On 28 March 2025, the Government of Vietnam issued Decree No. 71/2025/ND-CP (“Decree 71”) amending and supplementing a number of articles of Decree No. 35/2021/ND-CP (“Decree 35”) detailing and guiding the implementation of the law on investment in the form of public-private partnerships (“PPPs”). Decree 71 is effective from 28 March 2025.
Details of Decree 71’s key updates, compared to Decree 35 are presented in the following table:
| Key Updates | Decree 71 | Decree 35 |
|---|---|---|
| Scope and Applicability | Decree 71 outlines regulations for:[1] the appraisal council for PPP projects; matters related to the preparation of PPP projects, projects under a build-transfer (“BT”) contract without payment requirements; selection of investors for PPP project implementation; confirmation of completion and transfer of works and infrastructure systems; termination of PPP project contracts; and handling of situations and violations in PPP investment. Decree 71 excludes projects using BT contracts with payment from the state budget or BT contracts paid with land funds. Decree 71 annulled the regulations on investment sectors and the scale of PPP projects in Decree 35. | Decree 35 outlines regulations for:[2] the appraisal council of PPP projects; matters related to the preparation of PPP projects; investment sectors; the scale of PPP projects; ; selection of investors to implement PPP projects; confirmation of completion and transfer of works and infrastructure systems; termination of PPP project contracts; and handling of situations and violations in PPP investment. |
| The Inter-Agency Appraisal Council | The inter-agency appraisal council:[3] is established by the Prime Minister upon the Ministry of Finance’s proposal, or by the Minister of Finance, if authorized; consists of a chairperson, a vice chairperson, and other members: the chairperson of the council is the Minister of Finance; the vice chairperson is a representative from the leadership of relevant ministries or agencies; and the other members of the inter-agency appraisal council include representatives from relevant ministries and agencies. | The inter-agency appraisal council:[4] is established by the Prime Minister’s decision for each project based on the Ministry of Planning and Investment’s proposal; consists of a chairperson, a vice-chairperson, and other members: the chairperson of the council is the Minister of Planning and Investment; and the vice chairperson and other members are representatives from the leadership of relevant ministries and agencies. |
| State Capital Participation in Difficult Areas | Road projects in socio-economically difficult areas can receive state capital exceeding 50% but not more than 70% of the preliminary total investment, provided they meet specific conditions (e.g. financial feasibility challenges due to low traffic volume, toll fee, public service, revenue recovery period, revenue).[5] | No equivalent provision. |
| Investor-Proposed Projects | An investor submits to the relevant authority a written proposal for implementing the project applying the O&M contract or PPP project with a total investment equivalent to group B[6] or group C[7] project (defined by the Law on Public Investment) and not using state capital.[8] The investor formulates feasibility study report for the proposed project in case the investor’s project proposal is approved by the relevant authority.[9] | No equivalent provision. |
| Conditions for BT Projects Without Payment Requirements, Proposed By The Investor | A project applying BT contract without payment requirements, as proposed by the investor, must meet the following conditions:[10] the project must align with the conditions for selecting PPP projects for investment as specified in the PPP Law; the project must not overlap with any PPP project which the competent authority is organizing the preparation of a pre-feasibility study report, feasibility study report, or has already approved another investor to prepare such reports; and the project must comply with relevant planning in accordance with the provisions of the Law on Planning. | No equivalent provision. |
| Investor Selection Process | For projects applying open bidding and competitive negotiation, minimum bidding document preparation times vary by project scale:[11] 45-60 days (National Assembly/Prime Minister projects), 30-45 days (Group A projects); 20 days (Group B/C projects); and 10 days (applicable to projects requiring economic-technical reports). An appraisal unit (e.g. Department of Finance together with an expert team) is defined to evaluate bidding documents and investor selection results.[12] | For projects applying open bidding and competitive negotiation as stipulated in Article 38.1 of the PPP Law, the minimum time for bid preparation is 60 days for the selection of domestic investors or 90 days for the selection of international investors, counted from the first day of issuance of the bidding documents to the bid closing date.[13] |
| Contract Performance Guarantees | For O&M PPP projects, where the total investment amount includes the value payable to the state budget by the investor, after the investor fulfills the obligation to remit this amount to the state budget, the investor shall be refunded or released from the performance guarantee in proportion to the value paid into the state budget.[14] The remaining portion of the performance guarantee shall be refunded or released after the investor or the PPP project enterprise has fulfilled the remaining obligations under the contract.[15] | No equivalent provision. |
