Public investment capital refers to funds derived from the State budget and lawful revenues of State agencies and public service units. Such a source of capital plays a crucial role in the development of national infrastructure and the promotion of economic growth. The following article will provide an overview of the current legal regulations governing public investment capital.

I. Overview of public investment capital

Public investment capital serves as a fundamental financial source for implementing infrastructure and socio-economic development projects nationwide. These funds originate from the State budget and other public financial sources and are allocated to projects serving public interests, such as roads, bridges, hospitals, schools, and other essential facilities.

The management and use of public investment capital must adhere strictly to legal regulations to ensure efficiency, prevent wastefulness, and eliminate corruption. A thorough understanding of the legal framework on public investment capital enables enterprises and State authorities to implement projects in a transparent and lawful manner.

II. Legal regulations on public investment capital

1. Definition of public investment capital

Clause 22 Article 4 of the Law on Public Investment 2019 defines public investment capital as:

  • Public investment capital under this Law includes State budget capital, and capital from lawful revenues of State agencies and public service units designated for investment in accordance with the law.

Accordingly, public investment capital refers to funds derived from the State budget and lawful revenues of State agencies and public service units that are allocated to investment activities under statutory regulations.

2. Regulations on the management of public investment capital

Article 12 of the Law on Public Investment 2019 establishes the following principles for managing public investment:

  • Compliance with laws on the management and use of public investment capital;
  • Alignment with national socio-economic development strategies, five-year socio-economic development plans, and relevant planning under the Law on Planning;
  • Proper performance of responsibilities and powers of State management agencies, organizations, and individuals involved in public investment capital management;
  • Management and use of public investment capital in accordance with the specific requirements of each funding source; ensuring focused, synchronized, efficient, economical use of funds and balance of resources; preventing loss and waste;
  • Ensuring transparency and public disclosure in public investment activities.

Thus, the management of public investment capital must strictly follow the principles prescribed under the Law on Public Investment, ensuring that capital is used lawfully, efficiently, and without waste.

III. Questions regarding public investment capital

1. Is an investor of a social housing project eligible for exemption from land use fees if not using public investment capital?

Point a Clause 2 Article 85 of the Law on Housing 2023 provides incentives applicable to developers of social housing projects:

  • Investors in social housing construction projects not using capital as prescribed in Clause 1 of this Article shall enjoy exemption from land use fees and land rent for the entire land area of ​​the project;
  • Investors do not have to implement procedures for determining land prices, calculating exempted land use fees and land rent, and do not have to implement  procedures for requesting exemption from land use fees and land rent, except for the case specified in Point d of this Clause. 

Accordingly, investors implementing social housing projects without using public investment capital are entitled to exemption from land use fees and land rent for the entire project area.

2. What are the mechanisms for allocating public investment capital?

The allocation of public investment capital must comply with principles, criteria, and allocation norms approved by competent authorities under Clause 3 Article 48 of the Law on Public Investment.

 

The Law on Public Investment 2019 provides a mechanism for allocating capital based on medium-term and annual public investment plans to ensure efficient distribution of resources.

3. When appraising funding sources, must the ability to balance public investment capital be based on the total medium-term public investment capital?

Pursuant to Section 18 of Official Dispatch No. 5015/CV-TCT dated July 22, 2022 issued by the Prime Minister’s Special Task Force for reviewing and removing obstacles in investment procedures:

  • When appraising investment policy for new projects in the medium-term period, appraisal of the funding source and the ability to balance public investment capital must be based on the total medium-term public investment capital approved and notified by the Prime Minister to Ministries and central authorities to ensure project feasibility.

Thus, appraisal of funding sources must be based on the total medium-term public investment capital notified by the Prime Minister.

4. How is public investment capital managed for overseas public investment projects?

Clause 6 Article 6 of Decree No. 99/2021/ND-CP provides the following principles:

  • Signed contracts, the laws of the host country, international treaties to which the Socialist Republic of Viet Nam is a party, and Vietnamese law serve as the legal basis for managing, advancing, and disbursing capital for overseas public investment projects;
  • The managing agency, on behalf of the investor, is responsible for requesting and conducting transactions related to the disbursement of public investment capital with competent control and payment authorities.

Accordingly, the management of public investment capital for overseas public investment projects is governed by the principles above.

IV. Legal consultancy services related to public investment capital

The above article provided an overview of the legal regulations currently governing public investment capital. With a team of experienced lawyers and legal specialists, NPLaw offers professional and reputable legal services, ensuring optimal protection of clients’ lawful rights and interests. Should you require assistance, please contact NPLaw for consultation and support.