Vietnam law has regulations on investment incentive and guarantee for PPP projects. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what are investment incentives for PPP projects in Vietnam? What are investment guarantees for PPP projects? Thanks for answering my questions!”
Legal grounds
- 2020 Vietnam Law on Public-Private Partnership Investment
Regulations on Investment incentive
Investors and PPP project enterprises shall be entitled to tax, land use, land rental and other incentives in accordance with the law on taxes, land, investment and other provisions of relevant laws.
Regulations on Investment guarantee
– Investors and PPP project enterprises shall be entitled to investment guarantees in accordance with 2020 Vietnam Law on Public-Private Partnership Investment and investment legislation.
– Guarantee for the right to access land, rights to use land and other public property shall be prescribed as follows:
+ PPP project enterprises shall be assigned land or leased land by the State or permitted to use other public assets for the performance of PPP contracts in accordance with the law on land and the law on management and use of public assets;
+ The purpose of using land shall be protected from against any change that may arise during the entire contract term, even if the lender exercises their rights prescribed in Article 53 of 2020 Vietnam Law on Public-Private Partnership Investment.
– Guarantee for provision of public services shall be regulated as follows:
+ PPP project enterprises may use public works and other auxiliary ones for the purposes of implementation of projects in accordance with laws;
+ In case where there is any scarcity of public services or any limitation of users of public facilities, PPP project enterprises shall be given priority to provide public services or shall be preferred to have the right to use public works for the project implementation purpose;
+ The competent authority shall be responsible for assisting PPP project enterprises in carrying out the necessary procedures so that these enterprises can be prioritized to have access to public services and public works.
– Guarantee for the right to mortgage property, the right to commercially operate construction works and infrastructure systems shall be subject to the following regulations:
+ PPP project enterprises may provide their assets, their rights to use land and their rights to commercially operate construction works and infrastructure systems as a mortgage provided to lenders in accordance with land and civil law. The mortgage period must not exceed the contract term, unless otherwise agreed in the contract;
+ A mortgage agreement on the property, the right to operate infrastructure work or system must be made in writing between the lender and the contracting party;
+ Mortgaging assets or the rights to commercially operate construction works or infrastructure systems must not affect the objectives, scale, technical standards, project implementation schedule, other terms and conditions as agreed upon in the contract.
– Contract signing authorities and competent authorities shall be responsible for cooperating with local authorities of the places where PPP projects are located to ensure security, order and safety for people and property of PPP project enterprises and contractors in the process of implementing PPP projects.
Foreign currency balancing guarantee for significant PPP projects
– The Government shall make its decision to apply the mechanism to ensure the balanced foreign currency revenues and expenditures with respect to projects under the authority to grant investment policy decisions of the National Assembly and the Prime Minister on the basis of foreign exchange management policy and capability of balancing foreign currency over periods of time.
– If PPP project enterprises implementing the projects specified in Clause 1 of this Article have exercised the right to buy foreign currency to meet the needs of current, capital and other transactions, or transfer capital, profits, or other liquidated investments remitted abroad in accordance with the law on foreign exchange management, and the foreign currency market cannot, however, accommodate their legal foreign currency demands, then they shall be entitled to use no more than 30% of Vietnamese-dong revenues generated from each project after deduction of Vietnamese-dong spending amounts as a guarantee for foreign currency balancing.
Mechanism for sharing of increased and reduced revenues
– When the actual revenue is 125% higher than the revenue specified in the financial plan under a PPP project contract, the investor and the PPP project enterprise will share with the State 50% of the difference between the actual revenue and 125% of revenue in the financial plan. The increased revenue may be shared after adjustment in the prices and costs of public products and services or the PPP contract term according to the provisions of Article 50, 51 and 65 of 2020 Vietnam Law on Public-Private Partnership Investment and must be audited by the State Audit.
– When the actual revenue is 75% lower than the revenue specified in the financial plan under a PPP project contract, the State will share with the investor or PPP project enterprise 50% of the difference between 75% of revenue in the financial plan and the actual revenue. Sharing of reduced revenues may occur if the following requirements are satisfied:
+ Projects are developed and executed under BOT, BTO or BOO contracts;
+ Changes in relevant planning, policies and laws result in a reduction in revenue;
+ Measures to adjust prices and charges of public products and services, and PPP contract terms, according to the provisions of Articles 50, 51 and 65 of 2020 Vietnam Law on Public-Private Partnership Investment, have been fully taken, but the minimum revenue requirement of 75% has not been met yet;
+ The reduced revenue has been audited by the State Audit.
– The mechanism for sharing of the reduced revenue specified in Clause 2 of this Article must be determined according to the decision on investment policy. Expenses for dealing with the revenue reduction sharing mechanism shall be covered by the central government’s budget reserve with respect to the projects falling under the authority to grant investment policy decisions of the National Assembly, the Prime Minister, Ministers, heads of central agencies or other bodies, or by the local government’s budget reserve with respect to the projects falling under the authority to grant investment policy decisions of provincial People’s Councils.
– On an annual basis, the parties to PPP project contracts shall determine the actual revenue and send the results of such determination to competent financial institutions to carry out the mechanism for sharing of increased and decreased revenues. Accounting for state budget revenues and expenditures arising from sharing of the reduced or increased revenues shall comply with the provisions of law on state budget.
– The Government shall elaborate on this Article.
Please see more:
- Instructions for exclusive registration of company logos in Vietnam
- Service of changing the legal representative of Vietnamese enterprises
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Frequently asked questions
Investors and PPP project enterprises shall be entitled to tax, land use, land rental and other incentives in accordance with the law on taxes, land, investment and other provisions of relevant laws.
Guarantee for the right to access land, rights to use land and other public property shall be prescribed as follows:
+ PPP project enterprises shall be assigned land or leased land by the State or permitted to use other public assets for the performance of PPP contracts in accordance with the law on land and the law on management and use of public assets;
+ The purpose of using land shall be protected from against any change that may arise during the entire contract term, even if the lender exercises their rights prescribed in Article 53 of 2020 Vietnam Law on Public-Private Partnership Investment.
Contract signing authorities and competent authorities shall be responsible for cooperating with local authorities of the places where PPP projects are located to ensure security, order and safety for people and property of PPP project enterprises and contractors in the process of implementing PPP projects.
Conclusion: So the above is PPP Investment incentive and guarantee in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
