Opens the Door to Broader Private Investment: Vietnam’s New PPP Law in Infrastructure and Innovation

Vietnam’s economic transformation is increasingly underpinned by strategic efforts to mobilize private capital for national infrastructure and public service projects. At the heart of this shift is the amended Law on Public-Private Partnership Investment, which introduces sweeping reforms designed to broaden investor participation, remove longstanding barriers, and improve the risk-reward balance for both public authorities and the private sector.

This reform aligns with broader public investment management updates that aim to decentralize decision-making and boost local government autonomy, further enhancing the investment climate.

From Traditional Infrastructure to Innovation and Digital Transformation

Historically, Vietnam’s PPP projects were concentrated in conventional sectors like transport, waste treatment, water supply, and energy. Under the previous legal framework, many promising avenues — especially in digital infrastructure, information technology, healthcare, and education — were simply out of reach for PPP deployment.

The amended law eliminates this limitation by allowing all public-investment sectors to adopt the PPP model. This represents a strategic opening for investors seeking to support high-growth, transformational areas of the economy such as digital transformation and high-tech applications.

Such expansion reflects Vietnam’s broader push to accelerate innovation-driven growth, consistent with recent policies encouraging public-private cooperation in science and technology. For example, policy guidelines under Decree No. 180/2025/ND-CP have highlighted priority sectors for PPP implementation, including digital transformation and innovation ecosystems.

More Flexible Investment Thresholds and Local Authority

One of the most significant changes in the amended PPP Law is the removal of minimum investment thresholds. Previously, projects had to meet a minimum value of VND 200 billion (about US$7.7 million), or VND 100 billion in disadvantaged localities — a barrier that discouraged small and mid-sized projects. This restriction has now been eliminated, creating a more flexible environment for public and private entities to explore PPP opportunities at multiple scales.

Moreover, local governments now have greater authority to appraise, approve, and sign PPP contracts for Group B and C projects. This decentralization is expected to speed up project delivery and improve responsiveness to urgent local infrastructure needs.

Improved Risk-Sharing and Fiscal Support

To enhance financial viability, the amended law revises state capital contribution rules and revenue risk-sharing mechanisms:

• The state capital cap remains at 50% of total investment but may rise to 70% in cases such as high land-clearance costs, disadvantaged areas, or projects involving advanced technology transfer.
• In case of revenue shortfalls, the government will share up to 50% of deficits when revenue falls below certain thresholds, while investors share in excess revenue above predefined levels. This arrangement aims to make long-term investments more predictable and attractive.

These mechanisms are intended to reduce early-stage cash-flow pressure and provide a clearer fiscal support framework for private participants, especially in sectors with complex economic returns.

Implementation Challenges and Investor Concerns

Despite these improvements, challenges remain. Key concerns expressed by regulators and investors include:

• Long-term credit constraints: PPP projects often require extended payback periods (e.g., 20–30 years for transport infrastructure), creating risk aversion among banks and financial institutions.
• Institutional delays: Slow procedural responses from government bodies can extend timelines and strain project finances.
• Risk management clarity: Investors emphasize the need for robust and enforceable risk-sharing practices rather than ambiguous provisions.
• Secondary market absence: The lack of a secondary financial market for PPP debt limits banks’ ability to manage long-term credit risk effectively.

Industry voices suggest targeted solutions, such as enhanced credit access policies, dedicated PPP lending frameworks, and clearer land valuation methodologies — particularly for build-transfer (BT) projects involving land payment.

Looking Ahead: PPPs as a Growth Lever

Vietnam’s amended PPP Law represents a significant step toward integrating private capital into public investment strategies, aligning with broader goals of economic modernization and sustainable development. By offering expanded sector eligibility, more flexible financial rules, and enhanced local authority, the reforms aim to unlock capital for critical infrastructure and innovation drivers.

However, the ultimate success of this policy shift will depend on effective implementation, clarity in risk-sharing, and continued improvements in the investment ecosystem — including stronger credit markets and streamlined government processes.

For investors and developers eyeing Vietnam’s infrastructure landscape, the evolving PPP framework offers both new opportunities and important considerations for long-term engagement.

For investors seeking to capture opportunities, Core5 Vietnam provides more than facilities , we are your strategic partner in long-term success.

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