6 Notes About Construction Operating License Of Foreign Contractors In Vietnam.

Law on Bidding, Law on Construction, Law on Investment, and relevant legal documents allow foreign contractors to bid and implement construction projects in Vietnam. However, unlike local contractors, foreign contractors must obtain construction operating licenses according to each contract after winning a bid. So, what are the notable points of construction operating licenses? BLawyers Vietnam will present underneath.

1. Definition of the foreign contractor

By law, a foreign contractor means a foreign organization or individual that is legally capacitated (the individual must also have civil legal capacity) to conclude and execute construction contracts. Foreign contractors may be general contractors, contractors, joint venture contractors, or sub-contractors.

2. 6 notes about construction operating license of foreign contractors

1. Requirements for foreign contractors to obtain construction operating licenses

Foreign contractors can obtain construction operating licenses if meeting the following conditions:

1. Having been awarded the contract by the investor/ main contractor (or subcontractor);

2. Having to set up a joint venture with a Vietnamese contractor or employ local sub-contractors, unless local contractors are ineligible to execute any tasks of the contract package. In addition, having to clarify the contents, quantity, and value of tasks performed by local contractors in the joint venture or by local sub-contractors; and

3. Having to commit to complying with regulations of Vietnamese law.

2. Dossier for obtaining construction operating licenses for foreign contractors

Such dossier includes:

1. An application form for a construction operating license;

2. A certified true copy of the report on bid results or the decision on lawful contract award;

3. A certified true copy or e-copy of the establishment license or the Certificate of Business registration and practice license (if any) of the foreign contractor issued by its nationality country; and

4. Other dossiers provided by laws.

3. Validity of the construction operating licenses

A construction operating license shall be valid until the occurrence of the following cases:

1. The bidding contract is completed and finalized; or

2. The contract is invalid due to the suspension, dissolution, bankruptcy of the foreign contractor, or other reasons as prescribed in Vietnamese laws and the legislation of the country in which the foreign contractors hold nationality.

4. Revocation of construction operating licenses

A foreign contractor shall have its construction operating license revoked in one of the following cases:

1. The application for issuance of a construction operating license contains counterfeit documents;

2. Contents of the construction operating license are corrected, erased, or falsified;

3. The construction operating license is misstated as the fault of the issuing authority; or

4. The construction operating license is issued ultra vires.

5. Rights and obligations of a foreign contractor relating to the construction operating license

The foreign contractor has the following rights:

1. Requesting competent authorities to provide guidelines for preparing the application for issuance of the construction operating license;

2. Having its lawful business interests in Vietnam protected according to the granted construction operating license; and

3. Other rights provided by law.

The foreign contractor has the following obligations:

1. Establishing an executive office in the area where the project is executed after obtaining the construction operating license;

2. Registering or canceling specimen of the seal or returning the seal after a contract is terminated as prescribed by law;

3. Registering and paying taxes as prescribed by Vietnam’s laws; and

4. Other obligations provided by laws.

6. Penalties against foreign contractors without construction operating licenses

According to the law, foreign contractors who are organizations carrying out construction jobs in Vietnam without obtaining a construction operating license shall be imposed a fine of up to VND40,000,000. The fine incurred by a foreign individual contractor is half of that incurred by an organizational contractor.

In addition, the foreign contractor shall face an additional penalty which is suspending construction activities in Vietnam for up to 24 months.

Writer: Huy Nguyen 

For further information, please contact:

 Minh Ngo Nhat, Managing Partner, BLawyers

minh.ngo@blawyersvn.com