Establishment of a construction company with 100% foreign capital

Establishment of a construction company with 100% foreign capital

Notes when establishing a 100% foreign-invested construction company

• Construction is a conditional business investment industry listed in Law No. 03/2016/QH14, so foreign investors when investing to establish a 100% foreign-owned construction business must meet the conditions in accordance with the laws of Vietnam.
• Construction is a fairly broad field, including the following professions: construction planning, construction investment project formulation, construction survey, construction design, construction, construction supervision, project management, contractor selection, acceptance, handover and put into operation, warranty and maintenance of construction works and other activities related to work construction. In addition to the general conditions, some construction businesses also have their own conditions to be able to operate in this field. For example, the conditions of some construction industries can be mentioned as follows:

• Business planning design and construction services No. 120
• Construction investment project management consulting business No. 110

For these two business lines, the first thing to do is to meet the capacity conditions that are generally applicable to organizations and individuals operating while establishing FDI companies in the field of construction. Specifically, in Article 148 of the Law on Construction 2014:

Article 148. General provisions on capability condition of organizations and individuals engaged in construction activities

The content of the terms is supplemented by Point c, Clause 1, Article 39 of the Law on Architecture 2019; as amended by points a, b, Clause 53, Article 1 of the revised Construction Law 2020)

1. Individuals conducting construction activities must have diplomas and training certificates relevant to their construction jobs granted by lawful training institutions.
2. Contractors being foreign organizations and individuals conducting construction activities in Vietnam shall comply with the law on bidding and must possess operation licenses granted by state management agencies in charge of construction.
3. Holders of titles and individuals practicing construction activities that must have practice certificates in accordance with the provisions of this Law include construction investment project management director; assume the prime responsibility for, and assume the prime responsibility for, formulation of construction planning design; construction survey manager; in charge, in charge of designing, verifying construction designs; construction supervision consultancy; assume the prime responsibility for formulating, verifying and managing construction investment costs. Practicing certificates are classified into class I, class II and class III. (This content is guided and amended in Clauses 12 and 13, Article 1 of Decree 100/2018/ND-CP)
4. Organizations participating in construction activities must have certificates of competence as prescribed by this Law, including construction investment project management consultancy; Construction survey; formulation of construction planning design; design, verify construction design; Construction works; construction supervision consultancy. The organization’s competency certificates are classified into class I, class II and class III. A specialized construction agency under the Ministry of Construction shall issue a Class I capacity certificate; The Department of Construction, socio-professional organizations that fully meet the conditions prescribed by the Government shall issue certificates of capacity for the remaining classes.
5. Organizations and individuals practicing architecture shall comply with the provisions of the law on architecture.
6. The Government shall detail the capacity conditions of organizations and individuals participating in construction activities; regulations on the program, content and form of organization of tests for the grant of practice certificates; regulations on the grant, re-grant, conversion and revocation of practice certificates; regulations on conditions, competence, order and procedures for granting and revoking construction operation permits for contractors being foreign organizations and individuals.”.

In addition to meeting the above general capacity conditions, the two business lines in the field of construction planning design and construction investment project management consultancy are also specified in Articles 150 and 152 of the Law on Construction 2014. Contents of the terms below:

For construction planning design

“Article 150. Conditions on construction planning designing organizations

1. Having full relevant capability conditions for making construction planning designs.
2. Individuals holding the title of construction plan design manager must possess practice and capability certificates relevant to each type of construction plan.”

