Profile
Vietnamese
FOREIGN INVESTORS IN CONSTRUCTION SERVICES BUSINESS
Foreign investors are becoming an important force in investing and doing business in construction services in many countries in general and Vietnam in particular. Attracting investment from foreign investors brings many economic benefits to the country, however, it also poses many legal and management challenges. Therefore, to carry out this activity, foreign investors must meet a number of conditions and comply with legal regulations. In this article, we will learn about the necessary conditions for foreign investors to perform construction services in Vietnam, as well as the necessary procedures and processes to operate this service business.
LEGAL BASIS FOR FOREIGN INVESTORS TO CONDUCT BUSINESS IN CONSTRUCTION SERVICES
- Vietnam’s commitments in international treaties (WTO, AFAS, VJEPA, VKFTA, EVFTA, CPTPP);
- Law No. 61/2020/QH14, Law on Investment ;
Law No. 59/2020/QH14, Law on Enterprise ;
Law No. 50/2014/QH13, The Construction Law;
Decree 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the law on Investment ;
Decree 01/2021/ND-CP on business registration;
Decree 100/2018/ND-CP amending, supplementing and abolishing a number of regulations on investment and business conditions in the fields under the state management of the Ministry of Construction;
Decree 59/2015/ND-CP on management of construction investment projects;
CONDITIONS FOR FOREIGN INVESTORS TO CONDUCT BUSINESS IN CONSTRUCTION SERVICES
According to WTO, FTAs, AFAS: No restrictions on
- Construction of high-rise buildings (CPC 512)
- Construction of civil engineering works (CPC 513)
- Erection and installation work (CPC 514, 516)
- Finishing work of high-rise buildings (CPC 517)
Other conditions: Head of branch must be a permanent resident in Vietnam
- WTO: Foreign enterprises must be a legal entity of a WTO Member
- EVFTA: Foreign enterprises must be a legal entity of another Party.
ACCORDING TO VIETNAMESE LAW
According to Vietnamese regulations, construction services business is a conditional market access industry and conditional business lines so to carry out this activity, the following conditions must be satisfied:
- Construction licensing procedures must be carried out in accordance with Vietnamese law.
- Must have a certificate of capacity of the construction organization
- Must have full financial capacity, experience and professional qualifications necessary to carry out construction projects of appropriate type and level.
- Must comply with regulations on labor safety, environmental protection and other regulations of Vietnamese law on construction service business activities.
FORMS OF BUSINESS IN CONSTRUCTION SERVICES FOR FOREIGN INVESTORS
Foreign investors can choose one of the following two forms of investment to do business in construction services in Vietnam:
- Investing in establishing a new economic organization, or; See more: Establishing a 100% foreign-owned construction company
- Investing in contributing charter capital, buying shares, buying capital contributions;
PROCEDURES FOR FOREIGN INVESTORS TO CONDUCT BUSINESS IN CONSTRUCTION SERVICES
Step 1: Apply for an Investment Registration Certificate (IRC)
Documents for requesting an Investment Registration Certificate:
- A written request to implement an investment project to conduct business in construction services, including a commitment to bear all costs and risks if the project is not approved;
- Documents on the legal status of the foreign investor: ID card, passport, identity card for individual investors; copy of the Certificate of Establishment or other equivalent document confirming the legal status for institutional investors with consular confirmation
- Documents proving the financial capacity of the foreign investor, including at least one of the following documents: financial statements of the last 2 years of the foreign investor; commitment to financial support from the parent company; commitment to financial support from a financial institution; guarantee of the financial capacity of the investor; Other documents proving the financial capacity of the foreign investor;
- The proposal for an investment project to provide construction services includes the following main contents: investor or form of investor selection, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, implementation progress, information on the current land use status at the project implementation location and proposed land use needs (if any), labor needs, proposed investment incentives, impacts, socio-economic efficiency of the project, preliminary assessment of environmental impacts (if any) in accordance with the provisions of the law on environmental protection.
In case the law on construction stipulates the preparation of a pre-feasibility study report, the investor may submit a pre-feasibility study report instead of an investment project proposal;
- In case the investment project for construction services business does not request the State to allocate land, lease land, or permit the change of land use purpose, a copy of the land use rights document or other document determining the right to use the location to implement the investment project shall be submitted;
- Explanation of the technology used in the investment project for construction services business for projects subject to appraisal and consultation on technology according to the provisions of the law on technology transfer;
- Other documents related to the investment project, requirements on conditions and capacity of the investor according to the provisions of the law (if any).
- Number of documents: 01 set
- Processing time: The investment registration agency shall issue the Investment Registration Certificate to the foreign investor within 15 days from the date of receipt of valid documents.
- Issuing authority: Department of Planning and Investment of the province where the company intends to establish its headquarters
Step 2: Apply for an Enterprise Registration Certificate (ERC)
After being granted an Investment Registration Certificate, the investor shall carry out the procedure for applying for a certificate of registration of an enterprise providing construction services by one of the following three methods:
- Register the enterprise directly at the Business Registration Office;
- Register the enterprise via postal service;
- Register the enterprise via the electronic information network.
