1. Sea encroachment activities

The Government issued Decree 42/2024/ND-CP (“Decree 42”) dated 16 April 2024 to regulate sea encroachment activities. Decree 42 takes effect from the date of signing and introduces some major provisions as follows:

Under Decree 42, the determination of a sea area demarcated for encroachment must have its location, area, boundary and coordinates as determined in accordance with laws on mapping and measuring and must adhere to the principles of encroachment activities as set out in points (a), (b) and (d) of Article 190.2 of the Land Law 2024. Provincial People’s Committees shall decide which areas to be allowed for sea encroachment, and these areas must be included in the approved land use plannings at the provincial level and district level.

Under the Land Law 2024 and Decree 42, sea encroachment activity must be formulated as an independent sea encroachment project or a sea encroachment item of a particular project and shall be considered a construction investment project in accordance with the laws on constructions. Investment policy approvals/investment policy decisions for projects involved in sea encroachment activities shall be made in accordance with the relevant provisions of laws on investment, laws on public investment or laws on investment in PPP form. In addition to laws on constructions, Decree 42 also provides specialised provisions regarding the establishment and appraisal of construction feasibility study reports, the approval of projects; the establishment, appraisal and approval of construction designs; and the construction and acceptance of a work of a sea encroachment project or a sea encroachment item of a project.

The approved sea encroachment project/sea encroachment item of a project shall serve as the basis for allocation of sea areas simultaneously with the allocation or leasing of the land to be used for that project. Subject to the submission of dossiers requesting for sea area allocation by investors, Provincial People’s Committees have the authority to issue a decision on the allocation of land and sea areas used for sea encroachment (in Vietnamese: Quyết định giao đất đồng thời giao khu vực biển để lấn biển) or a decision on the lease of land and the allocation of sea areas used for sea encroachment (in Vietnamese: Quyết định cho thuê đất đồng thời giao khu vực biển để lấn biển), to the corresponding investors.

In respect of encroached areas, investors of sea encroachment projects/projects having sea encroachment items shall be issued with a Certificate of land use right and ownership of house and other assets attached to land (LURC) for land areas acquired after sea encroachment once they have (i) completed financial obligations regarding land and (ii) obtained the approval on acceptance test results of completed encroachment works from the provincial Department of Construction.

For projects involved in sea encroachment activities which have obtained an approval for implemention of investment projects from the competent authority (such as approval of investment policy or decision on investment policy) and dossiers of request for sea area allocation have been submitted before the effective date of Decree 42 (i.e. 16 April 2024) but the appraisal of such dossiers is still pending, the investors may choose to either adopt the procedures specified in Decree 11/2021/ND-CP regarding allocation of given sea areas to organisations and individuals for marine resource exploitation and use, or those specified in Decree 42.

2. Methods for determining electricity generating prices

On 12 April 2024, the Ministry of Industry and Trade (MOIT) issued Circular 07/2024/TT-BCT (“Circular 07”) to regulate methods for determining electricity generating prices, and power purchase agreements. Circular 07 takes effect from 1 June 2024 and replaces Circular 57/2020/TT-BCT dated 31 December 2020, as amended (“Circular 57”). Below are some noteworthy points of Circular 07.

Scope of application

Circular 07 applies to power projects operated in Vietnamese territory and connected to the national power grid. However, provisions on the methods for determining electricity generating prices, and provisions on standard power purchase agreement (PPA) under Circular 07 do not apply to multi-purposes hydro power projects; small hydro power projects applying the avoidable cost tariff; independent power projects invested under BOT form, power plants and units providing auxiliary services; and power plants applying the electricity price mechanism prescribed in the regulations issued by the competent authority (such as renewable power projects applying FiTs). In other words, several types of renewable energy projects (such as biomass power plants, wind and solar farms (except for cases as described below), and waste-to-power plants) will now be subject to the regulations of this Circular 07.

It is also noted that provisions on standard PPA of Circular 07 do not apply to solar and wind power plants except those participating in the competitive electricity market.

