Construction investment is a main sector that contributes to infrastructure development, economic growth, and urbanization. In the context of global integration, such an activity has increasingly attracted the attention of both domestic and foreign investors, particularly in Vietnam. In the following article, NPLaw invites readers to explore the legal issues surrounding construction investment.
I. Current demand for construction investment by foreign investors
At present, the demand for construction investment is rising in Vietnam, especially from foreign investors. With rapid urbanization, expanding investment-attracting policies, and a robustly developing economy, many investors are presenting their interest in areas such as industrial parks, urban areas, transport infrastructure, logistics, and commercial real estate.
In addition, the global supply chain shift has positioned Vietnam as an appealing destination for factory construction projects, production hubs, and logistics centers. The demand for construction investment is not only concentrated in major cities but is also expanding to provinces and regions with socio-economic development potential.
II. Legal provisions on construction investment by foreign investors in Vietnam
1. Are foreign investors permitted to invest in construction in Vietnam?
Foreign investors are permitted to invest in construction in Vietnam under the investment forms specified in Article 21 of the Law on Investment 2020. However, investors must comply with Vietnamese law, not engage in prohibited sectors, and meet the applicable investment conditions.
2. What forms of investment are available to foreign investors in Vietnam?
Pursuant to Article 21 of the Law on Investment 2020, foreign investors may implement investment activities in Vietnam under the following forms:
- Establishing economic organizations;
- Contributing capital, purchasing stocks, or acquiring capital contributions;
- Implementing investment projects;
- Investing under Business Cooperation Contracts (BCC);
- Other forms of investment and types of economic organizations as prescribed by the Government.
Accordingly, foreign investors are fully permitted to invest in construction projects in Vietnam in accordance with current laws on investment and construction.
3. Construction-related sectors prohibited to foreign investors
Under Section A, Appendix I of Decree No. 31/2021/ND-CP, one of the prohibited sectors in construction investment for foreign investors is the development of cemetery infrastructure with the purpose of transferring land use rights attached to such infrastructure.
III. Questions regarding construction investment regulations
1. Can foreign investors invest in construction in Vietnam using US dollars?
According to Clause 1, Article 4 of Circular No. 06/2019/TT-NHNN, foreign investors are allowed to make capital contributions in foreign currency, including US dollars (USD) or other currencies, depending on the agreement and in compliance with current laws.
Thus, foreign investors may use USD or other foreign currencies for construction investment in Vietnam, provided that such capital contributions comply with applicable investment and financial regulations.
2. Competent authorities for issuance of construction investment licenses
Under Article 103 of the Law on Construction 2014 (amended in 2020), the authority to issue construction permits is decentralized as follows:
- Provincial People’s Committees: Issue permits for construction works requiring construction permits within the province, excluding works under the jurisdiction of the District-level People’s Committees. Provincial People’s Committees may delegate or authorize agencies such as the Department of Construction, management Boards of industrial zones, export processing zones, high-tech parks, economic zones, or district-level authorities to issue construction permits within their respective jurisdiction.
- District-level People’s Committees: Issue permits for level-III, level-IV construction works and detached houses within their administrative area.
Thus, the licensing authority is divided between Provincial People’s Committees and District-level People’s Committees. Provincial People’s Committees are responsible for larger-scale projects, while District-level People’s Committees handle smaller-scale and residential construction.
3. Conditions for foreign investors to invest in construction in Vietnam
To invest in construction in Vietnam, foreign investors must meet the following conditions:
- The investor must set up an investment project that aligns with the planning and complies with Vietnamese laws pursuant to Articles 31 and 33 of the Law on Investment 2020;
- The project must not fall under the List of Prohibited or Market-Access Restricted Sectors for foreign investors as prescribed in Appendix I of the Law on Investment 2020 and Appendix I of Decree No. 31/2021/ND-CP;
- The investor must obtain an Investment Registration Certificate in accordance with Clause 1, Article 37 of the Law on Investment 2020.
Only upon satisfying these conditions may a foreign investor lawfully undertake construction investment in Vietnam.
4. Investment incentives for foreign investors in construction in Vietnam
According to Clause 1, Article 15 of the Law on Investment, foreign investors in construction in Vietnam may enjoy the following investment incentives:
- Corporate income tax incentives;
- Import tax exemption;
- Exemption or reduction of land use fees, land rent, and land use taxes;
- Accelerated depreciation and increased deductible expenses.
These incentives allow foreign investors to benefit from lower corporate income tax rates, import tax exemptions, land-use fee reductions, and more favorable depreciation policies.
5. Duration and procedures for applying for construction investment permits in Vietnam
According to Article 102 of the Law on Construction 2014 (amended in 2020), the process and timeline for applying for a construction permit are as follows:
Step 1: Submission of application dossier
- The project owner submits two sets of application dossiers for issuance or adjustment of construction permits to the competent authority;
- The authority receives, checks, and provides guidance for dossier completion if any information is lacking.
Step 2: Dossier evaluation
- Within 7 working days from receipt of the application, the licensing authority must appraise the dossier and conduct a site inspection. If documents are missing, the authority will notify the investor for supplementation.
- If the supplemented dossier is still incomplete, the authority will continue to guide the applicant within 5 working days. If compliance is still not met, the authority will issue a written refusal with reasons within 3 working days.
Step 3: Obtaining opinions from relevant agencies
- The licensing authority must collect opinions from state agencies managing sectors related to the construction work. The consultation period is 12 working days for both construction works and detached houses.
Step 4: Issuance of construction permit
- Upon receiving a valid application, the permit shall be issued within 20 working days for construction works, and within 15 working days for detached houses.
- If additional time is needed, the authority must inform the investor of the reason for the delay within 10 working days.
IV. Legal consulting services on construction investment regulations
The above is an article by NPLaw on legal provisions related to construction investment. With a team of experienced lawyers and legal professionals, NPLaw is always ready to accompany, consult, and support clients on all legal issues concerning construction investment. For further assistance, please contact NPLaw via the details below:
