1. Selection of investors under the Bidding Law

The Government issued Decree No. 23/2024/ND-CP (“Decree 23”) dated 27 February 2024 to implement the Bidding Law 2023 on selection of investors for projects for which bidding must be held under specialised laws. Decree 23 has taken effect since 27 February 2024. Some key issues of Decree 23 are summarised below.

Projects subject to bidding

Decree 23 provides a specific list of projects for which bidding for selection of investors must be held under specialised laws, namely: international football betting; household solid waste treatment facilities; dredging facilities in seaport water areas and inland water transport areas combined with product recovery; aviation service works at airports and airfields (excluding aviation operation centres of domestic airlines); road transport service works; renovation and reconstruction of apartment buildings; construction of water supply sources and water supply systems; projects falling within the sectors of education, vocational training, healthcare, culture, sport, environment, horse racing and greyhound racing with betting business, and social housing construction, if there are two or more interested investors registering for implementation.

Remarkably, Decree 23 does not cover the following projects: (a) projects using land in the form of receiving transfer or leasing land use right, receiving capital contribution by land use right for production and business pursuant to the land laws; (b) projects which are eligible for auction of land use rights in accordance with the land laws and laws on management and use of public assets; and (c) projects to which the State allocates or leases out land without auction of land use rights or bidding for investor selection under the land laws.

Preferred treatments

Under Decree 23, investors adopting technological solutions to minimize environmental pollution or committing to transfer advanced technologies shall be entitled to preferred treatments as follows:

• The investor adopting solutions for application of advanced technology, high technology or environmentally-friendly technology to minimize environmental pollution for projects in groups with high risk of adverse environmental impacts is given a preference of 5% when evaluating the bidding dossier;
• The investor committing to transferring technologies on the list of technologies prioritised for development pursuant to laws on high technologies, or on the list of technologies encouraged for transfer pursuant to laws on technology transfer is given a preference of 2% when evaluating the bidding dossier.

Sequences for the investor selection

Decree 23 sets out sequences for selection of investor in specific cases and outlines guidance in relation to the steps involved in each case. The guided procedures include:

• The procedure for selecting investors for projects applying open tender, limited tender using two-stage one-envelope bidding, two-stage two-envelope bidding;
• The procedure for selecting investors for projects applying open tender using two-stage one-envelope bidding; and
• The procedure for selecting investors for projects requiring determination of the number of interested investors.

Investors are required to register on the National Bidding Network System prior to the date of the investor selection decision.

Criteria for evaluation of bidding dossier

Procuring entities shall evaluate bidding dossiers by using a number of criteria, including: (i) criteria for evaluation on financial capacity, ability to arrange capital, and experience of investors; (ii) criteria for evaluation on business plan of investors; and (iii) criteria for evaluation on investment efficiency for development of sectors, fields, and localities.

As one of the criteria for evaluation on financial capacity, investors must meet the minimum equity capital requirement as stipulated in land laws (for projects using land) or the applicable specialised laws (for other projects). If the applicable specialised laws do not contain any provision on the minimum equity capital, such equity must be at least 15% of total investment capital.

Setting up the project enterprise and implementing the project

The winning investor has the right to set up the project enterprise to implement the project or shall directly implement the project. However, the foreign winning investor must set up the project enterprise to implement the project. The winning investor must hold 100% charter capital of the project enterprise. Decree 23 further provides that the project enterprise is not allowed to transfer the project without having satisfied the conditions prescribed in Article 76.2 of the Bidding Law and the conditions required by investment laws and applicable specialised laws.

Upon completion of compensation, assistance and resettlement in the land zone for project implementation, the winning investor or the project enterprise shall be allocated or leased land, and pay land use charges or land rentals in accordance with land laws.

The winning investor and/or the project enterprise must implement the project according to the provisions of the project contract, laws on enterprises, investment, construction, land and other relevant laws.

Forms of bidding invitation documents

The Ministry of Planning and Investment recently issued Circular 03/2024/TT-BKHDT for implementation of Decree 23. Forms of interest invitation documents and forms of bidding invitation documents are issued together with this Circular.

