How are the procedures for implementing public investment projects prescribed by law, particularly for FDI enterprises with foreign-invested capital? Below, KMC provides detailed step-by-step guidance on project execution procedures, along with practical insights into potential challenges and solutions to help your enterprise implement and manage projects effectively while ensuring legal compliance.
Legal basis for “procedures for implementing public investment projects”
Procedures for implementing public investment projects are prescribed in:
– Law on Public Investment No. 58/2024/QH15
– Latest amendments stipulated in Decree No. 85/2025/NĐ-CP detailing the implementation of certain provisions of the Law on Public Investment, including the formulation, appraisal, and approval of investment policy decisions for public investment programs and projects.
Latest procedures for implementing public investment projects
Procedures for implementing public investment projects are specified and detailed in Chapter II – FORMULATION, APPRAISAL, AND DECISION ON INVESTMENT POLICY FOR PUBLIC INVESTMENT PROGRAMS AND PROJECTS of Decree No. 85/2025/NĐ-CP.
Depending on the type of project, the procedures are regulated as follows:
Article 7. Procedures and processes for deciding on investment policy for programs and projects using funds from lawful revenues of state agencies and public service units allocated for investment
1.Heads of ministries and central agencies:
a) Assign subordinate units or public service units under their management authority to prepare pre-feasibility study reports and investment policy proposal reports for programs and projects specified in Point a, Clause 1, Article 6 of this Decree;
b) Establish an Appraisal Council or assign a competent unit to take charge of appraising pre-feasibility study reports and investment policy proposal reports; appraise funding sources and capital balance capacity from lawful revenues of state agencies and public service units allocated for investment;
c) Direct the units specified in Point a of this Clause to finalize pre-feasibility study reports and investment policy proposals; submit to the head of the ministry or central agency for consideration and decision on investment policy for programs and projects.
2. Chairpersons of People’s Committees at all levels:
a) Assign specialized agencies, subordinate units, or public service units under their management authority to prepare pre-feasibility study reports and investment policy proposal reports for programs and projects specified in Point a, Clause 2, Article 6 of this Decree;
b) Establish an Appraisal Council or assign a competent unit to appraise pre-feasibility study reports and investment policy proposal reports; appraise funding sources and capital balance capacity from lawful revenues of agencies and public service units allocated for investment;
c) Direct agencies and units specified in Point a of this Clause to finalize pre-feasibility study reports and investment policy proposals; submit to the Chairperson of the People’s Committee for consideration and decision on investment policy for programs and projects.
3.Heads of public service units specified in Points b, c, d, Clause 1, Article 6 and Points b, c, d, Clause 2, Article 6 of this Decree:
a) Assign specialized agencies and subordinate units under their management authority to prepare pre-feasibility study reports and investment policy proposal reports for programs and projects of their units;
b) Establish an Appraisal Council or assign a competent unit to appraise pre-feasibility study reports and investment policy proposal reports; appraise funding sources and capital balance capacity from lawful revenues of their units allocated for investment;
c) Direct agencies and units specified in Point a of this Clause to finalize pre-feasibility study reports and investment policy proposals; submit to the head of the public service unit for consideration and decision on investment policy for programs and projects.
Article 9. Procedures and processes for deciding on investment policy for Group A, B, and C public investment projects abroad
1.Heads of ministries and central agencies:
a) Assign subordinate units, including affiliated public service units, to prepare pre-feasibility study reports and investment policy proposal reports for projects.
b) Establish an Appraisal Council or assign a competent unit to appraise pre-feasibility study reports and investment policy proposal reports; appraise project funding sources and capital balancing capacity.
c) Direct the units specified in Point a of this Clause to finalize pre-feasibility study reports and investment policy proposals; submit to competent authorities for consideration and decision on investment policy for projects.
2.Chairpersons of People’s Committees at all levels:
a) Assign specialized agencies or subordinate units to prepare pre-feasibility study reports and investment policy proposal reports for projects;
b) Establish an Appraisal Council or assign a competent unit to appraise pre-feasibility study reports and investment policy proposal reports; appraise funding sources and capital balance capacity of the project;
c) Direct the agencies and units specified in Point a of this Clause to finalize pre-feasibility study reports and investment policy proposals; submit to competent authorities for consideration and decision on investment policy for projects.
3.Contents of pre-feasibility study reports for Group A projects and investment policy proposal reports for Group B and C projects:
a) Necessity of investment, implementation conditions, and assessment of compliance with planning regulations under the laws of the host country.
b) Objectives, scale, and investment location.
c) Estimated total investment and capital structure.
d) Expected implementation schedule and investment phasing.
đ) Security and environmental factors; preliminary assessment of socio-economic efficiency.
e) Sub-project allocation (if any).
g) Implementation solutions.
4.Contents of investment policy appraisal include:
a) Necessity of the project;
b) Compliance with legal regulations of the host country and the Socialist Republic of Vietnam;
c) Compliance with planning regulations under the laws of the host country;
d) Objectives, scale, location, implementation progress, and security and environmental factors;
đ) Socio-economic efficiency.
3 Key Phases in the Procedures for Implementing Public Investment Projects
After reviewing the latest regulations on public investment projects, particularly the implementation procedures, a public investment project is generally executed through the following three phases:
Phase 1: Investment Preparation
This is the phase that shapes and determines the fate of the project, including the following key steps:
- Formulation, appraisal, and approval of investment policy:
This is the initial step. The managing authority prepares the investment policy proposal report and submits it to competent authorities (National Assembly, Government, Prime Minister, Ministers, or Chairpersons of Provincial People’s Committees) for appraisal and approval. This step determines the necessity, feasibility, and scale of the project. - Formulation, appraisal, and approval of the Pre-Feasibility Study Report (if applicable):
Applied to Group A projects, nationally important projects, or as required by competent authorities. - Formulation, appraisal, and approval of the Feasibility Study Report (Investment Report):
This is the core stage. The report must detail technical options, organizational solutions, total investment capital, socio-economic efficiency, and project sustainability. After thorough appraisal, the competent authority approves and issues the investment decision.