For construction investment project management consulting

“Article 152. Conditions of project management consulting organizations, construction investment project management boards

1. Construction investment project management consulting organizations must satisfy the following conditions:
2. a) Having full construction capability conditions suitable to project management work according to sizes and types of projects;

(The content of this Clause in Article 63 of Decree No. 59/2015/ND-CP is now amended by Clause 30, Article 1 of Decree 100/2018/ND-CP)

Article 1. Amendment, supplement, replacement and annulment of a number of articles of Decree No. 59/2015/ND-CP dated June 18, 2015 of the Government on construction investment project management (hereinafter written as follows: Decree No. 59/2015/ND-CP for short) and a number of clauses in Article 1 of Decree No. 42/2017/ND-CP amending and supplementing a number of articles of Decree No. 59/2015/ND-CP dated June 18, 2015 of the Government on construction investment project management (hereinafter referred to as Decree No. 42/2017/ND-CP) as follows:

…

Amending and supplementing Article 63 of Decree No. 59/2015/ND-CP as follows:

“Article 63. Competence conditions of project management consulting organizations

1. Organizations participating in project management consulting activities must satisfy the following conditions corresponding to the capacity classes:
2. a) Class I:

– Individuals holding the title of project management director possessing a Class I project management practice certificate suitable to the type of project for which the certificate of competence is registered;

– Individuals in charge of specialized fields must have a Class I practicing certificate suitable to the work they undertake;

– Individuals participating in project management have expertise and skills suitable to the work they undertake and the type of project registered for a certificate of competence;

– Having performed project management of at least 01 group A project or 02 group B projects of the same type or more.

1. b) Class II:

– Individuals holding the title of project management director possessing a class II or higher project management practice certificate suitable to the type of project for which the certificate is registered;

– Individuals in charge of specialized fields must have a class II or higher practicing certificate suitable to the work they undertake;

– Individuals participating in project management have expertise and skills suitable to the work they undertake and the type of project registered for a certificate of competence;

– Having performed project management of at least 01 group B project or more or 02 group C projects of the same type or more.

1. c) Class III:

– Individuals holding the title of project management director have a project management practice certificate of class III or higher suitable to the type of project for which the certificate is registered;

– Individuals in charge of specialized fields must have a class III or higher practicing certificate suitable to the work they undertake;

– Individuals participating in project management have expertise and skills suitable to the work they undertake and the type of project registered for a certificate of competence.

Operation range:

1. a) Class I: Being allowed to manage projects of the same type;
2. b) Class II: Having managed a project of the same category from Group B or below;
3. c) Class III: Being allowed to manage projects of the same category as Group C and projects only requiring the preparation of economic – technical reports on construction investment.”.
4. b) Individuals holding the title of director of construction investment project management, individuals in charge of specialized fields of project management must have appropriate expertise, training and experience in the construction industry. and practice certificates appropriate to the size and type of the project.

(This content has been amended by point a, clause 54, Article 1 of the revised Construction Law 2020).

Conditions for establishing a 100% foreign-owned construction company

Vietnamese law provides a number of regulations on the conditions for establishing a 100% foreign-owned construction company as follows:

For subjects being foreign investors: Foreign individuals and legal entities must have the nationality in WTO countries or countries that have signed trade agreements with Vietnam. In addition, investors also need to have financial and economic ability to implement investment projects to establish FDI enterprises doing business in the field of construction with foreign capital in Vietnam.

Investors are only allowed to operate in the following fields:

• Construction of high-rise buildings;
• Construction of civil engineering works;
• Complete installation;
• Completion of high-rise buildings;
• Other construction works.

In case the investor is an investor operating as a construction contractor, a number of additional conditions must be met, which are:

• Foreign contractors must publish information on the websites of the Ministry of Construction and the Department of Construction as decentralized.
• If the bidding packages are subject to the regulations on bidding according to the provisions of Vietnamese law, the foreign contractor must have a decision on winning the bid or being selected for the contract.
• If the bidding packages are not subject to the regulations on bidding according to the provisions of Vietnamese law, the foreign contractor must satisfy the following conditions: There has been a decision to win the bid or to be selected for the contract; have sufficient capacity suitable for the work of contractor in accordance with the provisions of the law on construction.
• Foreign contractors must form a joint venture with Vietnamese contractors or use Vietnamese sub-contractors. If the domestic contractor is not qualified to participate in any work of the bidding package, the foreign contractor is not required to form a joint venture with a Vietnamese contractor or use a Vietnamese sub-contractor.

