04 Differences between Contractor Selection and Investor Selection – CNC

Definition of Contractor Selection and Investor Selection

At the moment, the bidding laws has yet to provide clear definitions of “contractor selection” and “investor selection”. However, in practice and per common senses, these two processes could be understood as a process for a series of events whose aim is to search, evaluate, and select candidates who fulfill the requirements specified in the tender documents

The criteria for the contractor/Investor selection include, but not limited to:

Furthermore, in practice, there are many cases of confusion between the two concepts of “Investor” and “Employer”, which might result in incorrect interpretation of the legal role, rights and obligations of the involved parties.

Due to the above, this article is prepared in order to clarify and systematize the issues related to the process of contractor selection and investor selection in accordance with the current Vietnamese law.

Contractor Selection

Definition of Contractor

Targets of contractor selection are organizations, individuals, or a group of organizations or individuals coming together under a consortium agreement that acts as a bidder who shall directly sign and execute the contract once awarded the bid[1].

Accordingly, contractors are understood as individuals or organizations whose scope of operation include:

Activities involved in package implementation

These activities are generally referred to as package implementation activities in accordance with the current laws on bidding[2].

Cases of Contractor Selection via Bidding

Case 1: Selection of Contractor for consulting services, non-consulting services, procurement of goods, and construction for Projects such as:

State-funded development investment projects of state agencies, political organizations, socio-political organizations, political/social/professional organizations, socio-political organizations, social organizations, units of People’s army, and public service unit.
Development investment projects of state-owned enterprises;
Development investment projects not contemplated in point a and point b of Clause 1, Article 1 of Law on Bidding 2013, in which state capital and/or capital of state-owned enterprises account for at least 30% of the total investment amount or below 30% if the sum is above 5 billion dong.
Procurement using state capital in order to maintain the regular operation of state agencies, political organizations, socio-political organizations, political/social/professional organizations, socio-political organizations, social organizations, units of People’s army, and public service unit
Procurement using state capital for the provisions of public products and services
Procurement of national reserve goods using state capital;
Procurement of medicine and medical supplies using state capital;

Case 2: Selection of Contractor for consulting services, non-consulting services, procurement of goods, and construction to implement Vietnamese enterprises’ abroad direct investment projects in which state capital account for at least 30% of the total investment amount or below 30% if the sum is above 5 billion dong.

Evaluation Criteria

Originating from the role of Contractors in the implementation of package, bidding contractors shall be evaluated based on the following criteria:

Contractor evaluation criteria

Investor Selection

Definition of Investor

Targets of investor selection are organizations or individuals that participate as a bidder who shall directly sign and execute the contract once awarded the bid. An investor may participate in the bidding as an independent investor or a consortium member[3]

Accordingly, it could be interpreted that investors are organizations or individual who engage in business investment for lucrative purposes.[4]

Furthermore, the definition of investor is also mentioned and clarified by the laws on investment. Accordingly, investors are organizations or individuals who engage in business investment , including domestic investors, foreign investors, and foreign-funded economic organizations[5]

Haruto then probe further what does Yumi means by that, and then, Haruto could tell that, behind him, a number of people have surrounded him. Haruto then look at Mika, saying that in the end, she is really just a liar. Haruto then add that being a liar is not a good thing at all, as it bound to come back and bite her later. Mika then say that she does not care, Haruto just reap what he sow. Haruto then look at Kaoru, asking her what is their plan for him today, beating him up as usual?

Distinction between “investor” and “employer”

Distinction between Investor and Employer

In practice, the definition of “investor” is often mistaken with “employer”, despite these are two separate concepts with different legal nature.

Accordingly, “investor” is a party who engage in business investment, often within the framework of public-private partnership projects, for lucrative purposes. Meanwhile, “Employer” means the organization or agency that owns capital, loans capital, or is assigned to manage and use capital, and manage the project implementation process; unit utilizing state capital; budget unit making direct use of procurement estimate not funded by state capital, unit undertaking concentrated procurement.

To be specific, “employer” could be (i) agency/unit utilizing state capital; (ii) unit assigned with the procurement estimate not funded by state capital; or (iii) unit undertaking concentrated procurement in accordance with the law.

Cases of Investor Selection via Bidding

Investor Selection via Bidding shall be applied in the following situations:

Case 1: Investment Projects under the form of Public-Private Partnership (PPP) in accordance with the law on PPP Investment;

Case 2: Investment Projects making use of lands for construction of commercial housings; commercial and service works; multi-functional works, multi-functional complexes for business purposes;

Case 3: Projects not contemplated in Case 1 and Case 2, but subject to the bidding process under specialized laws or legislation on private-sector involvement.

Furthermore, based on Article 66, Decree No. 115/2024/ND-CP, the changes to clause 4, Article 1 of Decree No. 23/2024/ND-CP has clarified the scope of application of investor selection via bidding even for projects not making uses of land or not subject to land revocation in accordance with law on lands. To be specific, there are three groups of projects that are subject to bidding process for the investor selection, whether land use is involved or not.

Group 1: International soccer betting business projects in accordance with the laws on horse racing, greyhound racing, and international soccer betting in Vietnam

Group 2: Projects involving dredging combined with product recovery for maritime infrastructure and inland waterway infrastructure in seaport waters and inland water areas in accordance with laws on maritime transport and inland waterway navigation

Group 3: Projects subject to bidding process when are two or more investors who jointly register for the implementation of: Projects in the education, healthcare, culture, sport, and environment sectors in accordance with the laws on private-sector involvement.

This change demonstrates the tendency of expanding the scope of application of laws on bidding over projects using public resources, even when these projects does not involve land use, in order to increase state management effectiveness and transparency in investor selection.

Criteria

Originating from the role of investors in business investment, investors partaking in the bidding shall be evaluated based on the following criteria:

Criteria for evaluation of Investor

Conclusion

Overall, contractor selection and investor selection via bidding have fundamental difference regarding:

Disclaimer:

This article was prepared to be used for the purpose of introducing or informing clients about issues and/or developments of legal perspectives in Vietnam. The information presented in this article does not constitute advice of any kind and may be subject to changes without prior notice.