License for foreign contractors in Vietnam

The new regulations of the Law on Bidding, the Law on Construction, the Law on Investment, and other relevant legislation have provided opportunities for foreign contractors to participate in bidding and carry out contracting projects in Vietnam. Foreign contractors can be the general contractor, main contractor, joint venture contractor, or subcontractor. However, unlike domestic contractors, foreign contractors must be granted a Construction Operation License for each contract after winning the bid. The procedure for granting the Construction Operation License in Vietnam to foreign contractors is as follows:

Legal basis for license for foreign contractors in Vietnam

• Construction Law 2014, as amended in 2020
• Decree 15/2021/ND-CP guiding certain contents on construction investment project management
• Decree 35/2023/ND-CP amending decrees related to the state management of the Ministry of Construction
• Circular 02/2019/TT-BXD providing detailed guidance on the policies for periodic reporting; amending, supplementing, and replacing certain provisions of the Circular related to the periodic reporting under the state management scope of the Ministry of Construction.

According to regulations, foreign contractors conducting construction activities must obtain a Construction Operation License. As per the Construction Law, “construction activities” cover: construction planning, formulation of a investment project to construct a work, construction surveys, designing construction works, construction, construction supervision, project management, contractor selection, acceptance, handover of works for exploitation and use, warranty and maintenance of construction works, and other activities related to construction.

Conditions for foreign contractors to be granted a Construction Operation License

• Foreign contractors are granted a Construction Operation License when there is a bid-winning decision, or they are selected as a contractor by the investor/main contractor (or subcontractor).
• Foreign contractors must form a joint venture with a Vietnamese contractor or use a Vietnamese subcontractor, except in cases where the domestic contractor cannot participate in any part of the bidding package. When forming a joint venture or using a Vietnamese subcontractor, the scope, volume, and value of the work to be performed by the Vietnamese contractor in the joint venture or the Vietnamese subcontractor must be clearly defined.
• Foreign contractors must commit to fully complying with the relevant legal regulations of Vietnam regarding the contracting activities in Vietnam.

A dossier is required for foreign contractors to apply for a Construction Operation License

• Application form for the Construction Operation License as per the template in Appendix III of Decree 15/2021/ND-CP;
• Certified copy or electronic copy of the bidding result or the official decision on contractor selection;
• Certified copy or electronic copy of the establishment license or business registration certificate for organizations, and professional certificates (if any) issued by the country of the foreign contractor’s nationality;
• Report on the contractor’s experience in relevant subcontracting activities and a certified copy or electronic copy of the financial audit report for the last 3 years (in case the contractor has not complied with bidding law regulations);
• Certified copy or electronic copy of the joint venture agreement with a Vietnamese contractor or the official contract or memorandum of understanding with a Vietnamese subcontractor for the subcontracting work (included in the bid or offer documents);
• Legal authorization letter for the person who is not the legal representative of the contractor;
• Certified copy or electronic copy of the project approval decision, investment decision, or investment certificate for the project/work.

Attention when preparing a dossier for a foreign contractor’s license application in Vietnam

• The application form must be written in Vietnamese;
• The Certificate of Incorporation or Certificate of Business Registration must be consular legalized, unless there is an international treaty between Vietnam and the relevant countries that provides for exemption from consular legalization;
• Any documents or materials in a foreign language must be translated into Vietnamese, and the translation must be notarized or authenticated according to Vietnamese law.
• As a general rule, foreign contractors must form a joint venture with a Vietnamese contractor or use a Vietnamese subcontractor, unless the domestic contractor cannot participate in any part of the bidding package. When forming a joint venture or using a Vietnamese subcontractor, the scope, volume, and value of the work to be performed by the Vietnamese contractor in the joint venture or the Vietnamese subcontractor must be clearly defined. If the foreign contractor does not form a joint venture or use a Vietnamese subcontractor, they must provide a clear explanation.

