This article will provide detailed and comprehensive guidance on the process and procedures for factory establishment for investors, particularly for foreign individuals setting up businesses in Vietnam, from researching to select the appropriate location for construction to obtaining procedures for environmental and fire prevention and fighting license.
The procedures for setting up a factory in Vietnam
The procedure for obtaining an Investment Registration Certificate
The Investment Registration Certificate (IRC) is a prerequisite for foreign investors to establish a factory in Vietnam, carry out investment projects legally, as well as have the right to use land, lease industrial real estate in Vietnam.
Dossier of application for Investment Registration Certificate
- Written request for implementing investment project (according to form);
- Copy of ID card/citizen identification card; Copy of Certificate of Establishment or legal status confirmation documents;
- Investment project proposal.
- Copy of the investor’s financial capability documents.
- Proposal for land use needs.
- Explanation of technology use (if applicable).
- Business Cooperation Contract (BCC) for investment projects in the form of BCC.
Place of submission/Processing agency:
- Submit the application online at http://fdi.gov.vn or http://dautunuocngoai.gov.vn.
- Within 15 days after online declaration, investors must submit an application for the Investment Registration Certificate (IRC) directly to the Department of Planning and Investment.
Processing time:
15 days from the date of submission of a complete and valid application.
Fees:
None.
Some special, large-scale and complicated projects, such as nuclear power plant construction projects, projects with a capital of VND 5,000 billion or more, projects using restricted technology transfer… will not follow the procedures for obtaining the Investment Registration Certificate, but are required to seek approval for Investment policy from the National Assembly, Prime Minister, or provincial People’s Committee.
The procedure for Enterprise Registration & Establishment in Vietnam
When investors want to make a procedure for setting up a factory with foreign investment, they are required to register and establish an enterprise in Vietnam to obtain a valid legal entity status, operate in compliance with regulations, as well as be entitled to the benefits and protections under Vietnamese law.
Dossier of application for Enterprise registration
- Request for Enterprise Registration (according to the provided form).
- Draft of the company’s charter.
- List of members for a two-member limited liability company or founding shareholders for a joint-stock company.
- Copy of ID card/citizen identification card; copy of the Certificate of Establishment or legal status confirmation document.
- Decision on capital contribution and appointment of the company’s manager; List of authorized representatives.
- Certificate of investment registration.
Place of submission/ Processing agency
- Submit the dossier of application at the Department of Planning and Investment at the provincial level, where the company’s main office is located.
Processing Time
3 days from the date of submission of a complete and valid application.
Fee
100,000 VND per application.
For more: The procedures for establishing a company for foreign investors
The procedures for land to build a factory
When investors want to build a factory or workshop inside the industrial park, they need to follow the procedures for land rental with the Industrial Park Management Board. In the case where investors want to build a factory outside the industrial park (on residential or agricultural land), they are required to carry out procedures for land-use change.
Procedures for setting up a factory inside the industrial park:
Dossier for land rental in the Industrial Park
- Land rental dossier
- Deposit contract for land reservation.
- Official land rental contract with the infrastructure investor of the industrial park;
When renting land within the industrial park, the infrastructure investor of the industrial park will be responsible for all procedures to grant the certificate of land use right to the investor. This also provides the investor with time to prepare the applications, documents, and plans to apply for an investment license in Vietnam.
Procedures for setting up a factory outside the industrial park
Residential or agricultural land is not allowed for the construction of industrial workshops, so investors must undergo procedures for change of land-use purpose.
Registration dossier for change of land-use purpose
- Application for permission to change land use purpose (according to the form)
- Certificate of land use right
Place of submission / Processing agency:
Department of Natural Resources and Environment at the land use location.
Processing time:
Not exceeding 15 days.
Procedures for factory construction and related licensing procedures
After completing the procedures for setting up a factory and obtaining the right to use industrial real estate, investors proceed to choose the appropriate design-build contractor.
To save time and costs for the following licensing procedures, investors should only proceed after selecting the most suitable design-build contractor and having the final technical design plan. Reputable and quality general contractors in Vietnam can provide advice and support to businesses in applying for construction permits and procedures for setting up production workshops quickly and efficiently, ensuring legal compliance and the construction quality in the future.
Environmental protection procedures (Law On Environmental Protection)
Environmental protection procedures are one of the bases for businesses to obtain construction permits and successfully inspect to put into operation in the future. During the environmental licensing process, relevant authorities assess the project’s impact on the environment and ensure that the business has measures to manage and treat emissions within the limits allowed by Vietnam standards.
Environmental licensing procedures in Vietnam are divided into three types, depending on the production sector and the scale of the factory: Environmental Impact Assessment (EIA), Environmental Protection Plan, and Environmental Protection License.
Environmental impact assessment
All projects classified under Group I and some projects classified under Group II with high potential for adverse environmental impacts according to the 2020 Environmental Law must apply for approval of the Environmental Impact Assessment (EIA) report.
EIA Dossier
- 01 request for appraisal of the environmental impact assessment report (according to the provided form);
- 07 environmental impact assessment reports of the project.
- 01 feasibility study report or investment project report.
Place of submission/ Processing agency
Provincial People’s Committee; Ministry of Natural Resources and Environment
Confirmation of the environmental protection plan
Projects that are likely to cause environmental pollution on a small scale, generate 20 – 500 m3/day of wastewater or 1 – 10 tons/day of solid waste or 5,000 – 20,000 m3 of exhaust gas/day. For small-scale projects that have the potential to cause environmental pollution, generating wastewater from 20 – 500 m3/day, solid waste from 1 – 10 tons/day, or emissions of 5,000 – 20,000 m3/hour, during the procedures for setting up a factory, it is only necessary to confirm an environmental protection plan and are not required to prepare an Environmental Impact Assessment (EIA) report.
