THE SELECTION OF INVESTORS IN BIDDING-REQUIRED PROJECTS - LATEST HIGHLIGHTS
Updated: Jun 15, 2020
Decree No. 25/2020/NĐ-CP (“Decree 25”) dated February 28, 2020 detailing the implementation of a number of articles of the Bidding Law regarding investor selection and takes effect from April 20th 2020. This Decree replaces Decree No. 30/2015/NĐ-CP, with the following highlights:
1. Expanded list of projects that requires bidding to select investors:
According to Article 1 of Decree 25, projects belonging to the project group that requires bidding include:
(i) Investment projects in the form of PPP;
(ii) Investment projects using land to build commercial houses; commercial constructions and services; multi-function constructions and multi-purpose complexes for business purposes;
(iii) Projects that must go through bidding to be in accordance with specialized laws and socialization laws.
Previously, Decree 30 only restricted to some projects that had to go through bidding to select investors, which were PPP projects, or projects that use commercial land and high value land funds to build complexes in urban areas and new urban areas; commercial housing; commercial constructions and services; multi-purpose complexes.
Henceforth, many land plots that were previously not subject to the bidding rules for investor selection procedures under the old Decree can now be applied when Decree 25 takes effect.
2. Supplementing conditions to identify investment projects with the use of land:
According to Article 11 of Decree 25, the conditions for identifying a project as an investment project using land include:
- Being on the list of projects subjected to land recovery approved under local land law or on government-managed land territory; within an urban development program (if any) in accordance with local law on urban development;
- Being in line with socio-economic development plans, branch and sector development plans; construction planning of 1/2,000 scale or 1/500 scale (if any) or urban zone planning of 1/2,000 or 1/5,000 scale under the provisions of the law;
- Ineligible to hold auctions for land use rights, in accordance with local land law.
3. Supplementing the regulations on order and procedures for land assignment and land lease to the winning investor:
- The biggest bottleneck in the bidding process for projects using land is the allocation and leasing of land and implementation of the project, especially the question whether to auction land use rights in accordance with the land law or not. To detangle this issue, Article 60 of Decree 25 regulates the responsibilities of the parties (including bid solicitors, investors, state agencies managing land) in land acquisition; approval of compensation, support and resettlement plans; clearance of land obligations once the project contract come into effect. At the same time, confirming the order and procedures for land allocation/lease to the winning investor in compliance with the order and procedures for land allocation and land lease prescribed in Clause 3, Article 68 of Decree 43/2014 / ND-CP, under which the procedure will apply similarly to the process of land allocation or land lease without auction of land use rights.
4. Skip the pre-qualification step:
Previously in Decree 30, pre-qualification is applied to PPP projects and also to investment projects using land. However, in the new Decree 25, the pre-qualification of land use projects has been eliminated, which saves time and cuts down the cumbersome procedures from preparation of pre-qualification documents, appraisal and approval, evaluating applications, reducing pressure for both investors and government agencies in the process of selecting investors for the project.
5. Supplementing regulations on investor incentives for PPP projects:
Decree 25 introduces the addition of circumstances where BT contracts are applied: investors entitled to incentives are entitled to a deduction of a value equal to 5% of the bid price after error correction, deviation adjustment and deduction discount (if any), to the bidding price proposed by such investor for ranking and comparison, after error correction, deviation adjustment and discount deduction (if any).
Updated by: Skylar Bui image by: Le Minh Sang