Construction operation licenses of foreign contractors in Vietnam

Construction operation licenses of foreign contractors in Vietnam

Foreign contractors may only conduct construction activities in Vietnam after obtaining construction operation licenses granted by state management agencies in charge of construction. Activities of foreign contractors in Vietnam must comply with Vietnam’s law and relevant treaties which Vietnam has signed or acceded to.

I. Conditions for grant of construction operation licenses in Vietnam

1. A foreign contractor may be granted a construction operation license in Vietnam after obtaining a bid-winning decision or being selected by the project owner or principal contractor (subcontractor).

2. The foreign contractor shall enter into a joint-name entity with a Vietnamese contractor or employ Vietnamese subcontractors, unless Vietnamese contractors are not qualified to perform any jobs of the bidding package. Upon the entry into a joint-name entity or employment of Vietnamese contractors, it is required to clearly define the contents, volume and value of jobs to be performed by Vietnamese contractors in the joint-name entity or by Vietnamese subcontractors.
3. The foreign contractor shall undertake to fully comply with Vietnam’s laws concerning contract performance in Vietnam.

II. Dossiers of application for construction operation licenses and competence to grant construction operation licenses in Vietnam.

1. A foreign contractor shall deliver in person or send by post an application fles to the local authority granting construction operation licenses. The dossier must comprise:
a/ An application for a construction operation license, made according to Form No. 01 or 04 provided in Appendix IV to the Decree No. 15/2021/ND-CP;
b/ A certified copy or e-copy of the lawful bidding result slip or contractor selection decision;
c/ A certified true copy or e-copy of the establishment license or business registration certificate, for institutional applicants, and practice certificate (if any) of the foreign contractor granted by the country of the contractor’s citizenship;
d/ A report on operating experience concerning the contracted jobs and a certified copy or e-copy of the summarization report on financial audits in 3 latest years (for cases not compelled to comply with Vietnam’s bidding law);
dd/ A certified copy or e-copy of the joint-name contract with a Vietnamese contractor or an official or in-principle contract with a Vietnamese subcontractor to perform the contracted jobs (already included in its bid or bidding dossier);
e/ A lawful power of attorney, for the person who is not the at-law representative of the contractor;
g/ A certified copy or e-copy of the decision approving the project or the investment decision or the investment certificate of the project/work.
2. Applications for construction operation licenses shall be made in Vietnamese language. Foreign establishment licenses or business registration certificates shall be consularly legalized, unless treaties to which Vietnam and relevant countries are contracting parties provide for exemption from consular legalization. If the papers and documents specified at Points b, c, dd and e, Clause 1 of this Article are made in foreign languages, they shall be translated into Vietnamese and the translations shall be notarized or certified in accordance with Vietnam’s law.
3. Competent authority for granting construction operation licenses in Vietnam:
a/ The specialized construction agency under the Ministry of Construction of Vietnam shall grant construction operation licenses to foreign contractors to perform contracts of national important projects and contracts of group-A projects and projects to be built in two or more provinces;
b/ Provincial-level Departments of Construction in Vietnam shall grant construction operation licenses to foreign contractors to perform contracts of group-B and group-C projects to be built in their respective provinces.

III. Time limit and fee for grant of construction operation licenses in Vietnam

1. A local authority specified in Clause II.3 above shall consider a foreign contractor’s application files for a construction operation license within 20 days after receiving a complete valid dossier specified in Clause II.1 above. If refusing to grant a license, the local competent authority shall issue a written reply clearly stating the reason to the contractor.
2. Upon receiving a construction operation license, the foreign contractor shall pay a fee as prescribed by the Ministry of Finance. The fee for granting construction operation licenses to foreign contractors is determined as follows:
(1) Submitting documents in person: VND 2,000,000/license.
(2) Submitting documents online:
- From January 1, 2024 to December 31, 2025: VND 1,600,000/license.
- From January 1, 2026 onwards: VND 2,000,000/license.

3. A construction operation license shall be invalided in the following cases:
a/ The contract is completed and liquidated;
b/ The contract ceases to be valid when the foreign contractor is suspended from operation, is dissolved, or falls bankrupt or for other reasons in accordance with Vietnam’s law and the law of the country of the contractor’s citizenship.

IV. Rights and obligations of foreign contractors in Vietnam

1. A foreign contractor has the following rights:
a/ To request related agencies to guide the making of a dossier of application for a construction operation license and other issues related to contractor activities according to Decree 15/2021/ND-CP;
b/ To lodge denunciations and complaints about violations committed by organizations and individuals performing the jobs prescribed in Decree 15/2021/ND-CP;
c/ To have its/his/her lawful interests in business operation protected in Vietnam according to its/his/her construction operation license.

