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It has emerged that the Dau Giay-Phan Thiet Expressway PPP project, which involved the design, construction, financing, operation and maintenance of a 98.7km four-lane expressway linking the Dong Nai and Binh Thuan provinces of Vietnam and represented an investment of US$757.7 million, has been cancelled.

The project had been in development for more than 10 years and was set to be Vietnam's first pilot transport project in PPP format. A senior official from the Ministry of Transport has confirmed that the Prime Minister of Vietnam terminated it last month.

Many international firms had allegedly shown interest in the project, but the Ministry of Transport repeatedly failed to attract investors enough to advance the tender process. 

This failure is attributed to inadequate regulation. The decrees that currently regulate PPP investment lack detail on, among other things, risk-sharing mechanisms, exchange rates and revenue guarantees, which are of especial concern to foreign investors.

The PPP investment structure proposed by the World Bank, a key lender for the expressway project, mandates that investors must get loans from international credit institutions. These institutions asked the Vietnamese government to directly guarantee the loans, exchange rates, and revenue which has proved impossible without guarantee policies enshrined in law.

Perhaps as a result of this cancellation, the Vietnamese Ministry of Planning and Investment has proposed building a draft law on investment in PPP projects, with the aim of creating a new legal foundation for all PPP investment activities.

The Deputy Director of the Ministry's Bidding Management Department has stated publicly that if the Ministry receives approval from the Government, the draft law will be submitted to the National Assembly in 2020 or 2021.

According to the Ministry, the bill will deal with major issues faced by prospective developers, including enhancing investment efficiency, investment process and procedures, investment attraction measures and legacy of PPP contracts, with the hope of harmonising the interests of the State and private investors, while introducing a coherent, transparent, smooth and attractive legal corridor for investment in long-term and risky PPP projects.