For feasible projects: Investors must submit to the competent authorities for consideration and approval before implementing the projects. At the same time, it is necessary to ensure that the location of the project implementation is suitable with the scale and development planning of the investor.

For enterprises: First of all, enterprises need to have valid documents according to the provisions of Vietnamese law on establishing a 100% foreign-invested construction company. In addition, enterprises need to commit to tax obligations, fees, labor use and land use with State agencies.

Procedures for establishment of a construction company with 100% foreign capital

Step 1: Prepare an application for an investment certificate 

Investors must prepare a number of documents required to apply for an Investment Certificate from a competent authority as follows:

• Document for requesting implementation of investment projects to establish FDI enterprises doing construction business.
• Certified copies of documents such as ID card/Passport/CCCD for individuals or Certificate of establishment of a 100% foreign-owned construction enterprise/Business establishment decision/Valuable documents equivalent to the subject being an organization
• Proposal for investment projects in the construction sector.
• Financial statements for the last 2 years of the enterprise; Commitment letter of financial support from parent company/financial institution or other documents
• A written request for land use demand or a copy of the location lease agreement, documents certifying the investment with the right to use the project site.
• In addition, in case the investment project to establish a 100% foreign-owned construction company uses technologies on the list of technologies restricted from transfer, it is necessary to submit an explanation on the use of technology.

Within 15 days from the time of receipt of complete dossiers, the Department of Planning and Investment will issue investment certificates to foreign investors according to regulations. If the enterprise is not granted the Investment Certificate on time, the competent authority will still notify the investor in writing and clearly state the reason.

Step 2: Register to establish a 100% foreign-owned construction company in Vietnam

Enterprises prepare documents for registration of establishment of a construction company with 100% FDI capital, including basic documents such as: application for registration of establishment of a construction enterprise, list of company members, operating charter, Investment Registration Certificate, and some other related papers.

Enterprises will apply for registration of establishment of a 100% foreign-invested construction company at the Business Registration Office of the Department of Planning and Investment where the company’s head office is located. in Hanoi, the Department of Planning and Investment of Hanoi will be responsible for processing the application. The processing time for the application is within 3 working days. After completing the implementation, the enterprise will be granted a Certificate of registration for establishment of a construction company with 100% FDI capital according to regulations.

After being granted a certificate of successful business registration, the next step is to publish the information on the establishment of a 100% foreign-owned construction company on the National Business Registration Portal at: https:/ /dangkytinhdoanh.gov.vn/ within 30 days from the time the enterprise is granted this Certificate. In case of non-publication or non-publication in accordance with state regulations, a fine of from VND 1,000,000 to VND 2,000,000 shall be imposed according to the provisions of Clause 1, Article 26 of Decree No. 50/2016/ND-CP. .

Next, the enterprise needs to engrave its company seal & decide on the number and form of the seal, self-implement or authorize the law firms, and notify the use of the seal sample at the Department of Planning and Investment and publish the seal information on the National Portal. Note, the seal must contain the business name and corporate tax identification number.

Step 3: The enterprise prepares the application for the Certificate of Competency of the construction organization:

Documents on Construction Competency Certificates are considered as conditions and powers of construction organizations participating in construction activities in Vietnam. Documents required in the application for the Certificate of Competency include:

• Application form for issuance of certificate of construction capacity
• Copy of Business Registration Certificate/Decision on establishment of a 100% foreign-owned construction company
• List of key members, together with relevant papers: practice certificate, labor contract, …
• Declaration of experience of typical enterprises (minimum 3 jobs) in the most recent time for each field related to the registered content
• Declaration of financial capacity
• Work performance management process or corresponding quality management system

Within 10 days after receiving the 100% foreign-invested construction company’s dossier, the competent authority will examine and handle the dossier. In case there are errors that need to be amended or supplemented, a notification will be sent to the enterprise.

After 10 days (for Class II certificates) or 15 days (for Class I certificates), there will be results on the granting of a certificate of construction capacity to a 100% foreign-owned construction company.

Service of Establishment of a construction company with 100% foreign capital from Siglaw team

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