By Phan Minh, bizconsult
On February 28, 2020, the Vietnamese Government issued Decree 25/2020/ND-CP providing details and guidance for implementation of a number of articles of Law on Bid with respect to selection of investors (“Decree 25”). This Decree will take effect from April 20, 2020 and replace Decree 30/2015/ND-CP (“Decree 30”) dated March 17, 2015 on the same subject matter. Following are some salient changes provided under Decree 25:
Expansion of governing scope
In addition to PPP projects and land-using projects, Decree 25 further governs projects which are required to implement bidding for selection of investor in accordance with specialised laws and laws on socialisation.
Land-using projects governed by Decree 25 are determined as projects of building commercial housing, commercial and service works; multi-purpose complexes for business purposes and must satisfy the following conditions: (i) Ineligible for organising auctions of land use rights; (ii) Included in the approved list of projects requiring land recovery or in the urban development program (if any) or implemented on land areas under the State’s management and use; (iii) In line with socio-economic development plans, branch/sector development plans; construction planning with scale of 1/2000 or 1/500 (if any) or urban zone planning with 1/2000 or 1/5000 scale. Accordingly, condition of “project using land with high commercial value” to determine projects required to implement bidding process for selection of investor under Decree 30 has been removed.
Clarification of mechanism of land allocation or land lease upon closing of the bid
Decree 30 and laws on land are silent on mechanism of land allocation or land lease to the successful bidder for implementation of projects using land. The lack of this mechanism leads to difficulties in allocating/leasing land to the winning investor upon the bidding. In practice, many localities suspended land allocation/lease to the successful bidders even they had spent hundreds of billion dong to serve for compensation and site clearance.
Decree 25 specifies that the State shall allocate or lease land to the successful bidder upon the completion of compensation, support and resettlement of project-implementing land area. In this case, procedure for land allocation and land lease shall be similar to the case of which is not through land use rights’ auction as prescribed in the land law. These regulations are important legal basis for the State to allocate/lease land to successful bidder, help overcome difficulties caused to investors and localities due to the lack of regulations.
Change on pre-qualification and methods of selection of investor of project using land
Process of prequalification under Decree 30 is now replaced by process of preliminary assessment of capacity and experience of investors who register for project implementation. Specifically, under Decree 25, upon publication of approved list of projects using land together with preliminary requirements on capacity and experience of investors, interested investors shall prepare and submit application dossier to competent authority. On the basis of results of the preliminary assessment process, the Chairperson of Provincial People’s Committee shall decide one of the following methods of selection of investor: (i) if there are at least two qualified investors: [international or domestic] open bidding shall be applied; (ii) if there is a qualified investor: the investor shall conduct procedure for investment policy decision in accordance with investment law instead of application of investor designation as regulated in Decree 30.
Under Decree 25, international open bidding is only applied to projects with total preliminary cost for project implementation (excluding compensation, support, resettlement costs and land use/rental fee) of 800 billion dong or more. This regulation narrows opportunity for foreign investors to participate in process of bidding for selection of investors in Vietnam compared to Decree 30. Furthermore, Decree 25 supplements a case required domestic open bidding, which is project with requirements on defense and security assurance. Besides, Decree 25 only retain one case which may apply investor designation, of which there would be only one investor eligible to perform project due to the reason concerning intellectual property, commercial secret, technologies or capital arrangement.
In summary, Decree 25 has significant changes regarding governing scope and process of bid and post-bid for selection of investors of PPP projects and land-using projects.
By Phan Minh
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