AGRI-PPP IN VIET NAM

1. AGRI-PPP IN VIET NAM

2. CONTENTS
POLICY AND LEGAL FRAMEWORK
Agri –PPP: Institutional arrangement
MAIN ISSUES
POLICY IMPLICATIONS

3. Agri - PPPAgri - PPP
- Decree of
15/2015/NĐ-
CP
- Investment
Law 2015
- Law system:
Contract Law,
Intellectual Property
Law, Land Law,
Food Safety Law,
Business Law,
Bidding Law, ...
- Other Policies:
encourage
investment in agri
and rural
Competely legal framework Create conditions to conduct
investment through PPP in agriculture and other industries.

4. CONCEPT
PUBLIC – PRIVATE PARTNERSHIP (PPP)
 Formal contractual arrangement between State and investors: Allocates
costs, benefit and risks
 Specific project
• Objectives: conducting, mangement, operation infracstructure projects,
providing public services.
• Arrangement contracts: Building- Operation- Transfer (BOT), BTO, BT
BOO, BTL, BLT, O&M.
• Relevant Area to agricultue: Agri and rural infrastructure
constructions, and service developed to connect between production
and processing and consuming agricultural production.
Source: Decree of 15/2015/NĐ-CP about PPP

5. Principles
 Create higher effectiveness
 Ensure legal and institutional framework to implement formal
agreements or contracts between public and private sectors;
 Conduct feasibility studies;
 Ensure the transparency, publicity and quality of private partner
selection.
 Define clearly roles and responsibilities of parties
 Share accountability responsibility
 Share risk and profit
 Access project output- based evaluation; ensure capacity for
implementation, monitoring and evaluation of PPP projects.

6. PUBLIC SECTOR
Government owned and run
agencies and institutions
operating at either national or
decentralized levels
State owned enterprises
International donors through
governmental agencies.
PRIVATE SECTOR
The part of the economy that is
not controlled by the State.
For-profit businesses that are not
owned or operated by the
government.
Charities and other non-profit
organizations.
PARTNERS OF PPP CONTRACT

7. INCENTIVES/ MOTIVATIONS
PUBLIC SECTOR
High spillover effects
High-risk and/or low return
Investment resources increasing
Management innovation,
efficiency improvement of
resource use
PRIVATE SECTOR
PRIVATE
High level of capital
investment
Market access
More advantages
Preferential policies

8. PROCESS OF PPP PROJECT
Define
project
FS Proposal Bidding
Investment
certificate
Project
implement
ation
Disbursement,
clearance,
transfer
Source: Decree of 15/2015/NĐ-CP about PPP

9. Agri-PPP in Vietnam

10. SITUATION OF PPP IN VIETNAM
• Focusing on non-agricultural projects with profitability (infrastructure,
communication system)  Big attraction for private investor
• Up to now, there is no PPP project in agriculture which ensures basic
principles of PPP (public partner and private partner cooperate equally
to invest and provide service/ public goods under based on project
contract under legel protection).
• Many forms of Public – Private Collaboration (PPC)
 Government to facilitate, support and create legal environment;
 Private firms to invest, exploit and gain profit

11. CASE STUDIES (PPC) IN VIETNAM
Case study GENTRACO, BCTVAG SOFRI
Forms PPC PPC
Product/service Agricultural extension, input services,
production
fly antibiotic, seed of dragon fruit
Role of public
partner
Planning, location arrangement,
support for linkage with farmers
Public Research fund
Role of private
partner
Investment, operation Product commercialization
Problems - Difficulties in land
- Difficulties in accessing working
capital
- Difficulties in accessing long-term
investment and technology loans
- Low central budget, short time,
complicated procedure
- Complicated legal framework and
copyright procedures
- Limited production and management
capacity of SOFRI

12. SITUATION OF IMPLEMENTATION
IN AGRICULTURE
- Already created PPP task force in MARD  to promote PPP
- Implementing the construction of joint circular guiding PPP in
agriculture (IPSARD cooperates with DOP/ MARD to build)
- MARD to approve the investment plan in form of PPP period 2016-
2020 with 21 projects with total investment budget of 6,900 billion
VND.

13. TENTATIVE AGRI-PPP PILOT PROJECT
IN VIETNAM
• MARD is promoting PPP pilot model in irrigation: application of
water-saving technology in Dak Lak province in form of PPP.
oPrivate firms: to invest in field irrigation
oGovernment: to build support infrastructure
oFarmers: to invest water-saving equipments in field and pay for water usage.
• Issues
oConfusion in implementation (lack of specific guidelines)  Government
should specify guidelines;
oEnprises must to invest large capital  MARD must specify what
enterprises can gain if they join;
oFarmers have to pay for new irrigation service (usually they didn’t have to
or pay only a small amount)  We need to prove that new irrigation service
is efficiency.

14. SOME ISSUES IN IMPLEMENTING PPP IN
AGRICULTURE
• The risk level in agriculture is high when capital recovery is slow
• Non-supportive institutional system and non-specific policy
• More difficulties to identify rights and obligations than other areas.
• Implementation mechanism: unclear (permission category, conducting
method …)
 Process: complicated, lack of guidance, slow implementation
 Area: rural and remote areas  more difficulties
 Support Policy: lack of resource, complicated process, inappropriate
subjects

15. NEW CONTEXT OF INVESTMENT
IN AGRI-PPP
CHALLENGES
•Complicated legal system
•Pressure to reduce public investment (increasing
public debt)
•Challenge from integration (TPP, AEC,
EVFTA): Competition
•Difficulties in agriculture
+ Climate change: Salinization, Draught;
+ Competing for resources from Mekong like
rivers or soil
+ Environment pollution
+ Natural disaster, diseases, price volatility
•Urbanization-Industrialization: Shift to non-
agriculture jobs
 Firms hesitate to invest in agriculture
OPPORTUNITIES
•Chances from integration
agriculture export, material
import
•Government provides a lot of
supporting policy for
investment in agriculture and
rural (tax exemption, land,
credit…)

17. RECOMMENDATIONS
TO PROMOTE AGRI-PPP
• Promoting the development and promulgation of legal documents ,
guidelines for agriculture and rural development
• Developing and publicizing the list of projects/ items for PPP
investment in agriculture
• Support policy which is strong enough to promote PPP in agriculture
• Enabling / prioritizing capital allocation for policies implemented to
encourage PPP in agriculture
 To increase the attraction of PPP projects in agriculture

18. Mr. Pha
Institute for Agricultural Environment
Mr. Cuong
Center for Agricultural
Policy, /IPSARD
Ms. Thao
Real Estate and
Resource
Economics
Faculty, NEU
Ms. Viet Anh
Center for Agricultural Policy,
IPSARD
Mr. Nguyên
Rural Center -
IPSARD
Ms. LOAN
National Economic
University