The different investment forms

Considering your investment form options

It is not mandatory for infrastructure projects to be carried out in the PPP form. While there are advantages and disadvantages to consider, the major benefit of investing under the PPP regime is it provides a specific regulatory pathway to seek government guarantees and support (though now on a limited basis) that will enhance project viability, mitigate risk and support financing.

While it is theoretically possible for the Government to offer such support to infrastructure projects done outside the PPP regime, there are limited precedents for this. Plus, investors face the uncertainty of direct negotiation. So far, we are aware of only two cases where the Government has provided government guarantees and undertakings (GGU) for megaprojects not carried out in PPP form. In another IPP, the Government issued a guarantee for the loan obtained by the project company (for repayment obligations only).

PPP or non-PPP?

From a bankability perspective, some of the regulations provide more favourable treatment for investment in the PPP form than the non-PPP form. Here's why:

  • The PPP Law provides that the Government can decide on issuing guarantees on foreign currency for key PPP projects, with the investment policy decided by the National Assembly or the PM subject to (i) foreign currency policy and the capability of the state to manage foreign currency reserves, and (ii) the 30% threshold for foreign currency support for VND project revenue (to be converted into USD) after deducting local expenses;
  • In addition to foreign currency availability and conversion, the PPP scheme expressly provides for more guarantees and support from the Government, including priority access to public facilities and services, a mechanism for sharing revenue increases and shortfalls, and lenders' step-in rights;
  • There is more room for the investor to negotiate bankable contracts in the PPP scheme. Specifically, the PPA for power projects does not have to follow a particular statutory form. Although the PPP contract has to follow a model form (which so far has only been issued in the form of guidance), a PPP contract by its nature allows the investor to shift certain risks to the Government side; and
  • In practice, there is ample precedent of international financing on a non-recourse basis of power projects in the PPP form. Many international lenders are familiar with the project documents and the key risks (although it remains to be seen whether financiers will be as ready to finance projects under the requirements of the new PPP Law).

There are other considerations when comparing PPP and non-PPP regimes in the current environment:

  • For non-PPP projects, it is less clear if a GGU will be on offer. Decree 311 states that subject to the socio-economic development conditions and the need to attract investment for each period, and the scale and nature of each project, the PM may decide the format and contents of a guarantee to be issued for (i) projects where the investment policy is decided by the National Assembly or the PM, or (ii) other important infrastructure projects. Decree 31 provides that such a guarantee can be in the form of (a) foreign currency support, or (b) other state guarantees as decided by the PM.
  • Although Resolution 55 stated that energy investment projects are encouraged to be implemented in the PPP form, it appears that the PPP form is not preferable as a matter of practice in certain sectors. For example, of the various LNG-to-power projects recently proposed to be carried out, we are aware of only two projects proposed to be in the PPP form, and the Government appears to prefer that LNG-to-power projects are carried out as IPPs;
  • History shows that negotiation of project documents in the PPP context can be very long and drawn out;
  • The PPP Law sets out a brand-new regime that has not been tested in practice, so the investor should expect currently unknown hurdles and delays along the way;
  • The non-PPP scheme offers some advantages that may be more attractive to the investor than those under the PPP scheme. For example, the law clearly provides that in certain cases, the selection of an investor through bidding is not needed; and
  • Other advantages of the non-PPP scheme include longer project life, no requirement to later hand over the project to the Government, no statutory time limit for securing finance, less stringent transfer conditions, and the possibility of some key contracts being governed by foreign law.

Investment cycle

Below are outlined the phases for investment under the PPP regime and the general investment law regime.

A PPP project must be included in the relevant master plans before the pre-FS can be formulated. Under investment law, a non-PPP project does not have to be included in a master plan,2 except for power (including LNG-to-power) and gas projects which must first be included in a power master plan (as has been the law and practice so far). Subject to this exception, an investment policy approval for a non-PPP project can be issued if the project complies with relevant master plans.

