Decision No. 87/2004/QĐ-TTg On the issuance of the Regulation on the Management of Activities of Foreign Contractors in the Construction Sector in Vietnam

Pursuant to …;

Regarding the issuance of the Management Regulation for the Activities of Foreign Contractors

in the Construction Field in Vietnam

_______________

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Construction Law dated November 26, 2003;

Pursuant to Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Decree No. 66/2003/NĐ-CP dated June 12, 2003 of the Government on amending and supplementing certain articles of the Bidding Regulation issued together with Decree No. 88/1999/NĐ-CP dated September 1, 1999 and Decree No. 14/2000/NĐ-CP dated May 5, 2000 of the Government;

At the proposal of the Minister of Construction,

DECISION:

Article 1. The Management Regulation for the Activities of Foreign Contractors in the Construction Field in Vietnam is hereby promulgated together with this Decision.

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette. All provisions contrary to the Regulation promulgated together with this Decision are abolished.

Article 3. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of People's Committees of provinces and centrally governed cities, organizations and individuals concerned are responsible for implementing this Decision./.

REGULATIONS

Management of Activities of Foreign Contractors

in the Construction Field in Vietnam

(Issued together with Decision No. 87/2004/QĐ-TTg dated May 19, 2004

of the Prime Minister)

PART I

GENERAL PROVISIONS

Article 1. Scope and Applicability

This Regulation applies to the activities of foreign contractors in Vietnam in the fields of investment consulting and construction, provision of materials and equipment technology along with related technical services to construction projects, and construction works.

In case international treaties to which the Socialist Republic of Vietnam is a party provide different provisions from those stipulated in this Regulation, such treaties shall be applied.

Article 2. Interpretation of Terms

The terms used in this Regulation are understood as follows:

1. "Foreign Contractor" means an organization or individual from abroad having capacity for civil legal acts; for individuals, they must also have capacity for civil conduct to conclude and perform contracts. The capacity for civil legal acts and capacity for civil conduct of foreign contractors shall be determined according to the laws of the country where the contractor has nationality.

A foreign contractor may be a main contractor, general contractor, joint venture contractor, or subcontractor.

2. "Main Contractor" means a contractor having a contractual relationship directly with the project owner.

3. "General Contractor" means a contractor who enters into a direct contract with the construction project owner to undertake the entire work of a type or all works of an investment construction project. General contractors include mainly the following forms: design general contractor; construction general contractor; design and construction general contractor; design, supply of equipment technology and construction general contractor; project investment planning, design, supply of equipment technology and construction general contractor.

4. "Joint Venture Contractor" means an organization (not a legal entity) consisting of foreign contractors or foreign contractors with Vietnamese contractors based on a joint venture contract to bid together and implement a single contract award in Vietnam. The joint venture contract must clearly define the common and specific responsibilities of the contractors participating in the joint venture for the work undertaken by the joint venture, while identifying the leading contractor of the joint venture.

5. "Subcontractor" means a contractor having a contractual relationship with the main contractor or general contractor to carry out part of the work of the main contractor or general contractor.

6. "Project Management Office" means the office of a foreign contractor registered to operate in the locality where the project is located to perform post-bid contract management tasks after obtaining a bidding permit. The Project Management Office only exists during the implementation of the contract and is dissolved upon contract termination.

7. "Authorized Person" means the person authorized by a foreign contractor to transact business in Vietnam on behalf of the foreign contractor. Such authorization must comply with Vietnamese law.

8. "Investment Consulting and Construction" means professional activities in investment and construction including consultancy for investment construction project planning, construction survey, architectural design, technical design, project investment construction management, construction supervision, and other technical and economic-technical services for investment construction projects.

9. "Construction Works" means the execution of construction work and installation of equipment and production lines within the project to put the project into operation, exploitation, and use according to the design.

10. "Bidding Permit" means the permit issued by the competent state agency of Vietnam to a foreign contractor for each contract after winning the bid or being selected for the bid in accordance with Vietnamese law.

Article 3. Principles for Managing the Activities of Foreign Contractors

1. Foreign contractors may only operate in Vietnam after being granted a bidding license by the competent state agency of Vietnam.

2. The activities of foreign contractors in Vietnam must comply with the provisions of Vietnamese law and relevant international treaties to which Vietnam is a party.

