Effective September 16, 2024, Vietnam's government introduced Decree No. 115/2024/NĐ-CP (Decree No. 115) to streamline the bidding process for land-use projects. This new decree replaces Decree 25/2020/NĐ-CP and offers substantial updates to align with the 2024 Law on Bidding. ATA will delve into the key changes that businesses should be aware of when participating in these bidding processes.
1. The bidder is liable for the costs incurred in processing a protest regarding the bid evaluation.
With the aim of increasing investor accountability for their proposals, Decree No. 115 introduces a new requirement: investors must pay a fee of 0.02% of the total project investment, capped at 200 million VND.
In the process of making a proposal, if an investor withdraws their proposal, they will only be refunded 50% of the fee paid if the Advisory Board has not yet been established or has been established but has not yet held a meeting; if the Advisory Board has already held a meeting, the investor will not be refunded the cost of processing the proposal.
If the investor's proposal is found to be valid, the fee paid will be refunded.
2. Investors must obtain written approval for project information for projects that do not require investment approval.
While Decree No. 23/2024/ND-CP guiding the Law on Bidding of Vietnam stipulated that a project investment information approval document was necessary for bidding on projects not requiring investment decision approval, Decree No. 115 provides more specific guidelines for this process, especially for land-use projects. The new decree aligns the procedures for issuing project investment information approval with those for investment decision approval.
In our view, this regulation is inconsistent with the existing Bidding Law, Investment Law, and Land Law. It imposes unnecessary burdens on businesses by requiring them to undergo project approval procedures, even for projects that are legally exempt from such requirements.
3. Investors may leverage the experience of their project partners to participate in the bidding process.
Previously, project partners were not considered in the evaluation of bids. However, Decree No. 115 introduces a new provision allowing bidders to include the experience and capabilities of their project partners in their bidding documents. This change provides greater flexibility for enterprises seeking to participate in projects and can enhance the overall quality of proposals.
However, in our view, to ensure fairness in bidding and prevent unqualified investors from taking advantage of the regulations to gain an edge in their bids, lawmakers should clarify the proportion or specifically define the number of points or evaluation criteria for the partner's experience factor, with a direction that it only accounts for a small, secondary part of the total score for evaluating the investor's experience factor.
4. The investment efficiency criterion can weigh up to 80% of the total score when assessing an investor's capacity.
The fundamental purpose of bidding is to choose the investor best suited to optimize land use, maximize investment returns, and deliver maximum benefits to the community. Recognizing the shortcomings of Decree No. 25 in addressing efficiency, Decree No. 115 has been amended to place greater emphasis on efficiency criteria in the evaluation of bids. Notably:
- For urban development projects with mixed-use functions, a synchronized system of technical infrastructure and social infrastructure with housing as prescribed by construction law for new construction, renovation, or urban renewal; and rural residential projects: The land use efficiency score accounts for 40% to 60% of the total score.
- In other projects, the investment effectiveness score for the development of industries, sectors, and localities can weigh as much as 80% of the total score.
5. The investor winning the bid to acquire shares/capital contribution in the economic organization undertaking the project must satisfy the same conditions as those for the transfer of the project.
According to Decree No. 115, the successful bidder or the economic organization they established may transfer shares or capital contributions prior to project commencement, provided that such transfers comply with conditions equivalent to those governing project transfers:
- Approved by the competent authority following the evaluation of the tender;
- The transferee investor must have legal capacity and meet the operational requirements stipulated by law for the corresponding type of economic organization; possess the capacity and experience commensurate with the shares or capital contribution to be transferred, or have equivalent or higher capacity and experience compared to the transferring investor; and must succeed to the rights and obligations to implement the investment project that the transferring investor has committed to in the tender dossier and project contract.
- The transferee of shares or capital contributions from a joint venture member is obligated to maintain the prescribed minimum equity ratio of each member.
Decree No. 115 takes effect from September 16, 2024.
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