• Coming Soon: New E-Bidding System and Regulations in Vietnam to Boost Public Procurement
  • April 6, 2015 | Author: Manfred Otto
  • Law Firm: Duane Morris Vietnam LLC - Ho Chi Minh City Office
  • Contractors will soon be able to benefit from electronic bidding in Vietnam. The Vietnamese Government has issued the new Law on Bidding promising great changes to the bidding process for public investment projects, including public-private partnership (PPP) projects. The Ministry of Planning (MPI) and Development and the Ministry of Finance are scheduled to jointly issue a new circular on e-bidding process in February 2015 that is likely to affect both Vietnamese and foreign contractors.

    Under the new draft, e-bidding will be compulsory for a broad range of public procurement activities. Projects may include consulting services, goods procurement and construction.

    The new e-bidding are expected to bring many advantages for contractors, especially foreign contractors. The system itself costs USD3.3 million to develop and is based on Korea’s successful web-based procurement System - KONEPS. This means that Vietnam will soon have a world-class e-bidding system in place.

    No longer a Pilot Program

    Vietnam has had a pilot e-bidding system for many years. The new circular on e-bidding will replace MPI’s Circular No. 17/2010/TT-BKH dated 22 July 2010 on a pilot program for online bidding. The new circular on e-bidding will replace the circular on pilot E-bidding.

    MPI officials have announced that State agencies and contractors have successfully cooperated in more than 1,000 pilot e-bidding projects and gained much experience under the pilot program. So, the new e-bidding circular and system is based on such experience as well as learning from other countries.

    Key Benefits:

    1. E-bidding helps saving time and money
    • By replacing the paper-based system, costs for paper, photocopying and postage will be saved;
    • Contractors, especially foreign ones, do not need to spend money on travel fees to buy tender invitation documents, submit tender documents by hand in remote provinces, because all will be done online. E-documents and e-signatures will have legal validity, and foreign contractors will be able to save time and money spent on signing, legalizing and sending documents to Vietnam; and
    • According to the draft circular, contractors only have to pay VND550,000 to register their participation in the system and a VND550,000 annual fee to maintain their names and data in the system.
    2. Reduce corruption in government process
    • Less chances for bureaucrats to abuse their power due to a reduction of face-to-face interaction;
    • Fewer “unofficial ways” to procure contracts, as the e-bidding system will control the procedure; and
    • Fairer competition for all contractors through more transparency.
    3. Valuable source of information and opportunities to introduce contractors’ profiles
    • Easy access to information about thousands of projects that will be available on the official website;
    • Information about contractors will be available to other contractors to learn about their competition;
    • Contractors’ profiles can be introduced to other parties calling for tenders and increase opportunities;
    • All information can be updated easily; and
    • Contractors posting wrong information can be penalized.
    Who can bid?

    The draft circular limits bidding to “domestic bidding.” Article 4.15 of the Bidding Law defines domestic bidding as “bidding in which only domestic tenderers and investors may participate.” Such bidders include foreign-invested enterprises registered in Vietnam, but excludes foreign companies with no commercial presence in Vietnam. However, it is expected that once the Trans-Pacific Partnership Agreement (TPP) becomes effective, bidders from member states will be considered “domestic tenderers” as well. So, bidders from TPP member states would not have to establish a commercial presence or have a local partner in Vietnam to use the e-bidding system.

    In sum, the new e-bidding system and regulations are hoped to attract more and more international contractors providing high-quality goods and services to Vietnam. Chances that international contractors win bids are likely to increase due to still limited competitiveness of domestic contractors.

    In addition, Vietnam is going to sign the TPP that will likely require e-bidding. The value of public procurement carried out under the Law on Bidding is 20% of Vietnam’s GDP - almost US$35 billion - a potentially attractive market for international contractors. Vietnam continues to attract large amounts of official development assistance. Contractors are urged to keep up to date with Vietnam’s bidding regulations and register their profiles as soon as possible to not miss out on the opportunities presented.

    Draft Circular on E-Bidding

    E-bidding is going to be applied to the following projects:

    Article 1.1
    Selection of tenderers to supply the consulting services, non-consulting services, goods procurement, construction & installation, and mixed contracts that are awarded through open bidding, selective bidding, competitive offering, direct procurement, and no-bid contract awarding.

    Subjects of application - E-bidding:

    Article 1.2
    a) Organizations and individuals that participate in or related to activities of bidding regulated in the Law on Bidding; and
    b) Organizations and individuals that have activities of bidding not within the governing scope of the Law on Bidding may choose to apply this Law.

    Activities regulated in the Law on Bidding No. 43/2013/QH13 dated 26 June 2014

    Article 1
    Selection of tenderers to supply the advisory services, non-advisory services, goods, construction and installation for:

    1. Selection of tenderers to supply the advisory services, non-advisory services, goods, construction and installation for:
    a) Projects on development investment financed by state of state agencies;
    b) Projects on development investment of state-owned enterprises;
    c) Projects on development investment other than cases defined at point a and point b of this Clause which are financed by state, state-owned enterprises with level equal to 30% or more or less than 30% but more than 500 billion VND in total invested capital of project.
    d) Procurement financed by state aiming to maintain regular activities of State bodies;
    dd) Procurement financed by state aiming to supply products and services in serve of public purpose;
    e) Purchase of national reserve goods financed by state;
    g) Purchase of drugs, medical supplies financed state; medical insurance fund, revenues from services of medical examination and treatment and other lawful revenues of public medical establishments;

    2. Selection of tenderers to supply the advisory services, non-advisory services, goods on Vietnam’s territory for implementation of overseas direct-investment projects of Vietnamese enterprises which are financed by state with level equal to 30% or more or less than 30% but more than VND500 billion in total invested capital of project.

    3. Selection of investors to perform the investment projects in form of public-private partnership (PPP), investment projects with land use;

    4. Selection of tenderers in petroleum field, except for selection of tenderers to supply petroleum services related directly to activities of search, exploration and development of mines and petroleum exploitation as prescribed by law on petroleum.