HÀ NỘI — The Vietnam Chamber of Commerce and Industry (VCCI) has recently proposed easing the conditions for applying a special mechanism to build-transfer (BT) contract projects to increase feasibility and attract investors.

The proposal was made in VCCI’s comments on a draft decree amending decrees guiding the Law on Investment under the public-private partnership (PPP) model.

Under the current legal regulations, projects that have a total investment of VNĐ20 trillion (US$760 million) are qualified to apply the land allocation mechanism for payment and guarantee of land value, but VCCI said that the threshold was too high.

According to feedback from the business community, the number of projects with VNĐ20 trillion or more in investment is very limited. Meanwhile, the majority of key local infrastructure projects requiring social resource mobilisation typically have total investment of approximately VNĐ10-20 trillion.

Maintaining the current threshold will prevent these projects from accessing support mechanisms, reducing policy effectiveness and narrowing opportunities to attract investment.

To solve this, VCCI has proposed lowering the threshold for applying the land allocation mechanism from VNĐ20 trillion to VNĐ10 trillion.

The chamber also proposed amending regulations on the method of land allocation for payment. According to current regulations, the entire land fund must be allocated at once, while land clearance in many localities is often lengthy and inconsistent, causing difficulties for both management agencies and investors.

According to VCCI, if land is allocated in parts or in stages corresponding to the value of the bank guarantee and the volume of completed works, businesses will significantly reduce guarantee costs while still ensuring the safety of public asset management.

VCCI also suggested that the value of the bank guarantee be determined based on each portion of the land fund or each construction item handed over in each stage, instead of guaranteeing the entire project value from the outset.

Aside from the land allocation mechanism issue, VCCI also proposed adding a mechanism to handle costs incurred when investors implement BT projects before the contract signing date.

Under current regulations, investors are allowed to carry out construction simultaneously with the negotiation and signing of contracts for certain urgent projects. However, the draft currently does not regulate the acceptance and payment of costs incurred during this phase.

The chamber said that during the pre-contract implementation phase, businesses still have to raise capital, bear interest costs and carry out construction items. If these legitimate costs are not recognised after the contract is signed, the entire financial risk will shift to the investor, increasing the cost of participating in the project and reducing the attractiveness of the PPP model.

VCCI has therefore proposed adding a regulation allowing the acceptance and payment of the entire construction volume and legitimate investment costs, including interest costs incurred based on actual disbursements before the BT contract signing, after the official contract is signed, in accordance with regulations on construction investment cost management. — BIZHUB/VNS