Attracting investors to PPP projects through policies
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The amendment of a number of contents is to specify the function of State management of the State agencies and self-determination right in investor’s business. Photo: Internet. |
The PPP policy has been gradually improved by the Government to be close with international practices. Specifically, the Government issued Decree 63/2018 dated 4th May 2018 on PPP investment (replacing Decree 15/2015/ ND-CP) and Resolution 20/NQ-CP dated 28 March 2018, stipulating a number of specialized mechanisms to facilitate the completion on schedule of projects for the investment of some roads of the Eastern North-South expressway under Resolution 52/2017/QH14 dated 21st October 2017 of the National Assembly.
The Ministry of Finance has gradually improved the management mechanism for PPP projects by developing a draft circular replacing Circular 55/2016/TT-BTC dated March 23 2016, on financial management of investment projects in the PPP form and investor selection expenses, and a circular guiding the implementation of specialized contents for the Eastern North-South Expressway. Currently, the Ministry of Finance has widely gathered opinion on these draft circulars in its Portal.
According to the Investment Department under the Ministry of Finance, the draft circulars have only been supplemented revenue and expenditure in accordance with international practices for PPP projects that have not been previously defined as expenditures related to mobilization beyond the normal interest rate ( guaranteed expenses, commitment fees, fees for credit insurance, brokerage), and additional revenue beyond main revenue from service fees.
Besides, the regulation on fixed interest rate in the financial plan of PPP projects shall be abolished; the interest rate shall be decided by the market; Investors shall determine the capital mobilization with reasonable interest rates to ensure competitiveness for bidding and the State shall not intervene. This is one of the fundamental changes that accurately reflects market principles and actual costs of a project. The loan interest rate in the project contract shall be determined on the basis of the bids of the selected investor. In the case of appointment of an investor, the interest rate in the project contract will be decided by the competent authorities.
The new regulations also specify that the investor’s profits are formed under the market principle through bidding between investors; Ministries and sectors shall issue a legal framework for bidding. At the same time, supplementing the regulations on return on equity that shall be from the time of project permitted to be put into operation and use by the competent agency for unifying an application.
The draft has been amended on the regulations of documents for investment capital payment funded by the State for projects towards maximum simplification, the main responsibility in determining the value of completion by investors and the meeting of conditions for disbursement of state capital as prescribed by competent state agencies.
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The Ministry of Finance has proposed to supplement a number of new contents such as: making plan for capital payment for investors using recurrent expenditure fund and revenue from public service provision; Determining the value of public assets in PPP projects.
According to the leader of Investment Department, the amendment of a number of contents is to specify the State management function of the State agencies and self-determination in investor’s business, and to facilitate the State agencies and investors in implementing financial contents of PPP projects.
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