| Consortium Requirements | In the case of a consortium, the lead investor must commit to contributing a minimum of 30% of the equity capital, and each member of the consortium must commit to contributing at least 15% of the equity capital, as specified in the consortium agreement.[16] For projects applying the O&M contract, at least one consortium member must have experience in operating and managing infrastructure works or systems to provide public products or services.[17] For BOT, BTO, BOO, BTL, BLT, or hybrid, PPP projects, at least one consortium member must have experience in operating and managing infrastructure, or the lead investor must have a cooperation agreement with a partner experienced in operating and managing similar infrastructure works or systems to provide public products or services.[18] | No equivalent provision. |
| Special Investor Selection Cases | The Prime Minister delegates authority to ministers, the head of another authority (e.g. provincial people’s committee’s chairman) to appoint investors for projects involving national defense, security, urgent needs, or offshore wind power.[19] | If a PPP project involves unique conditions that prevent standard investor selection methods or risk harming national interests, the competent authority may propose a special investor selection method, submit it to the Prime Minister for approval, and send it to the Ministry of Planning and Investment for appraisal.[20] |
| Supplemental conditions for negotiating early contract termination | The agreement on early contract termination between the parties must include the following information, among others:[21] The timeframe for the parties to remedy the situation; the proposed cost handling plan in the event of early contract termination; the engagement of an independent auditing organization (if necessary) in cases where the investor or the PPP project enterprise is entitled to compensation for early contract termination; and the request for the State Audit Office to audit the compensation costs related to early contract termination prior to making any payments to the investor or the PPP project enterprise. | The agreement on early contract termination between the parties must include the following information, among others:[22] Timeframe for the parties to remedy the situation; proposed cost handling plan in case of early termination of the contract; selection of an audit organization (if necessary). |
| Appendices and Model Contracts | Decree 71 updates forms for pre-feasibility and feasibility study reports.[23] Decree 71 revises guidance on formulating PPP project contract template.[24] New appendices provide model contract guidelines for BT projects (no payment) and O&M projects, detailing terms like financial plans, penalties, and dispute resolution.[25] | Decree 35 provides templates for pre-feasibility and feasibility study reports (Appendixes II & III) and guidance on formulating PPP project contract template (Appendix VI). |
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
[1] Decree 71, Article 1.1.
[2] Decree 35, Article 1.
[3] Decree 71. Article 1.2.
[4] Decree 35, Articles 8.1 and 8.2.
[5] Decree 71, Article 1.4.
[6] Under Article 10 of the Law on Public Investment, Group B projects typically have moderate to high investment capital, falling within specific ranges depending on the sector:
- In sectors like transportation, electricity, oil and gas, and construction materials, Group B includes projects with investment capital from VND 240 billion up to under VND 4,600 billion.
- In sectors such as irrigation, electronics, telecommunications, pharmaceuticals, and mechanical works, Group B includes projects with capital from VND 160 billion to under VND 3,000 billion.
- In sectors like agriculture, mining, and new urban infrastructure, projects are Group B if they have investment from VND 120 billion to under VND 2,000 billion.
- In sectors like health, education, IT, tourism, warehousing, and civil construction, Group B includes projects with investment from VND 90 billion to under VND 1,600 billion.
[7] Under Article 11 of the Law on Public Investment, Group C projects are essentially the lower-tier classification, often involving local or smaller development initiatives. The classification depends on the sector:
- In sectors like transportation, electricity, oil and gas, and construction materials, Group C includes projects with capital under VND 240 billion.
- In sectors such as irrigation, electronics, telecommunications, pharmaceuticals, and mechanical works, Group C includes projects with capital under VND 160 billion.
- In sectors like agriculture, mining, and new urban infrastructure, Group C projects are those with capital under VND 120 billion.
- In sectors like health, education, IT, tourism, warehousing, and civil construction, Group C covers projects with capital under VND 90 billion.
[8] Decree 71, Article 1.10(a).
[9] Decree 71, Article 1.10(a).
[10] Decree 71, Article 1.11.
[11]Decree 71, Article 1.12.
[12]Decree 71, Article 1.15.
[13]Decree 35, Article 31.6.
[14]Decree 71, Article 1.16.
[15]Decree 71, Article 1.16.
[16]Decree 71, Article 1.17(b).
[17]Decree 71, Article 1.17(b).
[18]Decree 71, Article 1.17(b).
[19]Decree 71, Article 1.23.
[20]Decree 35, Article 69.1.
[21]Decree 71, Article 1.29.
[22]Decree 35, Article 81.2(dd).
[23] Decree 71, Articles 1.33 and 1.35.
[24] Decree 71, Article 1.34.
[25] Decree 71, Article 1.35.
