Foreign contractors participating in construction investment projects in Vietnam must meet capacity requirements, commit to complying with local regulations, and be licensed by the competent authority. In cases where they operate without foreign contractor license, both the contractor and the investor will face administrative penalties according to the law, depending on the severity of the violation. This not only affects their reputation but also has negative implications for the company’s ability to operate.
How to identify a foreign contractor?
Under current Vietnamese law, a foreign contractor participating in a construction investment project is defined as a foreign organization or individual with legal civil capacity; in the case of individuals, they must also possess civil conduct capacity to enter into and perform contracts. The civil legal capacity and civil conduct capacity of the foreign contractor are determined in accordance with the law of the contractor’s nationality.
A foreign contractor may be a general contractor, main contractor, joint contractor, or subcontractor.
However, unlike domestic contractors, foreign contractors must be issued foreign contractor license for each contract after winning the bid.
Penalties for foreign contractors without foreign contractor license
Foreign contractors participating in construction investment projects without a construction activity license may be fined between VND50,000,000 and VND70,000,000.
For individuals, the fine ranges from VND25,000,000 VND to VND35,000,000.
Additionally, supplementary penalties may include a suspension of construction activities in Vietnam for 12 to 24 months and a remedial measure requiring them to complete the licensing procedure for a construction activity license.
Project owner using foreign contractors without a license will also be penalized
Investors who allow foreign contractors to engage in construction activities without the required license will face fines ranging from VND100,000,000 to VND120,000,000. Additionally, the foreign contractor must complete the procedure for obtaining a construction activity license as stipulated by regulations.
>> PROCEDURES FOR ISSUANCE OF FOREIGN CONTRACTOR LICENSE https://linconlaw.vn/procedures-for-issuance-of-foreign-contractor-license/
>> OPERATING WITHOUT ELIGIBILITY CERTIFICATE FOR CONSTRUCTION ACTIVITIES, HOW IS THE PENALTY? https://linconlaw.vn/operating-without-eligibility-certificate-for-construction-activities-how-is-the-penalty/
Legal basis:
- Construction Law 2014;
- Amended Construction Law 2020;
- Decree 15/2021/ND-CP guiding a number of contents on construction investment project management;
- Decree 35/2023/ND-CP amending Decrees under the state management of the Ministry of Construction;
- Circular 02/2019/TT-BXD providing detailed guidance on the periodic reporting regime; amending, supplementing and replacing a number of articles of the Circular related to the periodic reporting regime under the state management of the Ministry of Construction;
- Decree 16/2022/ND-CP on handling administrative violations in construction.
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