Chapter II

REGULATIONS FOR FOREIGN CONTRACTORS

Article 4. Conditions for Granting a Bidding License

To be granted a bidding license, foreign contractors must meet the following conditions and requirements:

1. In cases where the tender package falls under the mandatory application scope as prescribed by Vietnamese law on public procurement:

a) They have won the bid or been selected for the bid.

b) They have entered into a contract for the acceptance of the bid.

2. In cases where the tender package falls under the non-mandatory application scope as prescribed by Vietnamese law on public procurement:

a) They have won the bid or been selected for the bid.

b) They have entered into a contract for the acceptance of the bid.

c) They must possess the necessary qualifications suitable for the work they undertake, as stipulated by Vietnamese law.

3. In all cases where they are awarded a contract (whether through winning a bid via public procurement or being selected for the bid), foreign contractors must form a consortium with a Vietnamese contractor or must use a Vietnamese subcontractor (except in cases where permission is granted by the Prime Minister of Vietnam or as provided by Vietnamese law).

4. They must commit to fully comply with the relevant provisions of Vietnamese law concerning the activity of accepting bids in Vietnam.

Article 5. Documents for Applying for a Bidding License

1. To be considered for a bidding license in Vietnam, foreign contractors must submit registration documents to the competent authority according to the classification at Articles 10 and 16 of this Regulation.

Documents for applying for a bidding license include:

a) An application for a bidding license (according to the model guided by the Ministry of Construction).

b) A copy of the bidding result document or the decision to select the bidder or the lawful subcontracting contract.

c) A copy of the business establishment permit and company charter (or business registration certificate for organizations, consulting activity permit for individuals) and professional certificates issued by the country where the foreign contractor holds citizenship.

d) A report on related experience in performing the work they undertake and a financial audit report for the last three years (for cases specified in Clause 2 of Article 4 of this Regulation).

e) A joint venture contract with a Vietnamese contractor or a commitment to use a Vietnamese subcontractor to perform the contracted work (already included in the bidding dossier or tender offer dossier).

g) A legal power of attorney for persons who are not the legal representatives of the contractor.

2. The application for a bidding license must be in Vietnamese. Foreign documents and materials must be legalized by consular authentication (unless otherwise provided by Vietnamese law or international treaties to which Vietnam is a party). Foreign-language documents and materials must be translated into Vietnamese and the translation must be notarized and certified in accordance with Vietnamese law.

Article 6. Time Limit for Issuing a Bidding License and Licensing Fee

1. The competent state agency as prescribed in Articles 10 and 16 of this Regulation shall examine the application within twenty working days from the date of receipt of complete and valid documents as stipulated in Article 5 of this Regulation. If the license is not granted, the issuing authority must provide a written response to the contractor and specify the reasons.

2. When receiving a bidding license, foreign contractors must pay the licensing fee as prescribed by the Ministry of Finance.

3. The bidding license will expire in the following cases:

a) The contract has been completed and settled.

b) The contract is no longer effective due to the foreign contractor being suspended, dissolved, bankrupted, or for other reasons as prescribed by Vietnamese law and the law of the country where the contractor holds citizenship.

Article 7. Rights and Obligations of Foreign Contractors

1. Foreign contractors have the following rights:

a) The right to request relevant authorities to guide the preparation of tender application documents and other issues related to the contractor's activities in accordance with this Regulation.

b) The right to report and lodge complaints against violations committed by organizations and individuals performing tasks under this Regulation.

c) Protection of legitimate business interests in Vietnam according to the tender permit issued.

2. Foreign contractors have the following obligations:

a) Registering their address, means of communication, transaction accounts, and places where such accounts are opened for the project management office and the representative executing the contract at the relevant provincial People's Committee authority. At the same time, they must notify this information to the Ministry of Construction, Ministry of Public Security, Ministry of Finance, Ministry of Trade, State Bank of Vietnam, and the provincial People's Committee where the construction project is located.

b) Registering the use of the project management office seal with the provincial police force where the construction project is located. Foreign contractors may only use this seal for work serving the execution of contracts in Vietnam as stipulated in the tender permit.

Upon completion of the contract, foreign contractors must return the seal to the issuing authority.

c) Registering and paying taxes in accordance with Vietnamese laws, implementing accounting systems, opening accounts, and making payments according to the guidelines of the Ministry of Finance and the State Bank of Vietnam to serve business operations under the contract.

d) Implementing labor recruitment and usage of Vietnamese and foreign workers in accordance with Vietnamese labor laws.

