Licensing Foreign Contractors – What You Need to Know

The new regulations of the Bidding Law, Construction Law, Investment Law, and related legal documents have created favorable conditions for foreign contractors to participate in bidding and execute bidding projects in Vietnam. Foreign contractors can be general contractors, main contractors, joint venture contractors, or subcontractors. However, unlike domestic contractors, foreign contractors must obtain a Construction Operation License for each contract after winning the bid. The procedure for issuing a Construction Operation License to foreign contractors is as follows:

1. Legal Basis

• Construction Law of Vietnam 2014;
• Amended Construction Law of Vietnam 2020;
• Decree 15/2021/ND-CP guiding a number of contents on construction investment project management;
• Circular 02/2019/TT-BXD detailing periodic reporting regulations; amending, supplementing, and replacing a number of articles of circulars related to periodic reporting under the state management scope of the Ministry of Construction.

2. Conditions for foreign contractors to be granted a Construction Operation License

• Foreign contractors are granted a construction operation license when they have a decision to win the bid or are selected by the investor/main contractor (subcontractor).
• Foreign contractors must enter into a joint venture with Vietnamese contractors or use Vietnamese subcontractors, except where domestic contractors are not capable of participating in any work of the bidding package. When entering into a joint venture or using Vietnamese contractors, the content, volume, and value of the work performed by Vietnamese contractors in the joint venture; Vietnamese subcontractors must be clearly defined.
• Foreign contractors must commit to fully comply with the provisions of Vietnamese law related to contracting activities in Vietnam.

3. Dossier for applying for a Construction Operation License for foreign contractors

• Application for a construction operation license according to the form in Appendix III of Decree 15/2021/ND-CP.
• Certified copy or electronic copy of the bidding results or legal bid selection decision;
• Certified copy or electronic copy of the establishment license or Business Registration Certificate for organizations and practice certificates (if any) issued by the country of which the foreign contractor is a citizen;
• Report on operational experience related to contracted works and certified copy or electronic copy of consolidated financial audit reports for the most recent 03 years (for cases not implemented according to bidding law regulations);
• Certified copy or electronic copy of the joint venture contract with a Vietnamese contractor or official contract or principal contract with a Vietnamese subcontractor to perform the contracted work (already included in the bidding dossier or bid proposal dossier);
• Legal power of attorney for a person who is not the legal representative of the contractor;
• Certified copy or electronic copy of the project approval decision or investment decision or investment certificate of the project/construction.

Notes when preparing the application for a foreign contractor license in Vietnam

• The application must be prepared in Vietnamese;
• The establishment license or foreign business registration certificate must be legalized by consular authorities, except where an international treaty to which Vietnam and the relevant countries are members provides for exemption from consular legalization.
• Other documents and papers, if in a foreign language, must be translated into Vietnamese and the translation must be notarized and certified according to Vietnamese law.

4. Agencies receiving applications for Construction Operation Licenses for foreign contractors

• Specialized construction agencies under the Ministry of Construction (Construction Activity Department): issue construction operation licenses for foreign contractors executing contracts for nationally important projects, Group A projects, and construction investment projects in two or more provinces;
• Provincial Departments of Construction issue construction operation licenses for foreign contractors executing contracts for Group B and Group C projects invested and constructed within the administrative boundaries of the province.

5. Procedures for applying for a Construction Operation License for foreign contractors

Foreign contractors shall submit 01 set of documents to the competent authority for issuing the Construction Operation License.

Form of submission: Contractors can choose to submit documents via one of the following forms:

• Directly at the state agency;
• Via postal service;
• The licensing agency’s electronic information portal (if any);

The competent licensing authority shall review the application to issue the Construction Operation License to the foreign contractor within 20 days from the date of receiving a complete application as prescribed. In case of refusal, the competent authority for issuing the Construction Operation License must respond in writing to the contractor, stating the reason.

Notes on granting construction operation licenses to foreign contractors

• Foreign contractors must enter into a joint venture with Vietnamese contractors or use Vietnamese subcontractors, except where domestic contractors are not capable of participating in any work of the bidding package. When entering into a joint venture or using Vietnamese contractors, the content, volume, and value of the work performed by Vietnamese contractors in the joint venture; Vietnamese subcontractors must be clearly defined;
• After being granted a Construction Operation License, foreign contractors must register the information of their executive office and the representative for contract execution;
• Foreign contractors must register the use of the executive office’s seal with the police agency according to the authority of the Construction Operation License issuing agency. Foreign contractors shall only use this seal for work serving contract execution in Vietnam as stipulated in the contractor license. Upon termination of the contract, the foreign contractor must return the seal to the issuing agency;
• Foreign contractors must register and pay taxes according to Vietnamese law, implement accounting regimes, open accounts, and make payments according to the guidance of the Ministry of Finance and the State Bank of Vietnam to serve business operations under the contract;
• Foreign contractors must recruit labor, employ Vietnamese labor and foreign labor according to Vietnamese labor law; they are only allowed to register to bring into Vietnam economic management experts, technical management experts, and highly skilled workers that Vietnam is unable to meet;
• In addition, foreign contractors need to comply with other obligations as stipulated in Article 107 of Decree 15/2021/ND-CP.
• Reporting regulations: No later than December 16 every year, foreign contractors are responsible for reporting to the construction operation license issuing agency and the Department of Construction where the project is located on the status of contract execution.