PPP and BCC Investment

1. PPP Investment

Public-private partnership investment (hereinafter referred to as PPP) is a form of investment which basis of a project contract between a competent state agency and a project investor or enterprise to build, renovate, operate, trade, manage infrastructure projects, and provide public services.

PPP is a fairly developed model and is applied by many countries to take advantage of the state and the private sector for socio-economic development. The object of the contract is usually infrastructure works that fall within the state's responsibility in the fields of transportation - urban areas, parks, electricity, social infrastructure works, commercial infrastructure works, economic zone and hi-tech technical infrastructure; agriculture,... Therefore, the State encourages cooperation with the private sector in the form of PPP to reduce the burden as well as the risks to the budget.

PPP investment is governed by many legal documents related to the use and management of state assets, including the Construction Law, the Law on Investment, the Law on Public Investment, and the Law on Management and Use of Public Assets, Bidding Law. In the near future, PPP Law will be drafted and enacted to focus on unified and uniform management in a legal document.

PPP contracts allowed by Vietnam include: Build - Operate - Transfer (BOT) Contract; Build - Transfer - Operate (BTO) Contract; Build - Transfer (BT) Contract; Build - Own - Operate Contract (BOO); Build - Transfer – Leases (BTL) Contract; Construction – Leases - Transfer (BLT) Contract; Business - Management (O&M) Contract; and Combined contracts combining the above types of contracts. In case the investor proposes to apply a contract different from those listed above, this contract needs to be approved by the state agency, considered and approved by the Prime Minister.

2. BCC Investment

In the forms of investment, business cooperation contracts is often chosen by investors because of the advantages of not having to set up economic organizations when project operates. Business cooperation contract (BCC) is a contract signed between investors in order to conduct business cooperation for profit distribution and product distribution without establishing economic organizations. Parties to a BCC contract establish a coordinating board to carry out the BCC contract. The functions, duties and powers of the coordinating board are agreed by the parties. BCC contracts signed between domestic investors and foreign investors or between foreign investors must carry out the procedures for the grant of investment registration certificates.

In the course of contract performance, the parties retain their own legal status and perform their rights and obligations under the contract on their behalf. The rights and obligations of the parties are only bound by the contract, but there is no organizational commitment as in the form of new legal entities. BCC contracts are suitable for short-term projects in the field of profitability and quick profitability.

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