Authorities are receiving applications for Construction Operation Licenses for foreign contractors

• The Department of Construction is responsible for granting Construction Operation Licenses to foreign contractors carrying out construction investments within the administrative boundaries of the province;
• If the construction investment project spans across two or more provinces, the competent authority responsible for granting the license is the Department of Construction in the locality where the foreign contractor plans to establish its Executive Office.

Procedure for applying for a Construction Operation License for foreign contractors

Foreign contractors must submit one complete dossier to the competent authority responsible for granting the Construction Operation License;

Submission form: The contractor can choose to submit the dossier through one of the following methods:

• Directly at the government agency;
• Via postal services;
• Through the portal of the licensing authority (if available).

The competent licensing authority will review the dossier and issue the Construction Operation License to the foreign contractor within 20 days from the date of receiving a complete dossier as prescribed in laws. If the license is not granted, the licensing authority must respond in writing to the contractor, providing a clear explanation.

Attention for foreign contractors after granting a Construction Operation License

• After being granted a Construction Operation License, the foreign contractor must register the information of its Executive Office and the representative for the performance of the contract;
• Foreign contractors must register to use the seal of the project management office at the police station under the authority of the construction licensing agency. Foreign contractors only use this seal in the service of contract performance in Vietnam as prescribed in the bidding license. Upon completion of the contract, the foreign contractor must return the seal to the issuing authority;
• The foreign contractor must register and pay taxes under Vietnamese law, comply with the accounting regime, open accounts, and make payments in accordance with the guidance of the Ministry of Finance and the State Bank of Vietnam to facilitate business activities under the contract;
• The foreign contractor must carry out recruitment, employ Vietnamese and foreign workers according to Vietnamese Labor Law. They are only allowed to register the entry of economic management experts, technical management experts, and highly skilled workers who are not available in Vietnam;
• In addition, the foreign contractor must comply with other obligations outlined in Article 107 of Decree 15/2021/ND-CP.
• Regulations on report: No later than December 16th of each year, the foreign contractor is responsible for reporting to the construction licensing authority and the Department of Construction where the project is located regarding the contract performance.

Some Questions from Foreign Contractors

Who are foreign contractors?

Foreign contractors are organizations or individuals from abroad who have capacity for civil rights under civil law; for individuals, they must also have capacity for civil conduct to conclude and perform contracts. The capacity for civil rights and capacity for civil conduct of foreign contractors are determined under the laws of the country of their nationality.

Which foreign contractors are involved in projects in Vietnam?

Foreign contractors can be general contractors, main contractors, joint venture contractors, or subcontractors.

What construction activities are foreign contractors allowed to perform under the Construction Operation License in Vietnam?

Foreign contractors involved in construction activities in Vietnam can engage in the following: preparing construction planning, preparing investment projects for construction, conducting construction surveys, designing construction works, executing construction, supervising construction, managing construction investment projects, selecting contractors for construction activities, accepting and handing over works for use; warranty and maintenance of construction works; providing materials, equipment, and technology with related technical services for construction works, and other activities related to construction works.

Services for obtaining a Construction Operation License for foreign contractors

• Consulting conditions to be granted a Construction Operation License in Vietnam;
• Consulting procedures for applying for a Construction Operation License in Vietnam;
• Advising clients to prepare dossiers under Vietnamese laws related to granting  a Construction Operation License for foreign contractors in Vietnam;
• Translating, notarizing translations, and consular legalization of documents in the service of granting a Construction Operation License for foreign contractors in Vietnam;
• Completing documents for clients to be granted a Construction Operation License for foreign contractors in Vietnam;
• Carrying out procedures for applying for a Construction Operation License for foreign contractors in Vietnam at a competent state agency;
• Registering and applying for the seal of the Project Management Office of the foreign contractor;
• Consulting and drafting joint venture contracts between foreign contractors and Vietnamese contractors.

For foreign contractors seeking opportunities in Vietnam or requiring assistance with obtaining a Construction Operation License in Vietnam, please contact Viet An Law Firm for consultation and legal support to ensure quick, safe, and legal operations.