PPP project cycle

A PPP project cycle consists of the following phases:

Phase 1: Pre-FS report, Investment Policy Approval (IPA), Project announcement
  • Pre-FS report to be formulated by:
    • the body authorised by the authorised agency, or
    • the investor (in case the project is proposed by the investor);
  • Pre-FS report to be evaluated by the PPP Evaluation Council;
  • IPA to be issued by:
    • the National Assembly,
    • the PM, or
    • the Ministers of ministries or the provincial PC;
  • Project announcement.
Phase 2: Feasibility Study (FS) report and project approval
  • FS report to be formulated by:
    • the body authorised by the authorised agency, or
    • the investor (in case the project is proposed by the investor);
  • FS report to be evaluated by the same PPP Evaluation Council as mentioned in Phase 1.
Phase 3: Selection of investor
  • The selection of investor can be via:
    • public tender;
    • competitive negotiation;
    • direct appointment of investor; or
    • other methods in special cases.
  • Generally, public tender shall apply. The investor shall enjoy preferential treatment in the tender if it:
    • proposes the project;
    • undertakes to use domestic contractors for work accounting for at least 25% of the total investment capital of the project; and/or
    • undertakes to use domestic equipment and materials with a value accounting for at least 25% of the total investment capital of the project.
  • Competitive negotiation only applies in the case:
    1. there are no more than three investors satisfying the requirements for project implementation;
    2. the project is a hi-tech application project given priority for development; or
    3. the project applies new technology in accordance with the laws on technology transfer.
  • Direct appointment of investor only applies in the case:
    1. the requirement for national defence and security or state secret needs to be ensured, or
    2. replacement of an investor.
Phase 4: Project company establishment and signing of project contract
  • Establishment of the project company shall comply with the Law on Enterprises;
  • The PPP project contract is entered into between the project company, the investors and the contract signing agency;
  • Payment of performance security deposit;
  • Equity of the investors must be contributed in accordance with the schedule as agreed in the PPP project contract.
Phase 5: Project implementation, accounting finalisation, transfer of facility and liquidation of project contract 
  • The project company shall formulate and promulgate rules to select contractors for the implementation of the project.
  • The project company shall be responsible for construction quality management and supervision, under the supervision of the authorised state body
  • The accounting finalisation shall be carried out after completion of construction.
  • The handover of the project facility shall comply with the agreed conditions and procedures set out in the project contract.
Investment project cycle under general Investment Law regime (Non-PPP project cycle)

An investment project cycle under the general Investment Law regime consists of the following phases:

Phase 1: Formulation of investment project proposal

Formulation of the investment project proposal (where construction laws require the pre-FS to be formulated, the pre-FS could be used in place of the investment project proposal).

Phase 2: Investment policy approval (IPA)
  • IPA to be issued by:
    • the National Assembly;
    • the PM; or
    • the provincial PC.
Phase 3: Selection of investor
  • The selection of investor can be via:
    1. auction of the land use right (LUR) in accordance with regulations on land;
    2. tendering in accordance with regulations on tendering; or
    3. approval of investor.
  • Generally, auction of LUR applies in the following cases:
    • land lease or land allocation to implement the project is subject to auction of LUR under law on land; and
    • the proposed area of land for project implementation has already been cleared.
  • Tendering applies in the following cases:
    • the project does not satisfy the conditions for auction of LUR as stated in the preceding bullet point; and
    • the project is subject to tendering for selection of investor under the law on tendering, the law on socialisation or specialised laws.
  • Approval of investor applies in the following cases:
    • the LUR auction has been conducted but only one investor registered for participation;
    • the LUR auction in accordance with land regulations fails twice;
    • tendering is conducted to select investors, but only one investor registers for participation in the tendering and satisfies preliminary requirements for capability and experience. Or, various investors register but only one satisfies preliminary requirements for capability and experience;
    • the investor has LUR, except for the case where the state expropriates land for national defence and security purposes, or for socio-economic development in the national or public interest in accordance with regulations on land;
    • the investor has LUR via LUR transfer, capital contribution, lease of agricultural land for implementation of non-agricultural investment project for production or business that is not subject to land expropriation by the state in accordance with regulations on land;
    • the investor implements the investment project in an industrial park or hi-tech zone; or
    • other cases not subject to an auction or tendering in accordance with law.
Phase 4: Investment registration certificate (IRC), Enterprise registration certificate (ERC)
  • IRC shall be issued after issuance of IPA, except for projects that do not require an IPA.
  • Establishment of the project company shall comply with the Law on Enterprises.
Phase 5: Project implementation
  • The investor shall pay a security deposit for project implementation of 1-3% of the investment capital of the project.
  • The project term shall be no more than 50-70 years, depending on the location of the project. Upon expiry of such term, the investor may apply for extension of the term.


  1. Decree 31/2021/ND-CP of the Government dated 26 March 2021 implementing the Law on Investment.

  2. The law on investment only requires an investment project to be consistent with the national plan, regional plan, provincial plan, urban plan and special economic – administrative zone plan (if any) in order for the investment policy approval to be issued (Article 33.3(a)).