Construction Operation License: Conditions for Granting to Foreign Contractors

As Vietnam's construction market continues to open and integrate more deeply into the global economy, the participation of foreign contractors has become increasingly common. With advantages in technology, experience, and financial capacity, international enterprises are contributing significantly to the development of many large-scale projects. However, in order to legally operate in Vietnam, foreign contractors must fully satisfy the prescribed conditions and obtain a Construction Operation License in accordance with Vietnamese law.

This requirement is not merely an administrative procedure but also serves as a regulatory mechanism to ensure transparency, construction capacity, and legal responsibility of contractors throughout the implementation process. Therefore, what are the conditions for granting a Construction Operation License to foreign contractors? What are the specific regulations and what issues should contractors pay attention to in order to minimize legal risks?

The following article will clarify all important aspects of this matter, helping foreign contractors make complete and accurate preparations before implementing construction projects in Vietnam.

What Is a Construction Operation License?

According to Decree No. 175/2024/ND-CP, a Construction Operation License is a legal document issued by a competent Vietnamese authority to a foreign contractor, allowing such contractor to conduct construction activities in Vietnam for a specific contract after being legally awarded or selected for the construction package.

This license is a mandatory requirement for foreign contractors to carry out activities such as construction surveying, design, construction execution, or other construction-related works within the territory of Vietnam in compliance with applicable laws.

In summary, the Construction Operation License serves as an essential legal basis enabling foreign contractors to lawfully participate in and execute construction projects in Vietnam.

When Can Foreign Contractors Be Granted a Construction Operation License?

Pursuant to Article 114 of Decree No. 175/2024/ND-CP, a foreign contractor shall be considered for the issuance of a Construction Operation License when it fully satisfies the following conditions:

• The foreign contractor has obtained a lawful contract award decision or has been legally selected by the project owner, main contractor, or subcontractor in accordance with Vietnamese laws.
• The foreign contractor must enter into a joint venture with a Vietnamese contractor or engage a Vietnamese subcontractor to perform the construction package. This requirement may only be exempted where Vietnamese contractors do not have sufficient capacity to perform any part of the contracted work.
• In cases where the foreign contractor forms a joint venture with or hires a Vietnamese subcontractor, the parties must clearly agree on the scope of work, workload, and value of the work performed by the Vietnamese party.

Therefore, in order to obtain a Construction Operation License in Vietnam, a foreign contractor must not only have a lawful contract award result but also satisfy requirements relating to cooperation with domestic contractors in accordance with Decree No. 175/2024/ND-CP.

Application Dossier for a Construction Operation License

According to the provisions of Decree No. 175/2024/ND-CP, a foreign contractor shall submit one (01) application dossier for a Construction Operation License through direct submission, postal service, or online submission. The dossier includes the following documents:

• An application for a Construction Operation License using Form No. 01 for organizations or Form No. 04 for individuals as prescribed in Appendix III issued together with Decree No. 175/2024/ND-CP.
• A certified copy or valid electronic copy of the bidding result or contractor selection decision in accordance with applicable laws.
• A certified copy or valid electronic copy of the establishment license or business registration certificate, together with a practicing certificate (if any) issued by the competent authority of the country where the foreign contractor is registered or holds nationality.
• A report on experience in activities related to the contracted works and a copy of the audited financial statements for the most recent three (03) years (applicable in cases where the contractor is not selected in accordance with bidding regulations).
• A certified copy or valid electronic copy of a joint venture agreement with a Vietnamese contractor or a memorandum of understanding with a Vietnamese subcontractor, which has been declared in the bidding dossier or proposal dossier.
• A lawful power of attorney in cases where the person submitting the application is not the legal representative of the foreign contractor.

In addition, Decree No. 175/2024/ND-CP also stipulates that:

• The application for a Construction Operation License must be prepared in Vietnamese.
• Documents issued by foreign authorities or organizations must be consularly legalized, unless exempted under an international treaty to which Vietnam is a member.
• Documents written in foreign languages must be translated into Vietnamese and notarized or certified in accordance with Vietnamese laws.

When Does a Construction Operation License Expire?

According to Decree No. 175/2024/ND-CP, within 20 days from the date of receipt of a complete and valid application dossier, the Department of Construction shall review and consider granting a Construction Operation License to the foreign contractor. In case of refusal to issue the license, the competent authority must provide a written response clearly stating the reasons.

After being granted the license, the foreign contractor shall be responsible for paying the prescribed fees in accordance with regulations issued by the Ministry of Finance.

Cases Where a Construction Operation License Ceases to Be Effective

A Construction Operation License shall cease to be effective in the following cases:

• The construction contract has been completed and liquidated by the parties in accordance with applicable regulations.
• The contract is no longer valid because the foreign contractor's operations have been suspended, the contractor has been dissolved, declared bankrupt, or other cases as prescribed by Vietnamese law and the laws of the country where the foreign contractor holds its nationality.

Conclusion

A Construction Operation License is an essential “legal key” that enables foreign contractors to lawfully and effectively participate in and implement construction projects in Vietnam. Fully satisfying the licensing requirements not only helps enterprises comply with legal regulations but also enhances their reputation and competitiveness in an increasingly professional and demanding construction market.

In practice, legal regulations governing construction activities are frequently updated, requiring contractors to proactively monitor changes and carefully prepare their application documents, capacity profiles, and implementation procedures. Therefore, understanding the licensing requirements from the beginning will help enterprises save time, minimize legal risks, and ensure project progress. A solid legal foundation is an important starting point for foreign contractors to achieve sustainable development in the Vietnamese market.

Introduction to Khanh An Business Law Limited Company’s Legal Services

Khanh An Business Law is proud to be one of the reputable law firms providing professional legal services in Vietnam. We are committed to delivering comprehensive and effective legal solutions that fully meet the needs and requirements of each business and individual client.

Support Services for Construction Operation Licenses for Foreign Contractors Provided by Khanh An Law Firm

Keeping up with the latest amendments and requirements under Decree No. 175/2024/ND-CP is essential to avoid legal risks. With a team of experienced lawyers led by Master Lawyer Huong, Khanh An Business Law is committed to accompanying international contractors through the following services:

• Providing detailed consultation on licensing conditions and procedures in accordance with the latest regulations under Decree No. 175/2024/ND-CP.
• Supporting the preparation and completion of joint venture documents, subcontractor agreements, and consular legalization procedures.
• Representing foreign contractors in carrying out procedures with Departments of Construction nationwide. Providing legal consultation and support for contractors throughout their operation process in Vietnam.

Khanh An’s Core Values

We always pursue three core values: REPUTATION – QUALITY – HIGH EFFICIENCY. These values are not only our guiding principles in business operations but also the motivation for our continuous development. We are proud to receive positive feedback from our clients, which demonstrates the quality and effectiveness of the legal services we provide.

Khanh An will continue making every effort to deliver the best legal services and accompany our clients in their sustainable development journey.

Contact Information

KHANH AN BUSINESS LAW LLC

Hotline: (+84) 24 6688 5821 / (+84) 976 529 499

Address: 88 To Vinh Dien, Khuong Dinh, Hanoi, Vietnam

Website: khanhanlaw.com

Email: info@khanhanlaw.net