Determination of electricity generating prices for power plants

Regarding new power plants, Circular 07 generally reiterates the principles for determination of electricity generating prices of Circular 57, such as the internal rate of return (IRR) not exceeding 12%; the electricity generating price does not include taxes and charges; the electricity generating price comprises PPA price and specific connection price (if any), provided that the PPA price must fall within the electricity generation pricing framework issued by the MOIT in the year during which the total investment amount of the power project used for calculation of the electricity generating price is approved. The PPA price will consist of the fixed price and the variable price. Circular 07 adopts the same formulas as used in Circular 57 for calculating the fixed price and the variable price, however it amends several provisions on the input parameters for formulating the average fixed costs of a power plant (FC) to calculate the fixed rate, most notably the amendment regarding interest rate cap as discussed below.

Regarding commercially operated power plants, Circular 07 allows the seller (such as EVN) and power generation company to agree on the electricity generation price applied to subsequent years until the end of such power plant’s economic life, provided that the FC as agreed by both parties previously shall remain unchanged. Meanwhile, under the Circular 57, it lacked the regulations allowing parties to the PPA to do so, instead, the electricity generation price under current PPA shall automatically continue to be applied without any discussion and agreement.

Interim price

Circular 07 provides that in case where the electric generating price has not yet been agreed, the seller (such as EVN) and power generation company may agree on an interim price to be applied until the parties reach an agreement on the official electricity generating price. However, such interim price must be approved by the MOIT, and there is no requirement for a minimum interim price.

Power purchase agreements

Circular 07 promulgates the standard form of PPA which is the basis for the seller and the purchaser to negotiate. In addition to the clauses pre-included in the standard form PPA, the seller and the purchaser may agree and supplement certain terms in the PPA in conformity with the laws of Vietnam. The PPA will be prepared in Vietnamese, with the option to include English based on the agreement between the parties. Circular 07 also identifies required documents for negotiating the PPA.  The buyer and the seller are responsible for reporting to the Electricity Regulatory Authority under the MOIT to check the PPA after the PPA is negotiated and initially signed by the parties.

In addition to the circumstances under which the parties might request a re-negotiation of the PPA in case there is a change in law or policy as outlined in Circular 57, the parties will need to re-negotiate the electricity generating price/the PPA when it is so requested/necessary pursuant to the conclusion of the State Inspectorate or the State Audit Agency.

Interest rate cap

Under both Circular 57 and Circular 07, components used to determine FC include, among other things, loan interest rate and repayment timing during operating period. Pursuant to Circular 57, there was no provided interest rate cap when it comes to cost calculation to determine FC. However, Circular 07 has introduced an upper threshold for interest rate in case the total loan capital in the financing documents is lower than the total loan capital in the generation tariff calculation plan, the remaining loan capital would be subject to the following caps:

• Foreign currency denominated loans: An interest rate equal to 180-day average SOFR of preceding 36 months plus 3% (which is relatively lower than the current market rates); or
• VND denominated loans: An interest rate equal to the average of 12-month deposit rates for individuals of preceding 60 months announced by 4 banks (Vietcombank, Vietinbank, BIDV, and Agribank) plus 3%.

Determination of exchange rate differences

Circular 07 streamlines the procedures for adjusting annual exchange rate differences by eliminating the requirement for parties to submit an application to the Electricity Regulatory Authority for MOIT’s approval. Instead, the contracting parties can mutually agree on a calculation and payment method for such adjustments.

3. Road transport infrastructure assets

On 24 April 2024, the Government issued Decree 44/2024/ND-CP to regulate the management, use and operation of road transport infrastructure assets (“Decree 44”). Decree 44 will take effect from 10 June 2024 to repeal Decree 33/2019/ND-CP dated 19 April 2019, except for certain provisions of Decree 44 regarding the use of land associated with traffic infrastructure assets which will take effect from the effective date of the Land Law 2024 (expected on 01 July 2024).

Decree 44 applies to road transport infrastructure assets that are invested and managed by the State, except for road transport infrastructure assets that are (i) assigned to enterprises under the form of state investment in business establishment, (ii) used at units of people’s armed forces, or (iii) sold, transferred or calculated into the value of equitised enterprises. Road transport infrastructure assets comprise roads, land bridges, tunnels, car terminals, parking lots, roadside service stations, traffic monitoring and management centres, road traffic salvage and rescue centres, and other road traffic works as prescribed by laws on road traffic.

