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FOREIGN INVESTORS PROVIDING CONSTRUCTION SERVICES
Foreign investors are becoming an important force in investing and trading construction services in many countries in general and Vietnam in particular. Attracting investment from foreign investors brings many economic benefits to the country, however, also poses many legal and management challenges. Therefore, to carry out this activity, foreign investors must meet several 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 order and procedures to operate this service business.
Legal basis:
- 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 enterprises;
- Law No. 50/2014/QH13, Law on Construction;
- Decree 31/2021/ND-CP detailing and guiding the implementation of some articles of the Investment Law;
- Decree 01/2021/ND-CP on business registration;
- Decree 100/2018/ND-CP amending, supplementing, and abolishing some regulations on business investment conditions in the fields of state management of the Ministry of Construction;
- Decree 59/2015/ND-CP on the management of construction investment projects;
Conditions for foreign investors to provide construction services
According to WTO, FTAs, and AFAS: No limitation to:
- High-rise construction (CPC 512)
- Construction of civil engineering works (CPC 513)
- Erection and installation work (CPC 514, 516)
- Completion of high-rise buildings (CPC 517)
Other conditions: The branch head must be a permanent resident in Vietnam
- WTO: Foreign enterprises must be legal entities of a WTO Member
- EVFTA: Foreign enterprises must be legal entities of another Party.
1.2. According to Vietnamese Law:
According to Vietnamese regulations, the provision of construction services in industries and trades with conditional market access and conditional business lines, so if you want to carry out this activity, you must satisfy the following conditions:
- Construction permit procedures must be carried out under the provisions of Vietnamese law.
- Must have a certificate of competence of the construction organization
- Must have the necessary financial capacity, experience and professional qualifications to carry out construction projects of appropriate types and grades.
- Must comply with regulations on occupational safety, environmental protection and other provisions of Vietnamese law on business activities of construction services.
Forms of provision of construction services for foreign investors
Foreign investors can choose one of the following two forms of investment to provide construction services in Vietnam:
- Invest in the establishment of a new economic organization
- Investment in capital contribution, share purchase, purchase of contributed capital;
Procedures for the establishment of a construction service company for foreign investors
Step 1: Apply for an Investment Registration Certificate (IRC)
Dossier of application for an Investment Registration Certificate:
- A written request for implementation of an investment project on the provision of construction services, including a commitment to bear all costs and risks if the project is not approved;
- Documents on the legal status of foreign investors: ID card, passport, identity card for individual investors; a copy of the Certificate of Incorporation or other equivalent document confirming the legal status of the investor is an organization certified by the consular
- Documents proving the foreign investor’s financial capacity include at least one of the following documents: financial statements of the last 02 years of the foreign investor; commitment to financial support of the parent company; commitment to financial support of the financial institution; guarantee on the financial capacity of the investor; other documents proving the financial capacity of the foreign investor;
- A proposal for an investment project for the provision of construction services includes the following principal contents: investor or form of investor selection, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, implementation schedule, information on the current status of land use at the project site and proposal of land use demand (if any), labor demand, proposal for investment incentives, impacts, socio-economic efficiency of the project, preliminary environmental impact assessment (if any) under the law on environmental protection.
Where the law on construction provides for the preparation of a pre-feasibility study report, the investor may submit the pre-feasibility study report instead of the investment project proposal;
- In case an investment project providing construction services does not request the State to allocate land, lease land, permit change of land use purposes, submit copies of land use right papers or other documents determining the right to use the location for the implementation of the investment project;
- Contents of explanation of technologies used in investment projects on the provision of construction services for projects subject to appraisal and collection of opinions on technologies under the law on technology transfer;
- Other documents related to the investment project, requirements on conditions, and capacity of the investor as prescribed by 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 receiving a valid dossier.
- Competence to grant: Department of Planning and Investment of the province where the company intends to establish its headquarters
Step 2: Apply for an ERP
After being granted the Investment Registration Certificate, the investor shall carry out the procedures for applying for the Certificate of Registration of a construction service provider by one of the following three methods:
- Business registration directly at the Business Registration Office;
- Business registration via postal service;
- Business registration via an electronic information network.