2. Selection of contractors

The Government issued Decree No. 24/2024/ND-CP (“Decree 24”) dated 27 February 2024 to implement the Bidding Law 2023 on selection of contractors. Decree 24 takes effect from the date of signing and replaces Decree No. 63/2014/ND-CP dated 26 June 2014 and Decision No. 17/2019/QD-TTg dated 8 April 2019.

Decree 24 provides further guidelines on the implementation of the Bidding Law 2023 with respect to (i) the sequence and procedures for the selection of contractors; (ii) ensuring competition in bidding process and preferred treatments in the selection of contractors; (iii) signing of contracts; (iv) registration on the National Bidding Network System and management of contractors; and (v) inspection and supervision of bidding activities.

The bidding package price includes all costs for the execution of the bidding package. The project owner can calculate the bidding package price by reference to, among other factors, a quotation for goods and services. If there is more than one (01) quotation, then the average price of the quotations must be referred. Particularly for bidding packages for procurement of medicines, chemicals, testing supplies, medical devices and replacement components and accessories, the project owner can choose the highest quotation as the bidding package price.

The contract signed between the project owner (or its authorised entity) and the winning contractor must be consistent with the general conditions and specific conditions of the contract as stated in bidding invitation/request documents, the contractor’s proposals in the bidding dossier approved by the project owner, the results of contract negotiation (if any), the contractor selection decision and provisions of laws.

Contractors are required to register on the National Bidding Network System prior to the date of the contractor selection decision. Contractors are entitled to sign contracts with subcontractors who are on the list of subcontractors provided in their bidding/proposal dossiers or who are approved by the project owner. The replacement or supplementation of subcontractors must be approved by the project owner or supervision consultant.

Decree 24 contains a number of changes that facilitate the procurement of goods and services subject to centralised procurement (e.g. medicines, medical devices). Among these changes is the provision permitting contractors to offer goods or services based on their capabilities of supplying goods or services without being required to offer goods or services in sufficient quantity as stipulated in bidding invitation documents.

Under the Bidding Law 2023, from 01 January 2025, online bidding shall apply to all bidding packages, except the cases where bidding is not conducted on the National Bidding Network System. These cases are now specified in Decree 24 which include, among others: (i) bidding packages applying the two-stage one-envelope method, two-stage two-envelope method or international bidding; (ii) bidding packages applying the form of contractor appointment, direct procurement, self-execution, price negotiation, or selection of contractor in special cases; and (iii) bidding packages with confidential information and the disclosure of which on the National Bidding Network System would affect the public interest, or cause harms to national defence and security or social order and safety.

3. Mechanism for adjusting the average electricity retail price

On 26 March 2024, the Prime Minister issued Decision No. 05/2024/QD-TTg (“Decision 05”) regulating the mechanism for adjusting the average electricity retail price. Decision 05 takes effect from 15 May 2024 and replaces Decision No. 24/2017/QD-TTg dated 30 June 2017 (“Decision 24”). Below are the noteworthy points of Decision 05.

The minimum time between two average electricity retail price adjustments is shortened from 06 to 03 months. The Electricity of Vietnam (EVN) shall formulate the average electricity retail price by applying the formula set out under Decision 05. EVN may increase or reduce the average electricity retail price within the price bracket decided by the Prime Minister.

Similar to Decision 24, Decision 05 provides that EVN is allowed to increase the average electricity retail price by from 3% to under 5% compared to the current average level without obtaining approval from the Ministry of Industry and Trade (MOIT). In case of an increase in the average electricity retail price by from 5% to under 10%, EVN must obtain the approval from the MOIT. If the average electricity retail price needs to be increased by 10% or more or if it impacts on the macroeconomic status, the MOIT shall report to the Prime Minister for approval.

However, if the average electricity retail price is reduced by 1% or more, compared to the current average electricity price, EVN is obligated to reduce the average electricity price correspondingly.

4. National Energy Strategy

On 01 March 2024, the Prime Minister issued Decision No. 215/QD-TTg to approve the national energy development strategy of Vietnam to 2030, with a vision to 2045 (the “National Energy Strategy”).

The National Energy Strategy sets out the overall objectives, targets and orientations for development of the energy sub-sectors (including oil, coal, electricity, and new and renewable energy). The overall objectives are to: (i) ensure national energy security for socio-economic development; (ii) prioritize fast and sustainable energy development, (iii) adapt to to climate change and implement energy transition to meet the net zero emissions target by 2050; (iv) consonantly develop among energy sub-sectors with synchronous, smart and advanced infrastructure, (v) develop competitive energy market; (vi) exploit and effectively use domestic energy resources in combination with energy import and export; (vii) proactively manufacture some major equipment for the energy sub-sectors; and (viii) upgrade and build advanced power transmission and distribution grids.

The National Energy Strategy includes the following specific targets by 2045, among others:

• Primary energy will reach approximately 150-170 million tons of oil equivalent (TOE) by 2030, and approximately 260-280 million TOE by 2045;
• The ratio of renewable energy resources in the total primary energy will reach 15-20% in 2030, and 65-70% in 2045;
• A smart, efficient electricity system is developed capable of safely connecting to the regional power grid;
• The ratio of energy saving over total final energy consumption compared to the normal developmental scenario will be approximately 7% -10% by 2030, and 14%-20% by 2045;
• Oil refineries will meet at least 70% of the domestic demand;
• There should be sufficient capacity to import liquefied natural gas (LNG) of approximately 15-20 billion cubic metres by 2030, and approximately 10-15 billion cubic metres by 2045.
• Greenhouse gas emissions from energy activities compared to the normal development scenario would have been reduced by 15 – 35% by 2030, up to 70 – 80% by 2045.

The National Energy Strategy also specifies the details of how these objectives and targets to be achieved such as (i) improvement of the legal framework for the development of the energy market, (ii) re-structure of State-owned energy enterprises and projects of State-owned enterprises, (iii) encouragement for private investors to participate in the development of energy projects, (iv) training and development of high-quality human resources, and (v) environmental protection and climate change adaptation.

5. Management and development of industrial clusters

On 15 March 2024, the Government issued Decree No. 32/2024/ND-CP (“Decree 32”) regarding the management and development of industrial clusters. Decree 32 takes effect from 01 May 2024 and replaces Decree 68/2017/ND-CP dated 25 May 2017, as amended.

Industrial clusters are established to attract small and medium enterprises, cooperatives and cooperative groups to carry out their business within, or relocate their existing business to industrial clusters. The establishment of a new industrial cluster or expansion of an existing industrial cluster must comply with the requirements set forth in Decree 32 and must be approved by the provincial People’s Committee.

Decree 32 outlined a number of additional requirements for the establishment of an industrial cluster, including: (i) the inclusion of the industrial clusters in the list of industrial clusters in the province approved by a competent authority, (ii) having a land fund suitable to the land use planning in the district, (iii) having an enterprise, cooperative or organization with sufficient legal status and capacity applied to be the investor in the construction of technical infrastructure of the industrial cluster, (iv) where a district-level area already has industrial clusters, the average occupancy rate of them must exceed 50 percent or the total unleased industrial land fund of them must not exceed 100 hectares.

Investment in the construction of technical infrastructure of industrial clusters is a preferential industry or trade eligible for special investment incentives.

The local budget will be considered to provide support for investment and development of technical infrastructure works both inside and outside industrial clusters in the region. However, priority will be given to investment in environmental protection infrastructure works for operating industrial clusters; investment in essential shared technical infrastructure projects of (i) industrial clusters in areas with difficult or extremely difficult socio-economic conditions, and (ii) industrial clusters focused on sectoral linkage, specialization, support, ecology and traditional vocational conservation. In terms of discretion, the support for technical infrastructure construction in industrial clusters within the provincial jurisdiction will be subject to the discretion of the provincial-level People’s Committees or the corresponding People’s Councils as the case may be. Support from the State, which is not included in the project’s total investment capital for the calculation of land sublease prices and infrastructure use prices, may not exceed 30% of the total investment capital of the industrial cluster project.

Application of incentives to projects for the construction of technical infrastructure of industrial clusters and projects operating in industrial clusters shall comply with the laws on land, tax, credit and other relevant laws.