Only registering to bring into Vietnam economic managers, technical experts, and highly skilled personnel that Vietnam cannot adequately provide.

Foreign nationals working for foreign contractors in Vietnam must comply with Vietnamese laws on entry-exit, temporary or permanent residence registration, and obtaining work permits as stipulated by Vietnamese labor laws.

e) Processing export and import procedures for materials, machinery, and equipment related to the tendered contract in Vietnam in accordance with Vietnamese laws and guidance from the Ministry of Trade, including:

- Temporary import re-export registration for construction materials, machinery, and equipment;

- Import material list registration for raw materials, fuels, materials, and complete and integrated equipment for projects under the tendered contract.

g) Executing joint venture contracts signed with Vietnamese contractors or fulfilling commitments to use Vietnamese subcontractors determined during bidding and tendering as stipulated by Vietnamese laws.

h) Purchasing insurance as required by Vietnamese laws for contractor activities, including: professional liability insurance for investment and construction consulting contractors; goods property insurance for procurement contractors; various types of insurance for construction contractors, and other insurance regimes as stipulated by Vietnamese laws.

i) Inspecting the quality of imported materials and equipment supplied under the tendered contract.

k) Inspecting the safety of construction equipment and transportation means related to the business activities of foreign contractors in accordance with Vietnamese laws.

l) Adhering to regulations on standards, quality management of construction projects, environmental protection, and other relevant provisions of Vietnamese laws.

m) Fulfilling reporting requirements as stipulated in the tender permit.

n) Upon completion of the project, foreign contractors must prepare completion documents; be responsible for warranty services; settle accounts for imported materials and equipment; handle surplus materials and equipment in construction contracts according to import-export regulations; re-export construction materials and equipment registered under the temporary import-re-export system; terminate the contract. Simultaneously, they must inform relevant state management agencies about the contract termination, cessation of the project management office's operations, and return the project management office seal to the issuing authority.

o) Providing data information to the agency managing contractor data information in accordance with tender laws.

Chapter III

REGULATIONS FOR THE PROJECT INVESTOR OR PROJECT OWNER

Article 8. Selection of foreign contractors

When selecting foreign contractors to implement tender packages that are not subject to mandatory application under Vietnamese laws on bidding, in addition to their own requirements, the project owner or project sponsor must also base their consideration and evaluation on the provisions set out in Point c Clause 2, Clause 3, and Clause 4 of Article 4 of this Regulation. The contract between the project owner or project sponsor and the foreign contractor shall be based on mutual agreement but must not contravene Vietnamese law.

Article 9. Responsibilities of the project owner or project sponsor

The project owner or project sponsor has the responsibility to:

1. Guide foreign contractors to comply with the provisions of this Regulation and other relevant laws; assist foreign contractors in preparing documents related to the construction works they have undertaken which must be declared in the tender permit application and other procedures as required by Vietnamese law. Together with the foreign contractor, register the export and import of materials, machinery, and equipment related to the implementation of the contract for which the foreign contractor is responsible as stipulated in Article 7 of this Regulation.

2. Supervise foreign contractors to ensure compliance with commitments made in joint venture contracts with Vietnamese contractors or commitments to use Vietnamese subcontractors registered when bidding or tendering.

3. Consider the possibility of providing domestic construction equipment before agreeing on the list of machinery and construction equipment requested by the foreign contractor for temporary import-re-export.

4. Consider the availability of technical labor in Vietnam before agreeing with the foreign contractor on the list of foreign personnel working for the contractor who will enter Vietnam to perform tasks under the foreign contractor's contract.

5. Confirm the settlement of imported materials and equipment of the foreign contractor upon completion of the project.

6. When using foreign contractors to provide construction management consultancy and construction quality supervision services, the project owner or project sponsor must notify in writing other contractors and construction quality management agencies about the functions and responsibilities of the contractor acting on behalf of the project owner or project sponsor.

Chapter IV

FUNCTIONS, TASKS, POWERS

OF THE NATIONAL ADMINISTRATIVE AUTHORITIES

Article 10. Ministry of Construction

1. Coordinate with relevant ministries and sectors to manage the activities of foreign contractors in Vietnam according to their functions.

2. Explain, guide procedures, and manage the issuance of tender permits for foreign contractors undertaking tender work as prescribed in this Regulation.