The dossier includes the following documents:
- A written request for the establishment of a construction service enterprise;
- The company’s rules;
- 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 papers of members, shareholders, and a representative (For an individual investor: Copies of citizen identity cards, identity cards, passports or other lawful personal identification of founding members or shareholders; For the investor is economic organization: A copy of the company’s establishment decision, business registration certificate or other equivalent document of the organization; copy of valid identity card or passport of the legal representative of the organization);
- Investment registration certificate
- Other required documents (if any);
- Processing time: within 03 working days from the date of receiving the dossier, the business registration agency shall consider the validity of the enterprise registration dossier and grant business registration; in case the application is invalid, the business registration agency must notify in writing the contents to be amended, additions for business founders. In case of refusal to register an enterprise, it must notify in writing the enterprise founder by clearly stating the reason.
- Authority granted:
+) 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 and Planning Department under the district-level People’s Committee
Step 3: Apply for a Certificate of Competence in Construction Activities
- Competence to grant certificates of competence in construction activities:
- Specialized construction agencies affiliated to the Ministry of Construction shall issue Grade I certificates of competence;
- The Department of Construction shall issue certificates of competence of grades II and III.
To be granted a certificate of capacity for construction activities, a construction service provider needs to satisfy the general conditions and specific conditions for each class of capacity.
- General conditions:
- Having a laboratory or having a written agreement or principle contract on the association of performing laboratory work with a laboratory serving construction survey recognized according to regulations;
- Having machinery and equipment or capable of mobilizing machinery and equipment for survey work of the field of application for competence certificate.
- Individual conditions:
- a) Grade I:
– The individual who assumes the title of surveyor has a Grade I construction surveyor practice certificate suitable to the field of application for the certificate of competence;
– Individuals participating in the survey have professional skills suitable to the type of construction survey registered for competence certificates;
– At least 01 project from group A or 02 projects from group B or higher; or 01 project from grade I or 02 works from grade II or higher of the same type of survey.
- b) Grade II:
– The individual who assumes the title of surveyor has a construction surveying practice certificate of grade II or higher suitable to the field of application for the certificate of competence;
– Individuals participating in the survey have professional skills suitable to the type of construction survey registered for competence certificates;
– At least 01 project from group B; or 02 projects from group C; or 03 projects requiring economic-technical reports or higher or 01 project from grade II or 02 works from grade III or higher of the same type of survey.
- c) Class III:
– Individuals who assume the title of surveyor have a construction surveying practice certificate of grade III or higher suitable to the field of application for the certificate of competence;
– Individuals participating in the survey have professional skills suitable to the type of survey, construction, and registration for certificates of competence.
A dossier of application for a certificate of competence in construction activities includes:
- A dossier of the first issuance of a certificate of competence or adjustment of a class of competency certificate includes:
a/ An application form for a certificate of competence according to the form;
- b) Decide on the establishment of the organization in case of an establishment decision;
- c) The organization’s decision on recognition of a specialized construction laboratory or a principle contract on the association of performing laboratory work for construction survey with a recognized specialized construction laboratory (for an organization applying for a certificate of construction survey competence);
- d) Practicing certificates or declaration of practice certificate codes in case practicing certificates are issued according to the provisions of the 2014 Law on Construction of titles requiring practicing certificates; trained diplomas of individuals engaged in the performance of work;
đ) The certificate of competence has been issued by a competent agency in case of a request for adjustment of the class of the competency certificate;
- e) Diplomas or certificates of appropriate professional training and training of technical workers (for organizations applying for certificates of construction capacity);
- f) The contract and minutes of acceptance and completion of typical works performed according to the declared contents.
- g) The documents prescribed at Points b, c, d, dd, e and g of this Clause must be certified copies or files containing color photographs from the originals or copies, presented to the originals for comparison.
- Number of records: 1 set
- Submission method: one of the following three methods
+) online;
+) by post;
+) Submit directly to the competent authority issuing the certificate of competence;
- The time limitation for completion of the issuance of the Certificate of competence in construction activities:
+) Within the term 20 days from the date of receiving a complete and valid dossier, the competent authority shall issue a certificate of competence;
+) In case the dossier is incomplete or invalid, the competent authority issuing the competency certificate must notify once in writing to the organization applying for the competency certificate within 05 days from the date of receipt of the application dossier.
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