Construction Contract in Vietnam

     

In Vietnam, like other countries companies seeking to build an office building or industrial facility work with the contractor through a construction contract.

There are several types of construction contract used in the construction industry depending on the level of control from parties involved in terms of investment, responsibilities and duration.

Fixed price is a type of construction contract that offer a total fixed priced for all construction related activities. This contract type could include incentives or benefits for early termination, or can also have penalties, called liquidated damages, for a late termination. This contract type is preferred when a clear scope and a defined schedule has been reviewed and agreed upon.

Cost plus contract is a type of construction contract involves payment of the actual costs, purchases or other expenses generated directly from the construction activity. This type of contract must contain specific information about certain pre-negotiated amount (some percentage of the material and labor cost) covering contractor’s overhead and profit. Costs must be detailed and should be classified as direct or indirect costs.

Time and material contract is usually preferred if the project scope is not clear, or has not been defined. The owner and the contractor must establish an agreed hourly or daily rate, including additional expenses that could arise in the construction process. The costs must be classified as: direct, indirect, mark-up, and overhead. Sometimes the owner might want to establish a cap or specific project duration to the contractor that must be met, in order to have the owner’s risk minimized.

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Which Authority Approves Business Setting up in Vietnam?

     

Investment projects in Vietnam could be evaluated and approved for business setting up at top level of the government, at ministerial levels or at the provincial levels.

The licensing authorities for business setting up in Vietnam has been divided to distribute workloads at different state agencies with aim to speed up the process and attract more quality investment projects in Vietnam.

In practice, the process for establishing companies or executing investment projects in Vietnam would take from one month for simple project, three to six month for areas categorized under conditional investment areas, requiring sub-licenses, or additional time for more complicated projects. At the provincial levels, there might be inconsistency between cities and provinces due to different interpretation of laws. For investment project with difficulty to manage, the provincial levels would need to consult with technical department of central government agencies, as such the time taken to process the investment certificate would be lengthen.

Understanding the mechanism and the work division of Vietnam authorities that evaluate and approve business licensing at different government agencies would help foreign investors to smoothen the process and improve their experience in Vietnam.

It is notable that, the government level will be focusing on significant projects, in special area at large investment capital with impact on social economic situations. Most of the investment licensing procedures will be carried out at the provincial levels where the investment projects exist.

The following will point out directions for foreigners to approach respective agencies based on the particular area of interests, scale, and nature of the investment. However, to avoid delay and increase effectiveness, it is advisable that the foreign clients would consult with Vietnam law firms to help advise and represent them in preparing and executing the investment in Vietnam.

I. Projects evaluated and granted investment licensing at government level

Depending on the business nature, industry sector, investment scale, and investment policy, the Vietnam Prime Minister, on behalf of the government will evaluate and approve investment licensing for setting up business.

1. The investment project in Vietnam the government will evaluate and approve regardless of funding, the scale of investment are in the following areas:

a) Development and commercialization of airports and air transport;

b) Development and commercialization of national port;

c) Exploration, mining and processing of oil and gas; exploration and exploitation of minerals;

d) Radio, television;

e) Casino;

f) Production of cigarettes;

g) Establishment of university level educational institute;

h) Establishment of industrial zones, export processing zones, high-tech zones and economic zones.

2. Although investment projects which do not fall under the cases listed above, but the government of Vietnam also evaluates and approves investment project with investment capital of VND 1,500 billion (around USD 75 mil) upwards regardless of funding and in the following areas:

a) Sales of electricity, mineral processing, metallurgical;

b) Construction of railway infrastructure, roads, inland waterways;

c) Production, sales of wine and beer.

3. Further, the government of Vietnam also evaluates and approve investment projects with foreign investment in the following areas:

a) Maritime transport;

b) Establishment of networks and provision of postal services, courier, telecommunication and internet; network setup and signal transmission;

c) Printing and distribution of newspapers; publication;

d) Establishment of independent scientific research.

4. Where the investment projects specified in the above cases are in the plan which the Prime Minister has approved or authorized other agencies to approve, and that the investment projects meet the conditions prescribed by law and treaties to which Vietnam Nam is a member, the agency granted investment certificates perform the procedure for issuance of investment certificates is not required to submit to the Prime Minister to decide on the investment policy.

