By introducing amendments to the Current Bidding Law, the New Bidding Law seeks to improve transparency, fairness, and efficiency in selecting investors for the implementation of projects in Vietnam. These changes have the potential to greatly impact the investment landscape and drive further development in the power and infrastructure sectors of the country.

1. In brief

The National Assembly of Vietnam officially adopted the new bidding law (“New Bidding Law”) on 23 June 2023. This law, which consists of 96 articles divided into 10 chapters, will take effect on 1 January 2024. Its purpose is to address various concerns in the selection process of investors for project implementation, including power and infrastructure projects, in Vietnam, by introducing amendments to the Current Bidding Law.

2. New contents of the New Bidding Law that will impact bidding to select investors of projects

(i) A new approach to the scope of application of international bidding.

There are two types of bidding: domestic bidding and international bidding. Domestic bidding involves only bidders from within the country, while international bidding allows participation from investors outside the country.

The current Bidding Law governs the requirements for organizing international bidding. However, the New Bidding Law specifies a specific list of situations in which international bidding not permitted.

(ii) New criteria to assess bids and select winning investors.

The evaluation of investors’ bids under the existing Bidding Law is based on three criteria: (1) capacity and experience, (2) technical expertise, and (3) financial capabilities. The selected investor or group of investors (referred to as the “Winning Investor”) must have a valid bid, meet the assessment criteria, and propose the most efficient project implementation plan.

(iii) New detailed regulations on the list of key provisions of project contracts

Once selected, the relevant state authorities require the Winning Investor to sign a project contract (“Project Contract”). The Project Contract must align with the invitation to bid and the bid that was submitted by the Winning Investor. In addition to this obligation, the New Bidding Law outlines six fundamental components that must be included in the Project Contract. It is worth noting that the Current Bidding Law does not govern the specific contents of the Project Contract.

(iv) New requirements of contract performance security

Before or at the effective date of the Project Contract, the Winning Investor is obligated to furnish contract performance security. Although the Current Bidding Law does not prescribe specific forms of security, the New Bidding Law mandates that the Winning Investor must provide one of the following forms:

(1) The relevant state authority must approve the transfer.

(2) The transferee must fulfill the requirements concerning technical and financial capabilities necessary to carry out the project.

(3) The transferee must undertake the responsibility of assuming all the rights and responsibilities of the Winning Investors as stated in the Project Contract.

3. Conclusion

The ongoing discussion surrounding the Draft New Decree involves several unresolved matters, such as determining the authority responsible for issuing the decree. However, the introduction of a new decree to guide the selection of investors for power projects has the potential to establish a comprehensive framework, especially for those projects that multiple investors have proposed simultaneously. This would provide clarity and facilitate a more streamlined process for investor selection, ultimately contributing to the overall development of the power sector.

For the full detail of this post, please reference on this link: http://hmlf.vn/implications-of-vietnams-new-bidding-law-on-investor-selection-for-power-and-infrastrcuture-projects/ 

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