Note: The sequence and level of detail of reports vary among Group A, B, and C projects. Enterprises must correctly identify project classification to apply the appropriate procedures.
Phase 2: Investment Implementation
After the investment decision is issued, the project officially enters the execution phase on-site. Key activities include:
- Survey and construction design: Conduct site surveys and prepare basic design, technical design, construction drawings, and detailed cost estimates.
- Site clearance and resettlement: This is one of the most complex and dispute-prone stages. It must comply with compensation, support, and resettlement regulations.
- Contractor selection and contract signing: Selection of consultants, contractors, and suppliers must strictly comply with the Law on Bidding. Contracts are then signed with selected contractors.
- Construction execution and supervision: Construction must follow approved designs and schedules, ensuring quality, labor safety, and environmental protection. Supervision is conducted throughout the process.
- Cost management, payment, and final settlement: Strict control of cost overruns, payment according to contract progress, and preparation of final project settlement.
Phase 3: Construction Completion and Project Operation
- Inspection and handover: Conduct inspection of each item and the entire project, and hand over to the operation and management unit.
- Trial operation and legal completion procedures: Trial operation, rectification of defects (if any), and completion of legal procedures such as fire safety approval, inspection certification, and completion confirmation.
- Final settlement of investment capital and contract liquidation: Prepare final settlement reports of total investment capital and proceed with contract liquidation with contractors.
Practical Challenges and Solutions for FDI Enterprises in Public Investment Project Implementation
Understanding public investment procedures is only the first step. For FDI enterprises, investing in public projects in Vietnam is subject to even stricter regulatory control. Therefore, enterprises face multiple risks and challenges throughout approval – implementation – appraisal stages.
To help enterprises better identify risks and optimize solutions, KMC experts provide the following analysis of practical challenges and corresponding solutions.
Challenge 1: Approval delays and policy changes
Challenge: Appraisal and approval of reports (investment policy, feasibility) may take longer than expected due to complex administrative procedures or requests for revisions. During this period, legal regulations may change, affecting the project’s legal basis.
Solution:
- Actively monitor draft laws and upcoming decrees to anticipate regulatory changes.
- Establish close working relationships with appraisal authorities from the early stage to ensure two-way communication and timely updates.
- Engage professional advisory services with strong local regulatory expertise to shorten administrative processing time.
Challenge 2: Difficulties in land clearance and compensation
Challenge: This is the leading cause of project delays. Issues such as land valuation, negotiations with local residents, planning restrictions, or legal disputes over land use rights may halt project implementation.
Solution:
- Conduct thorough socio-economic surveys during the feasibility stage to assess complexity.
- Develop transparent, fair, and flexible compensation and support plans, considering local cultural factors.
- Coordinate closely with local authorities to leverage their mediation role and credibility.
Challenge 3: Price volatility and material supply risks
Challenge: In a volatile economic environment, construction material, fuel, and labor costs may fluctuate significantly, affecting the approved total investment.
Solution:
- Prepare cost estimates with appropriate contingency reserves in line with Ministry of Construction guidelines.
- Negotiate flexible price adjustment clauses in contracts based on official price indices published by the State (e.g., General Statistics Office data).
- Develop alternative supply chain plans with multiple suppliers to reduce disruptions.
Challenge 4: Coordination and quality management
Challenge: Lack of coordination among investors, supervision consultants, contractors, and regulatory authorities may lead to technical errors, additional works, and reduced construction quality.
Solution:
- Establish a centralized Project Information Management System (PIMS) to ensure transparent updates on progress and issues.
- Organize regular and ad-hoc coordination meetings with full participation of stakeholders.
- Invest in a qualified and experienced supervision team empowered to make timely on-site technical decisions.
Special Recommendations for Japanese and FDI Enterprises
As a manager of an FDI enterprise in Vietnam intending to invest in public projects, challenges may arise from preparation to implementation stages.
To optimize public investment procedures and effectively manage risks, the following key recommendations should be noted:
Focus on the preparation phase: Allocate sufficient time and resources for pre-feasibility and feasibility studies. A well-prepared report with optimal technical solutions and comprehensive risk analysis is the most critical success factor.
Build strategic partnerships: Cooperate with reputable local consultants and contractors who have deep understanding of Vietnam’s legal, cultural, and operational environment. This helps optimize efficiency in both time and cost.
Apply management technology: Implement advanced project management systems (such as BIM – Building Information Modeling) to manage progress, cost, and enhance transparency in reporting to governing authorities.
Above, KMC has provided the latest information and regulations on the procedures for implementing public investment projects, with a particular focus on comprehensive advisory and guidance for FDI enterprises investing in public projects in Vietnam.
In practice, implementing a public investment project has never been simple, especially for FDI investors. To ensure efficient project execution and investment, it is highly recommended that enterprises work with a professional consulting partner.
As one of the leading reputable firms specializing in tax, accounting, and corporate governance advisory solutions for FDI enterprises in Vietnam, particularly Japanese FDI companies, KMC has been accompanying and supporting thousands of enterprises from market entry, expansion, to successful project implementation in Vietnam.
Therefore, if you are in need of professional, in-depth advisory support that ensures full legal compliance when investing in projects in Vietnam, please contact KMC experts via hotline: 081 489 4789.