5. Where the investment projects specified in the above case is not in the plan which has been approved by the Vietnam Prime Minister or authorized other agency to approve, and that the projects do not meet the conditions for market access provisions in international treaties which Vietnam is a member, the agency granted investment certificates shall consult with other of relevant industries and submit to the Prime Minister for investment policy decision.

II. Projects evaluated and granted investment licensing at ministerial level

1. The Vietnam Ministry of Planning and Investment shall evaluate and approve licensing for investment projects in the form of BOT, BTO, BT.

2. Other ministries will be evaluating and granting license for investment in some sectors.

a.Vietnam Ministry of Commerce and Industry shall evaluate and approve licensing for investment project in oil and gas sector;

b. Vietnam State Bank shall grant licensing for financial institutions;

c. Vietnam Ministry of Finance shall be responsible for issuing license for investment project of insurance business.

III. Projects evaluated and granted investment licensing at provincial levels

1. Department of Planning and Investment shall be the single point of contact that receive the application and evaluate the investment plan of the foreign investors wishing to establish business in Vietnam for projects

a. Outside of Industrial Zone, Industrial Processing Zone;

b. Infrastructure development project for Industrial Zone, Industrial Processing Zone which management board of industrial zone and industrial processing zone are not yet established.

2. The management board of Industrial Zone, and Industrial Processing Zone:

a. For investment projects within the Industrial Zone, and Industrial Processing Zone which are not under the authority of the Prime Minister;

b. Infrastructure development project to for industrial zone and industrial processing zone.

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Issuance of Work Permit for Foreigner Online

      

From October 2nd 2017, the issuance of work permits to foreign employees working in Vietnam via Internet will be applied in accordance with the guidance of Circular No. 23/2017/TT-BLDTBXH issued by the Ministry of Labor – Invalids and Social Affairs on August 15th 2017.

Accordingly, the issuance and re-issuance of work permits for foreigners will be made via the electronic portal: http://dvc.vieclamvietnam.gov.vn. Employers must register their account to log into the Portal.

Before at least 7 working days, from the date the foreign worker intends to commence work, the employer must declare the information in the declaration form and submit the application for work permit via the electronic portal. The dossier includes: The declaration form and enclosed papers in accordance with the provisions of law on e-transactions and management of foreign laborers working in Vietnam; if the attached documents are in the form of paper, the employer must convert to electronic versions like pdf, doc, docx or jpg.

Within 5 working days from the date of receiving the dossier, the licensing agency shall reply via email to the employer. If the dossier is invalid, the licensing agency must clearly state the reasons.

Upon receipt of the result of notification of valid dossiers, the employers shall submit directly or by post the originals of the work permit application dossiers to the licensing agency for inspection, comparison and archive regulations. Within a maximum of 08 working hours from the date of receipt of the original application, the licensing agency shall return the result to the employer.

This Circular comes into effect from October 2nd 2017.

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Penalties on Working Without Work Permit in Vietnam

     

Vietnam has become an attractive destination for foreigner investors due to the impressive development of socio – economic in recent years. This is such a good opportunity for Vietnamese enterprises to get cooperation in business with foreign partners.

To take advantage of the opportunities to be the pioneer and market share, many of them have demand in employees with good skills and qualifications. To meet these requirements, more and more companies hire foreign workers for specific positions which might lack of human resources within Vietnam territory.

According to Labor Code 2019, the employer wishing to recruit the foreign workers has to explain their labor demand to the People’s Committee of provinces and obtain written approval from this agency. Pursuant to this written approval, the employer shall submit the application for the work permit to the Department of Labor, War Invalids and Social Affairs of the province where the planned working place of such foreign workers is located.

A foreign employee means a person who has a foreign nationality and:

Is at last 18 years of age and has full legal capacity;

Has qualifications, occupational skills, practical experience and adequate health as prescribed by the Minister of Health;

Is not serving a sentence; does not have an unspent conviction; is not undergoing criminal prosecution under his/her home country’s law or Vietnam’s law;

Possessing a work permit granted by a competent Vietnamese state agency, except the cases specified in Labor Code.

Therefore, based on regulations of the Labor Code of Vietnam, except for the foreign employees exempted from work permit i.e. investor of company established in Vietnam, all of cases the foreign employees wishing to work in Vietnam shall be subject to work permit application. A foreign employee shall produce his/her work permit in Vietnam when carrying out immigration procedures or upon request of a competent state agency.

