New Laws on Planning and Business Investment

On 29 November 2024, the National Assembly enacted Law No. 57/2024/QH15 (the "Amending Law"), introducing significant amendments to several existing laws, including the Law on Planning No. 21/2017/QH14 ("Law on Planning"), the Law on Investment No. 61/2020/QH14 ("Law on Investment"), the Law on Public-Private Partnership Investment No. 64/2020/QH14 ("PPP Law"), and the Law on Bidding No. 22/2023/QH15 ("Law on Bidding"). Effective from January 15, 2025, the Amending Law aims to address existing legal inconsistencies, enhance state management efficiency, encourage investment—particularly in public-private partnership projects—and ensure transparency and competitiveness in the bidding process. This Legal Update highlights key amendments introduced by the Amending Law. 

I. Amendments to the Law on Planning

The Amending Law introduces several notable changes to the Law on Planning, particularly concerning the relationship between various plans, the responsibilities of authorities, and the funding for establishing and amending plans. A significant addition is the provision for expedited procedures for planning adjustments under specific circumstances, as outlined below:

1. Implementation of Resolutions: Adjustment procedures can be expedited when implementing resolutions from the National Assembly, the Standing Committee of the National Assembly, or the Government that pertain to national defence and security, administrative division arrangements, or nationally significant projects, resulting in changes to one or more aspects of the existing planning.

2. Conflicts Between Plans

• Higher-Level Conflicts: When a plan conflicts with a higher-level plan, adjustments can be expedited to resolve the inconsistency.
• Same-Level Conflicts: Adjustments can also be expedited when there are conflicts between plans at the same level.

3. Emergency Projects or Urgent Tasks: Adjustments can be expedited when the implementation of emergency projects or urgent tasks necessitates changes in one or more aspects of the planning, as regulated by the Government.

These provisions offer substantial benefits for investors by facilitating quicker resolution of conflicts between plans, thereby streamlining project implementation and reducing potential legal uncertainties.

II. Amendments to the Law on Investment

1. Investment Support Fund

Article 2.3 of the Amending Law introduces the concept of an "Investment Support Fund," which will be financed by corporate income tax revenues (in line with global anti-base erosion tax regulations) and other lawful sources. The fund’s primary objectives are to attract strategic investors and multinational corporations by providing financial support for key investment projects, and to support domestic enterprises, particularly in sectors prioritized for investment by the government.

Through this mechanism, both domestic and foreign investors will have access to significant financial assistance for strategic and high-priority projects, reinforcing Vietnam’s commitment to fostering investment in critical industries. 

2. Special Investment Procedures

The Amending Law introduces a new provision regarding "Special Investment Procedures," allowing investors to opt for streamlined investment registration processes for projects located in:

• industrial parks;
• export processing zones;
• high-tech zones;
• centralized information technology zones;
• free trade zones; or
• functional zones within economic zones.

These special procedures apply to certain high-value, technology-intensive projects, including:

• innovation centres and R&D centres;
• semiconductor and integrated circuit (IC) industry investments, including:
  • technologies used in the design and manufacturing of ICs and their components; or
  • printed electronics (PE), chips, and semiconductor materials; or
• high-tech projects prioritised for investment and development, including the manufacturing of products listed as "recommended high-tech products" by the Prime Minister.

Under the special investment procedures, these projects will not be required to undergo lengthy approval processes, including:

• investment policy approval;
• technology assessment;
• environmental impact assessment;
• detailed planning and construction permits; and
• approval procedures for fire prevention and firefighting.

The Investment Registration Certificate (IRC) for these projects will be expedited, with a processing timeline of 15 days from the date of submission to the management authority of the respective industrial, export processing, high-tech, or economic zone.

These flexible investment procedures significantly reduce administrative burdens for high-tech and strategic projects, making Vietnam a more attractive destination for both domestic and foreign investors in priority sectors.

3. Termination of Investment Projects

The Amending Law introduces stricter enforcement measures to ensure discipline in project execution. A new provision states that an investment project will be terminated if within 24 months from the completion of the project schedule (or a specific phase, if applicable), the investor fails to meet the project objectives; and does not qualify for a schedule adjustment.

This measure is intended to prevent delays in project execution and enhance accountability among investors.

4. List of Conditional Business Lines

The Amending Law revises and supplements Appendix IV – List of Conditional Business Sectors to reflect current economic and technological developments.

Notably, new business sectors related to data have been added, including:

• trading in intermediate data products and services;
• trading in data analysis and consolidation products and services; and
• data exchange services.

Conversely, in the power sector, "consulting services in the power sector" has been removed from the list of conditional business sectors, reducing regulatory barriers for investors in this industry.

III. Amendments to the PPP Law

1. Reintroduction of the Build-Transfer (BT) Model

Under the current PPP Law, permitted contract types include:

• Build-Operate-Transfer (BOT);
• Build-Transfer-Operate (BTO);
• Build-Own-Operate (BOO);
• Operate-Manage (O&M);
• Build-Transfer-Lease (BTL);
• Build-Lease-Transfer (BLT); and
• Mixed PPP contracts.

The Amending Law reintroduces the Build-Transfer (BT) model, which was previously excluded from the PPP Law. Under this model, an investor constructs infrastructure and then transfers ownership to the State upon completion.

However, the reintroduction of BT contracts has been carefully structured to address previous concerns about:

• inefficiencies in public-private land swaps;
• disputes over land valuation; and
• potential misuse of public resources.

Under the Amending Law, three (3) types of BT contracts are introduced:

• BT contracts where payment is made using land;
• BT contracts where payment is made using the State budget; and
• BT contracts that do not require any payment.

2. Sectoral Focus

Unlike the previous PPP Law, which explicitly listed specific sectors eligible for PPP investments, the Amending Law introduces a more flexible approach.