The dossier includes the following documents:
- Application for establishment of an FDI enterprise providing construction services;
- Company charter;
- List of members or shareholders of the company (if it is a limited liability company with two or more members or a joint stock company);
- Copies of legal documents of members, shareholders, and representatives (For individual investors: Copies of citizen identification cards, identity cards, passports, or other legal personal identification of founding members or shareholders; For investors that are economic organizations: Copies of the decision to establish the company, business registration certificate, or other equivalent documents of the organization; Copies of valid identity cards or passports of the legal representatives of the organization);
- Investment registration certificate
- Other necessary documents (if any);
- Issuance period: Within 03 working days from the date of receipt of the dossier, the Business Registration Authority shall be responsible for reviewing the validity of the business registration dossier and granting the business registration; in case the dossier is invalid, the Business Registration Authority shall notify in writing the contents that need to be amended or supplemented to the business founder. In case of refusal to register a business, a written notice must be given to the business founder and the reasons must be clearly stated.
- Issuing authority:
+) At the provincial level: Business Registration Office under the Department of Planning and Investment
The Business Registration Office may organize points to receive dossiers and return results under the Business Registration Office at different locations in the province;
+) At the district level: Finance – Planning Office under the District People’s Committee
Step 3: Apply for a Certificate of Construction Activity Capacity
- Authority to issue a Certificate of Construction Activity Capacity:
- The specialized construction agency under the Ministry of Construction issues a Class I certificate of capacity;
- The Department of Construction issues Class II and Class III certificates of capacity.
To be granted a certificate of construction activity capacity, a construction service business establishment must satisfy the general conditions and specific conditions for each capacity level.Specifically:
General conditions:
- Having a laboratory or having a written agreement or a contract in principle on the cooperation in performing testing work with a laboratory serving construction surveys recognized according to regulations;
- Having machinery, equipment or being able to mobilize machinery and equipment to serve the survey work of the field for which a certificate of capacity is requested.
Special conditions:
- a) Grade I:
– The individual holding the title of survey manager has a Grade I construction survey practice certificate suitable for the field for which the certificate of competence is requested;
– The individual participating in the survey has expertise and professional skills suitable for the type of construction survey registered for the certificate of competence;
– Has conducted construction surveys for at least 01 project from group A or 02 projects from group B or higher or 01 project from level I or 02 projects from level II or higher of the same type of survey.
- b) Grade II:
– The individual holding the title of survey manager has a Grade II or higher construction survey practice certificate suitable for the field for which the certificate of competence is requested;
– The individual participating in the survey has expertise and professional skills suitable for the type of construction survey registered for the certificate of competence;
– Has conducted construction surveys for at least 01 project from group B or 02 projects from group C or 03 projects requiring the preparation of an Economic-Technical Report or higher or 01 project from level II or 02 projects from level III or higher of the same type of survey.
- c) Grade III:
– Individuals holding the title of survey manager have a construction survey practice certificate from level III or higher suitable for the field for which the certificate of competence is requested;
– Individuals participating in the survey have expertise and skills suitable for the type of construction survey registered for the certificate of competence.
The application for a certificate of capacity for construction activities includes:
The application for the first certificate of capacity, adjustment of the certificate of capacity includes:
- a) Application for a certificate of capacity according to the form;
- b) Decision on the establishment of the organization in case of a decision on establishment;
- c) Decision on recognition of the specialized construction laboratory of the organization or a contract in principle on the association to perform experimental work serving construction survey with a recognized specialized construction laboratory (for organizations applying for a certificate of capacity for construction survey);
- d) Certificate of practice or declaration of the code of the practice certificate in case the practice certificate is granted according to the provisions of the Law on Construction 2014 for positions requiring a practice certificate; training diplomas of individuals participating in the work;
đ)Certificate of competence issued by a competent authority in case of request for adjustment of the certificate of competence;
- e) Diploma or certificate of professional training and development of technical workers (for organizations requesting to issue a certificate of competence in construction);
- g) Contract and minutes of acceptance of completion of typical works performed according to the declared content.
- h) Documents as prescribed in points b, c, d, dd, e, g of this clause must be certified copies or files containing color photos of the original or copies, with the original presented for comparison.
- Number of documents: 1 set
- Submission method: one of the following three methods
+) online;
+) by post;
+) submit directly to the competent authority issuing the certificate of competence;
- Time limit for completion of granting the Certificate of Construction Operation Capacity:
+) Within 20 days from the date of receiving a complete and valid dossier, the competent authority shall grant the certificate of capacity
+) In case the dossier is incomplete or invalid, the competent authority shall notify in writing once to the organization requesting the issuance of a certificate of competence within 05 days from the date of receiving the application dossier.
_____________________________________________________
For comprehensive and free CONSULTATION ON BUSINESS IN CONSTRUCTION SERVICES IN VIETNAM, please contact:
Phone: (+84) 961 366 238
Email:
- vphn@siglaw.com.vn
- vphcm@siglaw.com.vn
Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.
Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.
Central branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City
Facebook: https://www.facebook.com/hangluatSiglaw