In case foreign employees who do not belong to work permit exemption being found working in Vietnam without work permit, that person shall be considered violation of the law of Vietnam. In addition, the employer that uses the violated employee without work permit shall be punished accordingly.

According to Decree No. 28/2020/ND-CP dated March 1, 2020 on administrative penalties for violations arising from labor, social insurance and sending Vietnamese workers abroad under contracts.

i) Foreign employee that working without work permits, except for the cases in which the work permit is exempt shall be expelled.

ii) Employers who employ foreign workers in Vietnam without work permits or written confirmations of their exemption from work permit requirements, or employs foreign workers holding expired work permits or written confirmations of exemption from work permit requirements shall be implied:

+ A fine from VND 30,000,000 to VND 45,000,000 if the violation involves 01 – 10 workers;

+ A fine From VND 45,000,000 to VND 60,000,000 if the violation involves 11 – 20 workers;

+ A fine From VND 60,000,000 to VND 75,000,000 if the violation involves 21 or more workers.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.

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What Are New Points of the Law on Intellectual Property 2022

      

What Are New Points of the Law Amending and Supplementing The Law on Intellectual Property?

The 2005 Law on Intellectual Property (IP) was amended and supplemented twice, in 2009 and 2019, to make it more practical and to address new concerns in the area of intellectual property as they arise. However, given the rapid development and international integration of this field, the requirement for updating this law continues to be raised so that domestic law is consistent with international law. The National Assembly, therefore, promulgated the Law amending and supplementing several sections of the IP Law (referred to as the Law on Amendments and Supplements) on June 16, 2022, which will officially take effect on January 01, 2023. The new law modifies more than 100 articles of the IP Law and focuses on 7 major policy groups.

First, the IP Law updates, corrects and perfects the interpretation of terms so that they are coherent and consistent. Any statute will contain provisions defining the technical terms of the area covered. However, in the process of linking terms and regulations, inconsistencies or misunderstandings still occur, hence amendments and supplements are necessary. Specifically, some concepts in Article 4 of the IP Law such as: derivative works; published work, audio and visual fixation; reproduction; broadcasting; industrial design; integrated trademarks; well known mark; geographical indication are explained and clarified. The terms can be seen as the basis for defining and applying legal provisions related to the claims arising around it, such as copyright for derivative works or industrial property rights for geographical indications. The terms under the Law on Amendments and Supplements are not completely renewed but simply inherited and perfected from the old law, then it is reasonably possible to adapt and apply.

Second, the Law on Amendments and Supplements provides more specific provisions on copyright and related rights in Vietnam; extending the term of protection; at the same time, there is a change in the assignment or transfer of these rights. In addition to works that are protected for the life of an author, cinematographic, photographic, theatrical, and applied art works, anonymous works published for the first time, have their protection term extended from 50 years to 75 years. It can be remarked that copyright protection in Vietnam is becoming more and more important and stricter. The biggest change is that the Law on Amendments and Supplements allows the author to transfer one more moral right. Pursuant to Article 41 of the 2005 IP Law amended and supplemented in 2009 and 2019, the author may only transfer some or all of the property rights and the only moral right which is to publish the work. Until the Law on Amendments and Supplements in 2022, Article 19 allows “authors have the right to transfer the right to use the right to give titles to their works”. Besides, the previous provision in Article 47: ” Authors shall not be permitted to license the moral rights stipulated in article 19 of this Law, except for the right of publication…” is amended to “ Authors shall not be permitted to license the moral rights according to clause 2 and 4, Article 19 of this Law…”. This change means that the author is allowed to transfer two moral rights: the right to publish the work and the right to give title the work. From there, the owner who are transferred these rights can completely name or change the name, which absolutely does not affect the legitimate rights of the author.

