VIETNAM: Strengthening the PPP Legal and Regulatory Framework

Vietnam’s Ministry of Planning and Investment estimates that over the next five years $68 billion is needed in infrastructure investment—a large portion of which will need to come from private investment given the current fiscal constraints. Sustained investment in and effective management of infrastructure assets is an important priority to prevent growth being constrained by emerging infrastructure bottlenecks. Ensuring reliable electricity supply, efficient logistics and transportation, and access to cost effective and reliable telecommunication services are especially critical for developing the manufacturing and service sectors. Meanwhile, Vietnamese cities are growing fast and a key challenge for municipal governments is to rapidly put in place the necessary infrastructure to support economic activities, ease urban mobility, and provide water, sanitation and other municipal services to the growing urban population. Priority infrastructure in rural areas include investments to expand access to water and sanitation, especially in remote and poor communities.   

To mobilize that needed private sector infrastructure investment, the government wanted to establish a PPP law. The purpose of PPIAF’s activity was to ensure that the various stakeholders within the government were aware of some of the key issues that needed to be satisfactorily addressed in a draft PPP law for it to be fit for purpose. PPIAF initially supported the Ministry of Planning and Investment with preparing a PPP roadmap aimed at indicating the long-term strategies, policies, and further actions for stimulating Vietnam’s PPP program. PPIAF has then been supporting the government with improving its PPP legal and regulatory framework, including drafting a PPP law and preparing enabling implementation decrees through fostering its Ministry of Finance engagement and National Assembly support. Being part of PPIAF’s PPP Institutions Programmatic Approach, these activities have also been benefitting from a streamlined approach. 

In June 2020, the draft PPP law was passed by the National Assembly. The law and subsequent implementation decrees are expected to foster private sector participation in infrastructure and the law aims to strengthen the regulatory processes for relevant parties to fulfill their obligations in PPP contracts. It focuses on five essential areas: transport; power grid and plants; irrigation, clean water supply, water drainage, and wastewater and waste treatment; healthcare and education; and information technology infrastructure.  

PPIAF’s intervention was critical to achieve this outcome, which is an important step in the right direction and indicates the government’s legal commitment to domestic and foreign investors and ongoing support for PPPs. The World Bank will continue to support the Ministries of Finance and Planning and Investment in socializing and implementing the new law, with a view to achieve substantial private capital mobilization outcome in the medium term. This activity is fully aligned with the World Bank’s objective to foster private sector participation in infrastructure and overall IBRD commitment to increase the mobilization ratio to 25 percent on average over FY 19–30.