3. Issue and revoke tender permits for foreign contractors undertaking tender packages of Class A projects.

4. Lead and coordinate with relevant agencies to organize inspections of the activities of foreign contractors in Vietnam.

5. Handle violations as provided for in Article 18 of this Regulation.

Article 11. Ministry of Finance

1. Set the level of fees, collection, payment, and use of fees for issuing tender permits.

2. Explain and guide regulations on tax systems, accounting reporting systems, payment systems for completed work volumes, construction and installation insurance fees, procurement insurance fees, professional service consultancy insurance fees, and other related regulations concerning the activities of foreign contractors in Vietnam within its authority.

Article 12. Ministry of Public Security

1. Prescribes the registration and management of the stamp of the project management office of foreign contractors operating in Vietnam.

2. Manages the entry-exit, temporary or permanent residence registration of foreigners working for foreign contractors in Vietnam.

3. Cooperates with relevant agencies to ensure political security, social order and safety, and prevent fires at facilities operated by foreign contractors.

Article 13. Ministry of Trade

1. Manages the temporary import-re-export, temporary export-re-import, and import of machinery, equipment, and materials for construction projects carried out under contracts awarded to foreign contractors in Vietnam.

2. Issues permits for temporary import-re-export, temporary export-re-import, and import of machinery, equipment, and materials for foreign contractors operating in Vietnam.

3. Reviews the settlement of imported materials, machinery, and equipment by foreign contractors and handles surplus materials and equipment according to the provisions of the law.

Article 14. Ministry of Labor, Invalids and Social Affairs

1. Manages the recruitment and use of Vietnamese and foreign workers employed by foreign contractors in Vietnam.

2. Manages the inspection of safety equipment during construction related to the activities of foreign contractors in Vietnam.

Article 15. Ministry of Planning and Investment

Manages the system of information data on foreign contractors operating in Vietnam according to the provisions of the law on bidding.

Article 16. People's Committees of provinces and centrally governed cities

1. Manages the registration of project management offices, representatives, and activities of foreign contractors in their localities; directs relevant agencies and local principal investors to implement this Regulation and related legal provisions.

2. Delegates the provincial Construction Department to issue and revoke bidding licenses for foreign contractors who undertake packages of projects belonging to Groups B and C in their localities.

3. Organizes inspections of foreign contractors' activities in their localities. Handles violations according to Article 18 of this Regulation for cases within their licensing authority, or refers cases outside their authority to the Ministry of Construction and other relevant agencies for handling.

Chapter V

INSPECTION AND VIOLATION HANDLING

Article 17. Inspection

1. The Ministry of Construction shall organize regular inspections of foreign contractors' activities in Vietnam, but not more than once a year.

2. Relevant ministries and sectors shall carry out inspections, reminders, and handling of foreign contractors when they violate this Regulation or other legal provisions according to their functions and authorities.

3. The provincial Construction Department serves as the focal point to assist the People's Committees of provinces and centrally governed cities in organizing inspections with the participation of the provincial Commerce Department, Finance Department, Labor, Invalids and Social Affairs Department, and Public Security Department regarding the activities of foreign contractors in their localities, while reporting every six months on the situation of issuing bidding licenses and the activities of foreign contractors in their localities to the Ministry of Construction for consolidation and reporting to the Government.

4. Surprise inspections may only be conducted when there are signs that foreign contractors are violating Vietnamese laws.

Article 18. Handling violations

1. Foreign contractors operating in Vietnam, if they violate the provisions of this Regulation and other Vietnamese laws, will be subject to the following penalties depending on the severity of the violation:

a) Suspension of ongoing work in Vietnam.

b) Administrative fines for violations of administrative regulations in construction.

c) Revocation of bidding licenses, suspension of the right to participate in bidding in Vietnam for a limited or unlimited period, or other penalties as prescribed by law.

d) In cases causing damage, compensation must be provided according to the law.

2. State management agencies with inspection functions, upon concluding that foreign contractors have violated the law in Vietnam, have the authority to handle the matter according to their jurisdiction or refer it to competent agencies for handling according to their functions and the law.

3. Those responsible for managing the activities of foreign contractors in Vietnam, if they abuse their positions or powers to harass or fail to comply with the provisions of this Regulation, will be subject to legal penalties according to the severity of the violation.

Chapter VI

IMPLEMENTING PROVISIONS

Article 19. Implementation Provisions

Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of People's Committees of provinces and centrally governed cities, and related organizations and individuals are responsible for implementing this Regulation./.