Third, the Law on Amendments and Supplements in 2022 clarifies acts of infringing upon copyright and related rights. Article 28 stipulates the act of copyright infringement in Vietnam initially has 16 clauses, then it is condensed and concise into 8 clauses but still full and covers the content. For example, Clause 1 “appropriating copyright in literary, artistic or scientific works”, Clause 2 “impersonating an author”, Clause 3 “Publishing and distributing works without the author’s permission”, … are all included in Clauses 1 and 2 of the new law as “infringement on the moral rights and property rights of the author”. In addition, the clauses of Article 35 on related rights infringement are supplemented and explained. Both Article 28 and Article 35 add Clause 11 on the act of “failure to perform or incomplete implementation of regulations to be exempted from liability of the intermediary service provider”. Technological technology and the Internet have developed strongly, leading to the formation of intermediary service providers. The regulations about “enterprise providing intermediary services” have first appeared in the IP Law, demonstrating the development and completion of the law in order to promptly adjust new problems. For exceptions that do not infringe copyright, according to the Law on Amendments and Supplements, when using a published work, one does not have to ask for permission or pay royalties, but he/she must provide information about the author’s name and the source and origin of the work. This change is to ensure copyright for that work, to avoid misunderstanding that the user is the author of the work.

Fourth, the procedure for registration of copyright, related rights and industrial property rights in Vietnam have become simpler and more streamlined. If the unmodified Law only stipulates that the application is filed directly or through a legal IP representative in Vietnam, the application for establishment of rights can be filed in the form of a written document in paper form (submitted in person) or electronically under the online application system after the law is amended. The new regulation represents an update in line with the development of the information technology level of the digital age. This creates favorable conditions for subjects to easily submit registration IP applications in Vietnam, especially those with geographical distances without authorizing other organizations and individuals to apply. At the same time, it also helps reduce the resources required to receive applications directly.

Fifth, the use of the National Flag, National Emblem and National Anthem is regulated for the first time in the Intellectual Property Law. Specifically, “Organizations and individuals exercising intellectual property rights related to the National Flag, National Emblem and National Anthem of the Socialist Republic of Vietnam must not prevent or obstruct the dissemination and use of the National flag, National Emblem, National Anthem” (added to Article 7.2). Thus, the dissemination and use of the National Flag, National Emblem, and National Anthem is allowed without being prevented or obstructed by any organization or individual if the purpose of such use does not violate the law and not against social morality.

In conclusion, the Law amending and supplementing the IP Law 2005 has updated more than 100 provisions to be consistent with the country’s socio-economic, scientific and technological development orientations and international treaties to which Vietnam is a member. For the Law to amend and supplement to achieve good results when it comes to implementation, competent state agencies should soon issue detailed guiding regulations, focus on organizing the implementation of the Law and ensuring the following regulations. the provisions of the Law come to life. The success of the Amended Law of Intellectual Property Law in Vietnam will make an important contribution to the sustainable development of the field of intellectual property in Vietnam.

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How to Establish Company in Vietnam?

     

Foreign investors may invest in the form of 100% capital to establish company in Vietnam, being limited liability company, joint stock company, partnership company.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates. Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for establishing company in Vietnam shall comprise:

Registration/Request for issuance of Investment Certificate;

A report on financial capability of the investor;

Draft of the company’s charter;

List of members of company;

Copy of the people’s identity card, passport or other lawful personal certification, for individual members;

Copy of the establishment decision, business registration certificate or other equivalent document, for member organizations;

Copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives.

Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;

Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;

The joint-venture contract or Business Cooperation Contract (BCC);

Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days. The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project. Minimum capital, special licenses or other conditions might be required in certain investment projects.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.

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How to Buy Apartment in Vietnam

      

Real estate, apartment in Vietnam has passed the most difficult period and stabilized. But to satisfy the house demand of 90 million people, it’s need to have many changes in laws. ANT Lawyers will update the proposal of an expert in issue of definite ownership apartment.

As many other countries such as in England, the term to own an apartment of 999 years, but in Vietnam, only land has been assigned by the Government in 2 forms: permanent assignment and definite assignment.

In first method, permanent land assignment fell into residential land, and almost apartments were purchased in market with the “permanent” term.

In the second, lands were assigned within 50 years, the investors continued developing the projects. Some apartment projects in Ho Chi Minh city and Ha Noi belonged to this type. After the investors conducted procedures to transfer definite ownership apartment to permanent ownership apartment. Therefore, actually, the price of apartment will decrease if the form of definite ownership is applied.

Regulating the definite ownership of 50 -70 years for apartment will take advantages in reconstruction and improvement in case of degrading, usage expiry.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.

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