AGRI-PPP IN VIET NAM

CONTENTS

POLICY AND LEGAL FRAMEWORKAgri –PPP: Institutional arrangementMAIN ISSUESPOLICY IMPLICATIONS

Agri - 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.

CONCEPTPUBLIC – 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

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.

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

INCENTIVES/ MOTIVATIONS

PUBLIC SECTORHigh spillover effects High-risk and/or low return Investment resources increasingManagement innovation, efficiency improvement of resource use

PRIVATE SECTORPRIVATE

High level of capital investment Market accessMore advantagesPreferential policies

PROCESS OF PPP PROJECT

Define project FS Proposal Bidding Investment

certificateProject

implementation

Disbursement, clearance, transfer

Source: Decree of 15/2015/NĐ-CP about PPP

Agri-PPP in Vietnam

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

CASE STUDIES (PPC) IN VIETNAM

Case study GENTRACO, BCTVAG SOFRI

Forms PPC  PPCProduct/service Agricultural extension, input services,

productionfly 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

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.

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 irrigationoGovernment: to build support infrastructureoFarmers: 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.

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

NEW CONTEXT OF INVESTMENTIN 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…)

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

Mr. PhaInstitute for Agricultural Environment

Mr. CuongCenter for Agricultural Policy, /IPSARD

Ms. ThaoReal Estate and Resource Economics Faculty, NEU

Ms. Viet AnhCenter for Agricultural Policy, IPSARD

Mr. NguyênRural Center - IPSARD

Ms. LOANNational Economic University