Incentives for investors in Vietnam

The proposal is supported by amendments in the draft Decree No 78/2006/ND-CP regulating BOT and BT contracts. If being approved, the pressure of ownership capital on investors will be eased considerably, meaning that the investment doors will be opened as for BOT, BTO and BT companies. If forcing the too high ownership capital ratio in over 1.5 trillion dong projects, many investors can miss opportunities because of the heavy pressure of financial strength.

Currently, pursuant to Clause 4 Decree No 78/2006/ND-CP, BOT, BTO and BT companies must have the ownership capital ratio of 25, 25 and 10 percent corresponding to each project worth $750 million, 1.5 trillion dong and more than 1.5 trillion dong. However, in some small scale projects, the ratio is ruled at higher. For example, with the ratio of 15 percent, compulsory ownership capital of the investor in a 1.490 trillion dong project is 298 billion dong. Meanwhile, as for 1.6 trillion dong projects, the statutory ownership capital is only 160 billion dong (10 percent).

With the new proposal, the unreasonable problem will be solved. Under the progressive principle, the compulsory ownership capital for 1.490 trillion dong projects will be 223.5 billion dong, and that for 1.5 trillion dong projects is 235 billion dong. Therefore, when selecting from the list of BOT, BTO and BT projects that is announced annually by local governances, investors can define the required ownership capital amount as well as count out profits to make decisions on following projects and carrying out projects.

If investors offer unplanned projects, they must present the project proposal in line with standards, ground clearance plan, resettlement (if any), environmental impacts, construction time, and the management and trading method (for BOT projects), payment method and others, according to the amendments in draft Decree No 78. These proposals will be considered by prime minister if they are subject to Vietnam’s national project groups passed by National Assembly.

The government encourages BOT, BTO and BT projects in fields of building roads, bridges, tunnels, ferry, railways, airports, seaports, clean water systems, waste tackling systems, drainage, electricity transmission lines and other infrastructure works.