Under the revised framework, PPP projects may be implemented in any public investment sector, provided that they aim to develop infrastructure projects; or provide public products and services.

However, certain restrictions apply:

• PPP projects are prohibited in sectors classified as a "State monopoly"; and
• PPP investments are restricted in defence, security, and social order sectors.

This amendment removes minimum investment thresholds and provides greater flexibility in selecting eligible PPP projects.

3. Equity of PPP Project

Previously, State capital participation in PPP projects was capped at 50% of total investment costs. The Amending Law increases this cap to 70% under the following conditions:

• projects with exceptionally high costs related to land compensation; site clearance; temporary resettlement and infrastructure relocation; and/or
• projects located in socio-economically disadvantaged areas that require higher State investment to ensure financial feasibility; and/or
• projects requiring high-tech transfers that necessitate additional State capital to attract private investment.

By allowing increased State contributions, the government seeks to boost private sector confidence in PPP projects while ensuring their financial sustainability.

4. PPP Procedures

The Amending Law streamlines approval processes for smaller-scale PPP projects by  removing the requirement for pre-feasibility studies for Group B, Group C, and O&M projects; and waiving investor selection procedures for BT projects that do not require payment. Additionally, the Amending Law revises approval authorities for certain PPP projects, investor selection processes, and procedural steps for granting in-principle investment approval.

These revisions simplify administrative processes and enhance efficiency, making PPP projects more attractive to private investors. 

5. Cost Payment in Termination of PPP Contracts

Previously, PPP project companies were only entitled to compensation for early termination in limited circumstances, such as national security concerns or serious contractual breaches by the government.

The Amending Law expands compensation eligibility, ensuring investors are compensated for early contract termination in cases of:

• force majeure events/ or national interest concerns requiring project cancellation/ or other cases where there is a fundamental change in circumstances, and contract specifies that the payment responsibility lies with the contracting authority; or 
• serious contractual violations by the contracting authority.

This revision enhances investor protections and improves contractual certainty in PPP agreements.

6. Risk-Sharing Mechanisms and Access to Financing

Although the PPP Law provides that the cost of managing the revenue-sharing mechanism in limited cases is covered by the central or local budget reserve, its practical implementation has faced significant challenges. To address these issues, the Amending Law introduces more detailed regulations, including:

• clarification of funding sources to ensure adequate capital for risk-sharing mechanisms;
• requirement for authorities to identify feasible capital sources to compensate for revenue reductions in PPP projects; and
• priority ranking of funding sources to ensure financial stability in project execution.

These provisions increase predictability for investors by providing a more structured and transparent approach to risk-sharing, thereby enhancing investor confidence in PPP projects.

IV. Amendments to the Law on Bidding

The Amending Law introduces several amendments and additions to the Law on Bidding, aimed at enhancing flexibility, efficiency, and transparency in Vietnam’s procurement and contractor selection processes. The key changes include:

1. Selection of Contractors in Exceptional Cases

Previously, the Law on Bidding provided a limited list of specific circumstances in which special contractor selection methods could be used. However, this did not cover all potential scenarios where flexibility may be required.

To address this, the Amending Law expands the scope of exceptional contractor selection cases, applicable to the bidding packages under the project, procurement estimate that:

• Involve complex procedural, contractual, or execution conditions that make conventional selection methods impractical; 
• Require special processes to safeguard national defence, security, foreign affairs, or territorial integrity; or
• Relate to the fulfilment of national political tasks where existing bidding methods cannot be applied.

While the specific scope and procedural details will be outlined in further guiding decrees, this amendment ensures greater adaptability in awarding contracts for strategic or sensitive projects.

2. Selection of Investors in Special Cases

A special investor selection mechanism was previously included in the 2013 Law on Bidding, but this provision was removed in the 2017 Law on Bidding. The Amending Law reintroduces this mechanism, which applies to investment and business projects that:

• require special conditions related to investment procedures, land allocation, land leases, or marine area allocation; or
• have unique criteria for selecting investors, including sector-specific contract standards; or
• are necessary to ensure national defence, security, or foreign relations objectives where existing selection methods cannot be applied.

3. Advance Bidding

The Amending Law introduces enhanced flexibility for advance bidding procedures, allowing certain activities to take place before official project approval. This applies to tenders involving:

• procurement of goods with clearly defined scope and technical requirements;
• consulting and non-consulting services related to land clearance, infrastructure relocation, demining, planning, and resettlement;
• project management consulting services for projects awaiting final approval; and
• projects using ODA (Official Development Assistance) or foreign concessional loans, where advance bidding is required by international sponsors.

Under the new framework, investors can approve winning bids and determine contractors before the project is formally approved, but contracts cannot be executed until approval is granted. With respect to projects using ODA (Official Development Assistance) or foreign concessional loans, contracts can be executed before the international treaties and foreign loan agreements are signed but must be after the project approval.

A key amendment is that contractors participating in advance bidding will not be required to provide bid security but must commit to the tender process through official documentation.

If the project is not approved or the international financing agreement is not signed, the project owner is responsible for cancelling the tender but is not required to reimburse any costs incurred by participating bidders.

Next Steps and Practical Implications

The Amending Law, effective from 15 January 2025, marks a significant shift in Vietnam’s legal framework for investment, public-private partnerships, and procurement. These amendments reduce regulatory barriers for investors, enhance flexibility in project approvals and contractor selection, and ensure greater transparency in procurement and bidding processes.

Investors and businesses operating in Vietnam's infrastructure, technology, and strategic investment sectors should carefully review the new provisions and prepare for potential changes in investment procedures and compliance requirements.

Click here to download: New Laws on Planning and Business Investment - Legal Update - March 2025