Dossier for confirmation of the environmental protection plan
- 03 environmental protection plans (according to the form)
- 01 investment report or production, business, service plan.
Place of submission / Processing agency
District People’s Committee
Application for Environmental License
Except for projects with no potential adverse environmental impacts classified as Group IV under the Environmental Protection Law 2020, all projects must apply for an Issuance of the Environmental License.
Dossier for Issuance of the Environmental License
- Written request for Issuance of the Environmental License (according to form);
- Report on proposal for issuance of environmental license
- Legal and technical documentation of the investment project.
Submission location / Processing agency:
Ministry of Natural Resources and Environment, Provincial People’s Committee, or District People’s Committee.
After finishing the procedures for setting up a factory as well as the construction, the business needs to report the results of the trial operation of the waste treatment facility to the provincial environmental protection agency for inspection and confirmation before putting the project into official operation.
Dossier for Fire Prevention and Fighting Certificate
Obtaining the Fire Prevention and Fighting License is a crucial step in the procedures for setting up a factory, confirming that the project meets the fire prevention and fighting requirements according to the law, and can be granted for construction permits.
Dossier for appraisal of fire safety design
- Application for consideration of and feedback on fire safety solution of investor (according to form)
- Investment registration certificate
- Certificate of eligibility for fire prevention and fighting service business of fire safety design consultancy unit
- Fundamental design description and drawings showing requirements for fire safety solutions
- Cost estimate for construction of work
- Drawings and description of technical design or construction drawing design showing fire safety requirements. The design dossier must comply with the National Technical Regulation 06:2020 and 06:2022/BXD on Fire safety of Buildings and Constructions
Application for fire safety commissioning
- Copy of fire safety design appraisal certificate and document submitted together with the dossier bearing the appraisal seal the firefighting authority;
- Copy of certificate of fire prevention and fighting equipment inspection;
- Records of testing, commissioning of each part and comprehensive commissioning of the fire prevention and fighting system;
- As-built drawings of the fire prevention and fighting system and items related to fire prevention and fighting in accordance with the appraised design dossier;
- Written guidelines for operation and maintenance of fire prevention and fighting equipment;
- Records of commissioning of work items and systems related to fire prevention and fighting;
- Copies of certificates of eligibility for fire prevention and fighting service business of the supervision consultancy unit (if any) and fire prevention and fighting system construction unit.
Dossier for fire prevention and fighting certificate
- Application for Issuance of Certificate of Eligibility for Fire Prevention and Fighting (according to form);
- Certified copy of the Certificate of Fire Prevention and Fighting; Records of commissioning of Fire Prevention and Fighting;
- Comprehensive statistics of all fire prevention and fighting and life-saving equipment provided (according to form);
- Fire fighting plans;
- Decision on the establishment of the fire prevention and fighting team, including a list of individuals that has completed the fire prevention and fighting training course.
Place of submission / Processing agency:
Fire and Rescue Police Department or Provincial Fire and Rescue Police Department.
Processing time:
15 – 20 days depending on the actual situation.
Fee:
Minimum of 500,000 VND per project; maximum of 150,000,000 VND per project.
Procedures for applying for a construction permit
The construction permit is the final step in the procedures for setting up a factory, ensuring that the factory complies with the relevant standards and regulations of Vietnamese law. Without a construction permit, the investor may face demolition of the facility, inability to carry out the commissioning and operate the factory legally for production.
Dossier of application for a construction permit
- Application for issuance of a construction permit
- Investment Registration and Business Registration Certificate of Investor
- Documents related to land use rights (land lease agreement, rental agreement for the workshop, or certificate of land use right,…).
- Project approval decision, investment decision.
- Notification of feasibility study report appraisal result for construction investment; the basic design drawings enclosed with a certification stamp (if any).
- Capability and experience profile of the design organization.
- Construction design drawings are deployed after the basic design is appraised.
- Appraisal of fire safety design and the fire prevention and fighting appraised drawings.
- Environmental license or environmental registration documents of the project.
- Letter of introduction for submitting the dossier.
Place of submission / Processing agency:
For most medium-scale factories and workshops classified as grade III or grade IV projects, the construction permit is issued by the People’s Committee at the district level and the Industrial Park Management Board.
For factories and workshops in specialized manufacturing industries with larger scales, classified as grade II projects, the construction permit is issued by the People’s Committee at the provincial level.
Processing time:
Not exceeding 20 days from the submission of a valid application.
Fees:
Dependent on the regulations of each locality.
For more: Procedures for granting factory construction permits in Vietnam
After obtaining the Environmental License, Fire Preventing and Fighting System Certificate, and Construction Permit, the investor and contractor are responsible for implementing the construction, finishing the project acceptance with the relevant authorities to meet the requirements stated in the issued permits. Only then can the factory be allowed to operate.
Where is the most developed industrial real estate fund to build factories?
According to the Vietnam Association of Realtors (VARS), the top 5 provinces and cities with the most active industrial parks in the country are Dong Nai, Binh Duong, Ho Chi Minh City, Long An, and Bac Ninh.
Provinces and Cities in the period 2021-2030, with a vision to 2050, Hung Yen is the province with the largest planned land fund for industrial development in the country, totaling 15,798 hectares. Additionally, the province offers many incentives for investors when carrying out Procedures for setting up a factory in the area.
With over 15 years of experience in industrial construction, having served as the design-build contractor for many FDI factories in various manufacturing sectors at several large industrial parks in Vietnam, DELCO understands and can provide consultancy and support for investors to carry out the procedures for setting up a factory, ensuring that the projects comply with the regulations of Vietnamese law.
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