Decree 44 provides methods of exploiting road traffic infrastructure assets including: (a) a road traffic infrastructure asset management agency (“Asset Management Agency”) directly organizing the exploitation, (b) transferring the right to collect fees for using road transport infrastructure assets, (c) leasing the right to exploit road transport infrastructure assets, (d) transferring the right to exploit road transport infrastructure assets for a specific period, or (e) other methods approved by the Prime Minister. Regarding methods (b), (c) and (d), the Asset Management Agency must formulate a corresponding lease scheme or transfer scheme in the forms provided in this Decree 44 and submit it to the competent agency (the Ministry of Transport for assets managed by the central-level agency or the relevant provincial People’s Committee for those managed by the local government) for approval before organising an auction of transfer of the right to collect fees for using road transport infrastructure assets, or an auction of lease/transfer of the right to exploit road transport infrastructure assets. The term of each transfer or each lease shall be specifically determined in the relevant transfer or lease contract and shall be based on the suitability for each asset (or part thereof) but not exceed (i) 10 years for the transfer of the right to collect road traffic infrastructure assets using fees and for the lease of the right to exploit road transport infrastructure assets, or (ii) 50 years for the transfer of right to exploit road transport infrastructure assets

Upon the approval of the lease or transfer scheme, the Asset Management Agency shall determine the initial price for auction, hold the auction, and enter into a corresponding contract with the winning bidder. Decree 44 also provides guidance on how the Asset Management Agency determines the initial price for auction. For example, the initial price for auction of assignment of the right to exploit road transport infrastructure assets for a specific period shall be determined based on (i) additional investment value, (ii) estimated turnover and expenses from the operation of asset in the term of assignment, and (iii) a price valuation deed and a price valuation report of the price valuation enterprise or a price determination results of the price determination council.

Decree 44 also provides procedures for resumption of road transport infrastructure assets, delivery of road transport infrastructure assets to the localities or enterprises to manage, and procedures for use of road transport infrastructure assets for participation in PPP projects.

4. Car transport business

The Government issued Decree 41/2024/ND-CP (“Decree 41”) dated 16 April 2024 to amend a number of articles of the various Decrees applicable to car transport business, and car driver training services and driver examining services (i.e. Decree 65/2016/ND-CP dated 01 July 2016 (as amended), Decree 10/2020/ND-CP dated 17 January 2020 (as amended), and Decree 119/2021/ND-CP dated 24 November 2021). Decree 41 will take effect from 1 June 2024. Below are some key amendments of Decree 41 relating to car transport business.

Under Decree 41, business entities conducting passenger transport pursuant to a contract, tourist passenger transport business entities, and goods transport business entities are no longer required to notify the minimum contents of the transport contract or transport paper (applicable to goods transport business entities) to the competent transport agency, instead, they are required to keep the transport contract and the list of passenger, or the transport paper for at least 03 years.

Decree 41 supplements cases of revocation of car transport business permits and allows a longer window (10 days after the issuance of the decision on revocation of the car transport business permit, instead of 7 days as currently stipulated) for the concerned transport business entity to return the permit together with its badges and signs to the permit-issuing agency. A new point of Decree 41 is that it has specifically stipulated a timeline for the permit-issuing agency to re-issue a car transport business permit that has been revoked.

5. Medicines subject to centralised procurement

On 20 April 2024, the Ministry of Health (MOH) issued Circular 04/2024/TT-BYT (“Circular 04”) issuing the list of medicines subject to national-level centralised procurement. Circular 04 takes effect on 20 April 2024 and repeals Circular 15/2020/TT-BYT dated 10 August 2020 (as amended).

Circular 04 provides the detailed list of medicines subject to national-level centralised procurement, including a list of 50 active ingredients. Within a maximum period of 2 years, based on the actual situation, this list will be amended and supplemented by the MOH upon the principles and criteria set out in Circular 04.

The national centralised procurement unit (under the MOH) shall procure medicines on the said list through bidding process. Circular 04 requires the national centralised procurement unit to provide written notice if the contractor selection result is not available yet or no contractor can be selected. After the giving of this notice, local medical establishments and other units seeking to procure medicines can organise the selection of contractors supplying medicines subject to national-level centralised procurement in accordance with laws.