2. A foreign contractor has the following obligations:
a/ To set up an executive office in the locality where the project is implemented after being granted the construction operation license; and register the address, phone number, fax number, email, seal specimen, account number and tax identification number of the executive office. For a contract on formulation of a construction master plan, formulation of a construction investment project, construction survey or construction design, the foreign contractor may either set up an executive office at the place where the project owner’s head office is registered or not set up an executive office in Vietnam. For a contract on construction or construction supervision of a work running through several provinces, the foreign contractor may set up an executive office in one of these provinces. The executive office shall only exist during the contract performance period and dissolve when the contract becomes invalid;
b/ To register or cancel the seal specimen and return the seal when the contract is completed in accordance with law. The foreign contractor may only use this seal for the contract performance in Vietnam according to it/his/her construction operation license;
c/ To register and pay taxes in accordance with Vietnam’s law, implement the accounting regime, open accounts, and make payments under the guidance of the Ministry of Finance and State Bank of Vietnam to serve its/his/her business activities under the contract;
d/ To recruit employees and employ Vietnamese and foreign workers in accordance with Vietnam’s labor law. The foreign contractor may only register to invite to Vietnam economic and technical experts and highly skilled workers that Vietnam is unable to supply;
dd/ To carry out procedures for import and export of supplies, machinery and equipment related to the contract performed in Vietnam in accordance with Vietnam’s law;
e/ To perform the joint-name contract already concluded with the Vietnamese contractor or employ Vietnamese subcontractors as stated in the dossier of application for a construction operation license;
g/ To buy insurance in accordance with Vietnam’s law for the contractor’s jobs, including professional liability insurance for construction consultancy contractors; asset and cargo insurance for procurement contractors; various types of insurance for construction contractors and other insurance regimes in accordance with Vietnam’s law;
h/ To register for quality inspection of imported supplies and equipment supplied under the contract;
i/ To register for inspection of construction equipment safety and vehicles related to business activities of the foreign contractor in accordance with Vietnam’s law;
k/ To comply with technical regulations and standards on construction work quality management, occupational safety and environmental protection and other relevant laws of Vietnam;
l/ To make reports as required in the construction operation license;
m/ When the work is completed, to compile as-built documents; to provide warranty; to settle imported supplies and equipment; to handle unused supplies and equipment under the construction contract in accordance with regulations on import and export; to re-export supplies and equipment already registered under the regime of temporary import for re-export; to liquidate the contract; and concurrently, to notify related state management agencies of the completion of the contract and termination of operation of the executive office.

V. Responsibilities of the project owner to the foreign contractor in Vietnam.

The project owner or the principal contractor has the following responsibilities:
1. To sign the contract only with the foreign contractor that has been granted the construction operation license by a competent state agency; guide the foreign contractor o comply with Decree 15/2021/ND-CP and relevant laws; to support the foreign contractor in preparation of documents relating to the work that the foreign contractor is required to declare in the dossier of application for a contractor’s permit and relevant procedures in accordance with Vietnam’s law. Together with the foreign contractor, to register the import and export of supplies, machinery and equipment related to the contract performance which fall under the foreign contractor’s responsibility according to Decree 15/2021/ND-CP.
2. To supervise the foreign contractor’s fulfillment of the commitments in the joint-name contract with the Vietnamese contractor or employment of Vietnamese subcontractors according to Article 103 of Decree 15/2021/ND-CP.
3. To consider domestic supply of construction equipment before reaching agreement  with the foreign contractor on the list of construction machinery and equipment to be temporarily imported then re-exported.
4. To consider the supply of technical labor in Vietnam before reaching agreement with the foreign contractor on the list of foreign staff working for the foreign contractor and applying for entry into Vietnam to perform the jobs under the contract of the foreign contractor.
5. To certify the final settlement of imported supplies and machinery of the foreign contractor upon completion of the construction work.
6. When hiring a foreign contractor to perform project management consultancy or construction quality supervision, to notify in writing other contractors and construction quality management agencies of the functions and tasks such foreign contractors will perform on its behalf.

Source: Decree No. 15/2021/ND-CP dated 3rd March, 2021 of Vietnam Government on management of construction investment projects.

LAWYER VIETNAM LAW FIRM- Vietnamese lawyer, attorney, solicitor, advocate, barrister