A PPP project does not travel the ordinary Investment Law approval road. It has its own statute — Law on Public-Private Partnership Investment 64/2020/QH14 — with its own investment-policy decision, its own devolution in Article 12 and minimum-scale thresholds in Article 4. A foreign investor entering PPP must therefore read two systems at once: investor conditions under investment law, and project architecture — contract under PPP law.
The entry gate: sectors and minimum scale
The PPP Law opens only the sectors listed in Article 4 — transport; power grids and power plants (excluding hydropower and State-monopoly cases); irrigation, water supply and drainage and waste treatment; healthcare; education and training; information-technology infrastructure — and sets minimum total investment scale: not below VND 200 billion for most sectors (VND 100 billion in areas with difficult or especially difficult socio-economic conditions), not below VND 100 billion for healthcare and education; projects under O&M contracts carry no minimum threshold. A project below threshold or outside the sectors cannot be packaged as PPP however much both sides want it.
The BT contract (build — transfer) sits inside the PPP project-contract system, with investor payment in land funds or budget under the PPP Law and related amendments. The point an FDI investor must inspect in a BT is the value and legality of the payment land fund — that payment asset must be clean and priceable at signing, or the entire project finance case hangs on an uncertain asset.
Decision devolution under Article 12
The National Assembly decides policy for PPP projects that: use public investment capital of VND 10,000 billion or more; have major or potentially serious environmental impact (including nuclear power plants; conversion of special-use forest, watershed or border protection forest from 50 hectares, windbreak and sea-dike protection forest from 500 hectares, production forest from 1,000 hectares); convert two-crop wet rice land from 500 hectares; resettle 20,000 people or more in mountainous areas or 50,000 or more elsewhere; or require special mechanisms decided by the Assembly. The Prime Minister decides: resettlement from 10,000/20,000 people by region; central-budget projects equivalent to group A or using ODA and foreign preferential loans; new airports and international terminals; and berths in special-class or class I seaports equivalent to group A.
The remainder belongs to ministers, central agency heads or provincial People Councils within their management scope. Unlike ordinary projects under Investment Law 143/2025/QH15, PPP devolution keeps the provincial People Council as the deciding level for provincial PPP projects — a difference that easily misfiles a team trained only on the general investment-law frame.
Risk sharing and early termination: read the contract
The PPP Law states risk-sharing principles between the State and the investor, including revenue increase and decrease sharing mechanisms in statutory cases and foreign-currency balance and minimum-revenue assurances for certain special projects by competent decision — but most concrete risk allocation (market demand, slow site clearance, law changes, inflation) is decided in the project contract and bidding documents. An FDI investor who wins by low price and only then discovers demand risk sitting entirely on its side is the classic PPP loss script.
Early termination distinguishes whose fault it is: termination for investor fault — the State takes over the works and handles matters per contract, the investor bears penalties and loses performance security; termination for State-side fault or statutory events — the investor is paid and compensated under the contract and PPP Law mechanisms for invested amounts and recognised losses. For a foreign investor, the termination-compensation clause and the mechanism for remitting compensation abroad are two clauses to negotiate at project-contract level, not to leave to general law.
In PPP, the policy decision is only the gate ticket; winning and losing are decided by the risk architecture inside the project contract. The FDI investor reads Articles 4 and 12 to enter by the right door, then reads every risk-allocation line before pricing a bid. This draft is pending review by the QA Council.
Frequently asked questions
A foreign investor joins a PPP project — which level decides its policy?
Under Article 12 of PPP Law 64/2020/QH14: the National Assembly for projects using public investment capital from VND 10,000 billion, with major environmental impact, resettling 20,000/50,000 people by region or needing special mechanisms; the Prime Minister for resettlement from 10,000/20,000 people, central-capital projects equivalent to group A or ODA-funded, and major airports and seaports; the rest falls to ministers, central agencies or provincial People Councils. Investor nationality does not change this devolution — it follows project nature and scale.
What must a foreign investor note about the PPP Law?
Four points: first, PPP is open only to Article 4 sectors with a minimum scale of VND 200 billion (VND 100 billion for difficult areas and the healthcare and education group) — projects outside that frame cannot be packaged as PPP; second, policy devolution in Article 12 is its own system, different from the general Investment Law frame, with provincial People Councils deciding provincial projects; third, investors are selected mainly through competitive bidding; fourth, protections, dispute mechanics and money-transfer must be locked in the project contract because the law states principles only.
How is risk shared with the State in a PPP?
By PPP Law principles as concretised in the project contract: the State shares risk through mechanisms such as revenue increase and decrease sharing in statutory cases, Government guarantees for specially important projects by separate decision, and bearing State-side risks such as site clearance to committed schedule. Market-demand risk sits with the investor by default unless the contract allocates otherwise. Every sharing item must be read in the bidding documents and the signed project contract — there is no automatic sharing outside the documents.
What compensation applies on early termination of a PPP contract?
It follows whose side caused termination. Investor fault: the State takes over the works, the investor bears penalties, loses security and is paid only under the contracts fault-deduction mechanics. State-side fault or statutory events (law changes making the project impossible, prolonged force majeure): the investor is paid the value of invested works and compensated under the project contract and PPP Law 64/2020/QH14. Amounts and computation live in each project contract — this clause must be negotiated before signing, not after a dispute.
What special risk does a land-fund-paid BT project carry?
The central risk is the payment asset: the land fund used to pay the investor under a BT contract must be legally clean, priceable and deliverable on schedule; land still stuck in compensation, with unsettled planning or disputed valuation jams the investor capital-recovery cash flow. Diligence on a BT project must therefore diligence the payment land fund as hard as the construction project itself — planning status, site clearance and the value-determination mechanism at payment time.
This article has been quality-reviewed by the FLAW AI Legal Council