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Setting up a construction and design enterprise in Vietnam

As a consequence of the increasingly dramatic urbanization in many big cities in Vietnam, such as Ho Chi Minh City, Hanoi, Danang,.. loads of buildings, apartments built in an effort to satisfy citizens and organizations’ demand. It is not limited in the purposes of office or department store, other constructions used for manufacturing and doing business are also boosted. Thus, design-construction activities have been witnessed a overwhelming growth recently. As to foreign investors, nowadays, there is no limitation regarding commercial presence according to Vietnams’ Accession with WTO. Nonetheless, in order to legally provide design-construction services – are conditional business lines, both domestic and foreign investors have to meet all the regulated conditions.

Legal documents need to research:

  • Law on Investment 2014;
  • Law on Enterprise 2014;
  • Construction law 2014;
  • Decree No. 59/2015/ND-CP on construction project management;
  • Decree No. 42/2017/NĐ-CP on amendments to the Government’s Decree No. 59/2015/ND-CP dated on June 18, 2015 on construction project management (effective date: 06/01/2017)
  • Circular No. 17/2016/TT-BXD on instruction on capacity of organizations, individuals involved in construction activities.

As to design-construction lines, business organizations or individuals are required to have Construction practice certificates pursuant to other detailed regulations, if they want provide services in Vietnam.

Here is procedure:

Step 1: Investors enumerate project’s information on National Investment Information Portal. Within 15 days from the date enumerating online, investors submit dossier to Investment registration agency.

The investment application dossier consists of:

  • A written request for permission for execution of the investment project;
  • A copy of the ID card or passport (if the investors is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investors (if the investors is an organization).
  • An investment proposal that specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, requests for investment incentives, assessment of socio-economic effects of the project;
  • Copies of any of the following documents: financial statements of the last two years of the investors; commitment of the parent company to provide financial support; commitment of a financial institutions to provide financial support; guarantee for investors’ financial capacity; description of investors’ financial capacity;
  • Demand for land use; if the project does not use land allocated, leased out by the State, or is not permitted by the State to change land purposes, then a copy of the lease agreement or other documents certifying that the investors have the right to use the premises to execute the project shall be submitted;
  • Explanation for application of technologies to the project required;
  • The business cooperation contract if the project is executed under a business cooperation contract.

Step 2: After receiving the dossier, Investment registration agency shall provide investors with an account accessed to National Foreign Investment Information Portal so as to supervise the proceeding progress.

Step 3: Investment registration agency shall use National Foreign Investment Information Portal to receive, proceed, respond dossier’s result, update the proceeding progress and issue the project’s code.

The procedure of establishing a design-construction company is deemed much more simply with the below stages:

Step 1: Submitting dossier of establishing enterprise, following Department of Plan and Investment’s forms;

The dossier comprises:

  • Application form for enterprise registration;
  • Article of Association;
  • List of members or shareholders (if company is multi-member company limited of joint stock company);
  • Legitimate copies one of:
  • Individual: ID paper or valid passport;
  • Organization: The decision on establishment or certificate of enterprise registration or an equivalent document, ID paper of the authorized representative and the letter of attorney if the founder is an organization.
  • Decision on capital contribution if member is organization

Notice: With the aim of operating business conveniently, business organization should consider diversifying company’s business lines relating to design-construction services when registering business lines. The relative design-construction services written in Vietnam Standard Industrial Classification system:

NumberBusiness line nameVSIC
1.Construction of buildings4100
2.Construction of railways and roads4210
3.Construction of utility projects4220
4.Construction of other civil engineering projects– Construction of industrial facilities, except buildings, such as:

– Construction of subways;

– Other construction works, other than buildings, such as: Outdoor sports facilities.

This class also includes land subdivision with land improvement (e.g. adding of roads, utility infrastructure).

4290
5.Demolition4311
6.Site preparation4312
7.Electrical installation4321
8.Plumping, heating and air-conditioning installation4322
9.Other construction installation4329
10.Building completion and finishing4330
11.Other specialized construction activities4390
12.Retail sale of hardware, paint, glass and other construction installation equipment in specialized stores4752
13.Specialized design activities7410
14.Architectural activities and related technical consultancy7110

Step 2: Notifying establishment information (the content of Certificate of Business organization and information of business lines.)

After issued Certificate of Business organization, company has to publically announce in National Business Registration Portal. According to Article 26, Decree No. 50/2016/ND-CP (effective date: 07/15/2016) on penalties for administrative violations against regulations on planning and investment, a fine of VND 1,000,000 – VND 2,000,000 shall be imposed for failure to publish or publish on schedule enterprise registration information on National Enterprise Registration Portal. Remedial measure: Publish enterprise registration information on National Enterprise Registration Portal.

Step 3: Creating company seal and notifying company’s seal

Within 01 day, from Certificate of Business organization is granted to company. Viet An shall create new company’s seal and notify seal sample to Business Registration Department.

After managing all above stages of establishing enterprise, company commences submitting dossier to Ministry of Construction or Department of Construction in province where its headquarter is located in, requesting for Capacity  Certificate in order to legitimately provide services:

Conditions on work construction organizations:

  1. Having full work construction capabilities corresponding to types and grades of construction works.
  2. Site chief commanders must possess construction practice capabilities and relevant practice certificates.
  3. Having construction equipment meeting requirements on construction safety and quality.

Class I:

  1. There are at least 3 (three) people qualified to hold the positions of class I construction site commanders as mentioned in their certificate;
  2. The people in charge of various aspects of the project must obtain bachelor’s degrees or vocational college degrees that match their fields and tasks and at least 3 (three) years’ experience regarding bachelor’s degrees or at least 5 (five) years regarding vocational college degrees;
  3. There are at least 15 (fifteen) people in the quality control system and occupational safety management who have professional competence appropriate to the construction work types;
  4. There are at least 30 (thirty) technical workers having certificates appropriate to their certificate;
  5. It is capable of mobilizing sufficient machinery and equipment meeting construction execution requirements that match their fields and tasks;
  6. It acted as general contractor for at least 1 (one) Class I construction work or 2 (two) Class II Works that conform to their certificate.

Class II:

  1. There are at least 2 (three) people qualified to hold the positions of Class II construction site commanders that conform to their certificate;
  2. The people in charge of various aspects of the project must obtain college, vocational college or trade school degrees that match their fields and tasks and at least 3 (three) years’ experience;
  3. There are at least 10 (ten) people in the quality control system and occupational safety management who have professional competence appropriate to the construction work type;
  4. There are at least 20 (twenty) technical workers having certificates of professional training appropriate to their certificate;
  5. It acted as general contractor for at least 1 (one) Class II construction work or 2 (two) Class III Works as that conform to their certificate.

Class III:

  1. There is at least 1 (one) person qualified to hold the position of Class III construction site commander that conform to their certificate;
  2. The people in charge of various aspects of the project must have professional competence that match their fields and tasks
  3. There are at least 5 (five) people in the quality control system and occupational safety management who have professional competence appropriate to the construction work type;
  4. There are at least 5 (five) technical workers having certificates of professional training appropriate to their certificate.

Operation scope:

  1. Class I: The organization is entitled to execute all Works classifications that conform to their certificate;
  2. Class II: The organization is entitled to execute Works less than or equivalent to class II that conform to their certificate;
  3. Class III: The organization is entitled to execute Works less than or equivalent to class III that conform to their certificate.

Conditions on construction designing and design-verifying organizations:

  1. Having full capability conditions for work construction designing and verifying work construction designs.
  2. Individuals holding the title of design manager must have construction designing practice capabilities and practice certificates relevant to requirements of each type and grade of work.

Class I:

  1. There are at least 10 (ten) people obtaining Class I licenses for design practice; the persons in charge of various aspects of the project must obtain Class I practice licenses that match their fields and tasks;
  2. There are at least 15 (fifteen) people in the quality control system of the construction design organization who have professional competence appropriate to the field applying for the certificate;
  3. It carried out at least 1 (one) Class I construction work or 2 (two) Class II Works that conform to their certificate.

Class II:

  1. There are at least 10 (ten) people obtaining Class II licenses for design practice; the persons in charge of various aspects of the project must obtain Class II practice licenses that match their fields and tasks;
  2. There are at least 10 (ten) people in the quality control system of the construction design organization who have professional competence appropriate to the filed applying for the certificate;
  3. It carried out at least 1 (one) Class II construction work or 2 (two) Class III Works that conform to their certificate.

Class III:

  1. There are at least 5 (five) people obtaining Class III licenses for design practice; the design leaders must obtain Class III practice licenses that match their fields and tasks;
  2. There are at least 5 (five) people in the quality control system of the construction design organization who have professional competence appropriate to the filed applying for the certificate.

Operation scope:

  1. Class I: The organization is entitled to design and assess construction designs for all types of Works that conform to their certificate;
  2. Class II: The organization is entitled to design and assess construction designs for Works less than or equivalent to class II that conform to their certificate;

Class III: The organization is entitled to design and assess construction designs for Works less than or equivalent to class III that conform to their certificate;

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