Vietnam opens up private sector opportunities in PPPs

HANOI - Vietnam’s new public-private partnership (PPP) decree alleviates concerns and cultivates investment opportunities for private investors and lenders, according to lawyers Baker & McKenzie in a new Client Alert. Effective April 10, Decree No 15 improves certain parts of the legal framework in Vietnam for PPP projects.

“This is a significant development aimed at attracting private sector capital needed for infrastructure projects and the provision of public services in Vietnam over the next several years,” B&M says.
 
“The most positive aspect of Decree No 15 is that it addresses certain issues, inconsistencies, and difficulties in the implementation of PPP projects. Also, Decree No 15 aims to provide basic principles and general regulations to ensure flexibility for PPP projects with differing scales and in different areas/sectors.
 
“From a lender’s perspective, Decree No 15 creates a more flexible mechanism for the lender by allowing it to enter directly into an agreement on step-in right with the authorized State agency. The lender can also form an agreement with the authorised State agency on the time for signing such agreement.
 
“However, Decree No 15 fails to settle some of the issues that impact bankability. Specifically, it does not provide for Government guarantees on minimum revenue, nor it does mention any specific mechanisms for risk allocation for investors and lenders.

 Also, amid concerns over sources of foreign currency at the national reserve, the assurance for the balance of foreign currency can only be granted to certain important projects as made eligible under certain Government decisions and programmes.   www.bakerandmackenzie.com (ATI).