete pre-feasibility study reports on the basis of evaluation opinions.

– Provincial-level People’s Committees shall petition same-level People’s Councils to consider granting investment policy decisions, including such contents as investment objectives, scale, gross investment, location, timelength, schedule of implementation of a project and design of funding plans.

Procedures and documentation requirements for grant of decisions on policies for investment in public investment programs and projects using ODA funds and preferential borrowings from foreign sponsors

– Ministries, central and local regulatory authorities recommend public investment programs and projects using ODA funds and other foreign preferential borrowings to the Ministry of Planning and Investment, the Ministry of Finance and other related entities as per law.

– The Ministry of Finance presides over identifying factors of eligibility for preferential treatment, assessing impacts of ODA and preferential borrowings granted by foreign sponsors with respect to debt safety ratios, and determining the domestic financial mechanism under the Law on Public Debt Management.

– The Ministry of Planning and Investment consolidates opinions from Ministries, central and local regulatory authorities concerned, assesses the necessity of each public investment program and project, makes the preliminary assessment of feasibility, socio-economic efficiency and environmental impacts (if any), and impacts of each public investment program or project on the mid-term public investment plan, chooses to recommend appropriate programs and projects to the Prime Minister to seek his decision.

– The Prime Minister considers granting approval of recommended programs or projects.

– As for national target programs or public investment projects of national significance, procedures and processes for granting investment policy decisions shall be subject to provisions laid down in Article 19, 20 and 21 herein.

– As for public investment programs put under the Government’s decision-making authority, procedures and processes for granting investment policy decisions shall be subject to provisions enshrined in Article 22 herein.

– Regarding group-A public investment projects, procedures and processes for grant of investment policy decisions shall be subject to provisions enshrined in Article 23 herein.

– As for public investment programs or projects put under the Prime Minister’s decision-making authority as provided in point b, c and d of clause 4 of Article 17 herein, procedures and processes for granting investment policy decisions shall be subject to the following regulations:

+ Governing body sends the Ministry of Planning and Investment an investment policy recommendation report;

+ Ministry of Planning and Investment presides over evaluating the submitted investment policy recommendation report, funding sources and capital balancing capacity before making representations to the Prime Minister;

+ Prime Minister considers granting the investment policy decision.

– As for public investment programs or projects not put under the decision-making authority of entities and persons prescribed in clause 1, 2, 3 and 4 of Article 17 herein, procedures and processes for granting investment policy decisions shall be subject to the following regulations:

+ Governing body collects opinions from the Ministry of Planning and Investment, the Ministry of Finance and other related entities about an investment policy recommendation report;

+ Based on these opinions, governing body undertakes the evaluation and decides whether an investment policy decision is made.

– Public investment programs or projects using non-refundable ODA funds and not associated with borrowings shall be exempted from the requirement for preparation of project recommendation reports.

Procedures and processes for grant of decisions on policies for investment in group-B and group-C public investment projects using public investment capital under the management of Ministries or central regulatory authorities

– Ministers and Heads of central and local regulatory agencies shall have the following responsibilities:

+ Authorize the entity directly put under their control to prepare an investment policy recommendation report;

+ Establish a Council to evaluate, or authorize another competent entity to evaluate, the investment policy recommendation report, funding sources and capital balancing capacity;

+ Direct the entity prescribed in point a of this clause to prepare a complete investment policy recommendation report based on evaluation opinions.

– Based on evaluation opinions prescribed in clause 1 of this Article, Ministers and Heads of central regulatory authorities issue investment policy decisions, including such contents as investment objectives, scale, gross investment, structure of funding sources, location, timelength and schedule of implementation and proposed fund disbursement plan.

Procedures and processes for grant of decisions on policies for investment in group-B and group-C public investment projects using public investment capital under the management of local authorities

– The Chairmen/Chairwomen of all-level People’s Committees shall assume the following responsibilities:

+ Authorize specialized entities or People’s Committees at the inferior level to directly prepare investment policy recommendation reports;

+ Establish a Council to evaluate, or authorize another competent entity to evaluate, these investment policy recommendation reports, funding sources and capital balancing capacity with respect to public investment programs and projects using public investment capital under their respective jurisdiction;

+ Direct the entities prescribed in point a of this clause to prepare complete investment policy recommendation reports based on evaluation opinions.

– People’s Committees petitions same-level People’s Councils to consider granting investment policy decisions, including such contents as investment objectives, scale, total investment capital, location, timelength, schedule of implementation of a project and proposed fund disbursement plans, mechanisms, solutions and policies for implementation.

Principles, authority, procedures and processes for grant of decisions on policies for investment in outward public investment projects and projects in the public-private partnership form

– Principles, authority, procedures and processes for grant of decisions on policies for outward investment in group-A, group-B and group-C projects shall be subject to the Government’s regulations.

– Principles, authority, procedures and processes for grant of decisions on policies for investment in public investment projects existing in the public-private partnership form shall be subject to law on investment made in the public-private partnership form.

