Obtaining construction permits is an important legal procedure and one of the mandatory conditions to build a factory in Vietnam. So what do investors need to prepare and notice to be able to enter this market?
Vietnam – a promising destination for investors
Vietnam is a country worth investing in and building factories, which has a good strategic geographical location and young and abundant human resources. Currently, Vietnam has attracted many large investors such as Intel, Samsung, LG,.etc.
According to VnEconomy, the total foreign investment capital into Vietnam in the first 4 months of 2023 illustrated a positive sign. In addition, the structure of foreign investment in Vietnam is also diversified with all kinds of industries.
The chart shows the total registered foreign investment capital in Vietnam in the first 4 months of 2023 (unit: billion USD) (Source: VnEconomy, 2023)
However, the majority of businesses engaging in the Vietnamese market must obtain the necessary legal procedures, which includes an application dossier for a construction permit. Following are the steps for applying for a construction permit in Vietnam.
Obtaining a construction permit in Vietnam:
Dossiers for applying construction permit in Vietnam
The construction permit is an essential legal basis, demonstrating that the investor’s design dossier and factory establishment process comply with the standards and regulations of Vietnamese law. In addition, a construction permit protects the legitimate interests of investors, recognizes the project’s legality, and is a mandatory document for factory’s acceptance test and operation procedures later.
Pursuant to Article 102 of the 2014 Law on Construction, the process and procedures for applying for a factory construction permit include the following steps:
Step 1: Dossier to apply for a factory construction permit
Pursuant to Article 43 of Decree 15/2021/ND-CP, dossier to apply for a factory construction permit includes:
- Application form for construction permit.
- Investment Registration Certificate (IRC), Enterprise Registration Certificate (ERC) of the Owner
- Documents on land use rights (land lease contract, factory lease or certificate of land use rights)
- Declaration of capacity and experience of the design contractor
- Factory design drawings
- 02 Appraisal certificate provided by specialized agencies about the design work
- Appraisal and approval of Fire prevention and fighting design and the attached approved drawings
- Environmental permit or environmental registration document of the project
- Letter of introduction (if any)
Step 2: Submit the application to the competent authorities
Which competent authorities grant construction permits in Vietnam?
Most factories with mid-range production scales are regulated as grade III or grade IV projects. Accordingly, the competent authorities entitled to grant factory construction permits will be the District-level People’s Committees and the Industrial Park Management Board, the details of which depend on the specific regulations of each province.
In case the factory is large-scale or has specific production fields, which are counted as Grade II, the competent authorities have the right to grant factory construction permits is the Provincial People’s Committee.
The review time for factory construction permit application: within 30 days, from the date that all required documents are received in a complete and valid state.
Step 3: Get construction permit
In case the license issuance is due but still needs further consideration, the competent authority must notify and the settlement time limit must not exceed 10 days.
Construction permit application fee
According to Circular 85/2019/TT-BTC, the fee for granting construction permits is regulated by the People’s Committee of each province. Therefore, depending on where the factory is located in,
the fee for applying for a construction permit in each province will be different.
(unit: VND):
Penalties for building a factory without a permit
According to Clause 7, Article 16 of Decree 16/2022/ND-CP, the administrative fine for acts of organizing and constructing works without a permit is from 120,000,000 to 140,000,000 VND. In addition, not only will they be fined, these constructions will not be accepted and forced to dismantle and comply with the laws and regulations in Article 81 of this Decree.
At the end of 2022, in Hai Duong, K. Company in Vietnam was fined nearly 400 million VND due to the construction of a series of 3 unauthorized works and factories: Factory 7, Factory 8, and Inspection house.
Along with that, in Quang Ngai, T. Trading and Service Company was fined 165 million VND and dismantled for not having construction documents and other legal procedures.
Recommendations when applying for construction permits in Vietnam
Before applying for a construction permit, investors should pay attention to the following issues and prepare the following documents:
- Investment Certificate (IRC), Land Use Right Certificate
- Appraisal and approval of Fire prevention and fighting design, comply with the standard – QCVN 06:2022/BXD standards on the fire safety of buildings
- Environmental registration or environmental license- according to the standards from the Environmental Protection Law in 2020
- The profile is designed according to QCVN 01:2021/BXD on construction density
If the dossiers of application for factory construction permit do not meet these standards, investors will spend a lot of time and money to edit the technical documents, affecting the project schedule and production schedule plan in Vietnam.
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