Contents of reports on recommendation of policies for investment in public investment programs

Main contents of reports on recommendation of policies for investment in public investment programs shall include:

– Necessity of public investment program for implementation of objectives of related socio-economic development strategies, plans and planning schemes in accordance with law on planning;

– Objectives, extent and scale of a public investment program;

– Total estimated investment capital and structure of resources necessary for implementation of the program, including the portfolio, capacity for balancing public investment capital, mobilization of other funds and resources;

– Proposed plan for disbursement of fund and schedule of implementation of the program which are adapted for practical conditions and capacity for calling for resources in the rational order of preference, ensure concentrated and efficient investment;

– Determining costs related to the implementation process and costs incurred from operation of the program after the program is completed;

– Conducting the preliminary analysis and assessment of environmental and social impacts and influences of the program, measurement of investment efficiency in terms of socio-economic aspects of the program;

– Splitting constituent projects belonging in the program as per law;

– Implementation measures.

Contents of pre-feasibility study reports of public investment projects of national significance and group-A public investment projects

– Contents of pre-feasibility study reports of public investment projects of national significance and group-A public investment projects with construction components shall be subject to law on construction.

– Main contents of pre-feasibility study reports of public investment projects of national significance and group-A public investment projects without construction components shall be comprised of the followings:

+ Necessity of making investment, requirements for carrying out investment, assessment of relevance to related planning schemes, subject to law on investment planning and proposals;

+ Forecast of demands, service scope and proposed investment objectives, scale and form of investment;

+ Investment site, location, proposed size of land to be used and demands for other resources;

+ Preliminary analysis and selection of technologies, techniques and requirements for provision of raw materials, equipment, fuels, energy, services and infrastructure;

+ Preliminary analysis and selection of investment plans and scale of investment items;

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

+ Preliminary analysis and assessment of environmental and social impacts;

+ Preliminary determination of gross investment, plans to call for capital and funding structure;

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

+ Proposed fund disbursement plan and schedule of implementation of a project and investment phasing;

+ Preliminary measurement of investment efficiency in socio-economic aspects of a project;

+ Division of constituent projects or subprojects (if any);

+ Implementation measures.

Contents of reports on recommendation of policies for investment in group-B and group-C public investment projects

Main contents of reports on recommendation of policies for investment in group-B and group-C public investment projects shall include the followings:

– Necessity of making investment, requirements for carrying out investment, assessment of relevance to related planning schemes, subject to law on investment planning and proposals;

– Objectives, scale, location and extent of investment;

– Estimated gross investment and structure of investment capital, capacity for balancing public investment capital, mobilization of other funds and resources for implementation of a project;

– Proposed schedule of investment, proposed plan for disbursement of funds which are adapted for practical conditions and capacity for calling for resources in the rational order of priority, ensure concentrated and efficient investment;

– Preliminarily determining costs related to the implementation process and costs incurred from operation of a project after it is completed;

– Preliminarily analyzing and assessing environmental and social impacts; preliminarily determining investment efficiency in socio-economic aspects;

– Splitting constituent projects (if any);

– Implementation measures.

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

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

Delegation of authority to evaluate funding sources and capacity for balancing funds for public investment programs and projects

– Evaluation of funding sources and capacity for balancing funds is part of the evaluation of investment policies.

– Ministry of Planning and Investment shall be vested with authority to evaluate funding sources and capacity for balancing funds for the following programs and projects:

+ National target programs;

+ Public investment projects of national significance;

+ Public investment programs, subject to the Government’s investment policy decisions;

+ Public investment programs or projects, subject to the Government’s investment policy decisions.

– Ministers and Heads of central regulatory authorities shall be authorized to mandate their entities specialized in management of public investment to preside over and cooperate with related entities in evaluating funding sources and capacity for balancing funds for those projects using public investment capital under their jurisdiction provided that these funds do not exceed total mid-term investment capital limit that the Prime Minister informs to apply in the later period of time, and total mid-term investment capital limit that the National Assembly decides to apply to Ministries or central regulatory authorities in the period when these programs or projects are implemented, except those projects specified in clause 2 of this Article.

– Chairmen/Chairwomen of all-level People’s Committees shall be authorized to mandate entities specialized in management of public investment to preside over and cooperate with related entities in evaluating funding sources and capacity for balancing funds for public investment programs or projects using public investment capital under their jurisdiction provided that these funds do not exceed total mid-term investment capital limit that the Prime Minister or the competent authority informs to apply in the later period of time, or total mid-term investment capital limit that the National Assembly or People’s Council at any level decides to apply to localities, and are not greater than the actual excess of the local budget’s revenues (if any) intended for capital investment purposes, except those projects stipulated in clause 2 of this Article.

Modification of investment policies

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

– Procedures and processes for grant of the decision to modify an investment policy shall be regulated as follows:

+ As for public investment programs, these procedures and processes shall be subject to regulations laid down in Article 19, 20, 21, 22, 25 and 27 herein;

+ As for public investment projects of national significance, these procedures and processes shall be subject to regulations laid down in Article 19, 20, 21 and 25 herein;

+ As for group-A public investment projects, these procedures and processes shall be subject to regulations laid down in Article 23, 24 and 25 herein;

+ As for group-B and group-C public investment projects, these procedures and processes shall be subject to regulations laid down in Article 25, 26 and 27 herein.

– Application documentation submitted to competent authorities to request grant of decisions to modify investment policies of public investment programs and projects shall be subject to the Government’s regulations.

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