New points of Law on amending and supplementing to Law on Construction of Vietnam

Co-writers: Thao Bui & Vi Tran 

Vietnamese National Assembly adopted Law on amending and supplementing of the Law on Construction 2014 (“LOC 2020”) on 17 June 2020. This law will take full effect on 01 January 2021. LOC 2020 has many innovations, creates more favorable conditions in the construction field, especially for construction enterprises.

Our construction lawyers would like to lead some highlights of the LOC 2020 as follows:

1. Specialized construction authority

LOC 2020 has changed definition of specialized construction authority (“SCA”). It does not specified name of authorities, just mentioned as assigned authorities to manage construction. However, such authorities shall work under the instruction of Ministry of specialized construction management and the Provincial People’s Committee. Besides, LOC 2020 recognize role of industrial parks, export processing zones, high-tech zones, economic zones’ Management Boards in construction management.

2. Appraisal competence

LOC 2020 clearly regulates competence of each subject in construction project appraisal. Details as follows:

(i) Investment decider, investor appraise the construction investment and design approval; and

(ii) SCA appraises to control compliance with legal regulations of subjects participating in construction activities.

3. Evaluation of the report

The following projects shall comply with procedures provided by LOC 2020:

(i) National important projects using public investment shall comply with public investment law;

(ii) Public private partnership project shall comply with public private partnership investment law; and

(iii) Other projects.

Besides, construction investment projects in service of national defense and security shall apply specific regulations. It shall also be under the control of Ministry of Defense and Ministry of Public Security.

4. Environmental impact assessment (“EIA”) report

Previously, the environmental impact assessment was only carried out in the project preparation stage following the Law on Environmental Protection. In LOC 2020, it is compulsory for the below projects to have EIA report in the stage of pre-feasibility study report on construction investment:

(i) National important and group A projects using public investment capital;

(ii) Public private partnership projects; and

(iii) Projects under the authority of the National Assembly, the Prime Minister to decide on investment policies.

5. Construction permit

Construction permit (“CP”) is issued by a competent state authority to an investor to build, repair, renovate or relocate works. Here are 04 outstanding new points of LOC 2020 related to CP, as following:

Firstly, works are exempt from CP

(i) 02 works exempted from CP

According to LOC 2020, the followings are CP’s exemption cases:

  • Advertising works not required to be granted a CP in accordance with the law on advertisement; and
  • Passive telecommunications technical infrastructure work.

(ii) Competence to decide construction investment

Together with the existed competence agency, LOC 2020 supplemented others competent subjects who are head of these following authorities:

  • Central body of political organizations;
  • The People’s Supreme Procurators;
  • The People’s Supreme Court;
  • The State Audit;
  • The President’s Office;
  • The National Assembly’s Office; and
  • Central body of Committee of the Vietnamese Fatherland Front and social – political organizations.

(iii) Condition for exemption from CP of separate house

LOC 2020 has removed condition of total floor area under 500m2 for CP exemption. Accordingly, separate house shall be an exemption if it meets 2 condition:

  • Having scale below 07 floors; and
  • 1/500 detailed plan has been approved by a competent state authority.

(iv) Construction works in rural areas

Only construction work level IV and separate house under 07 floors in rural area shall be exempted from CP.

Secondly, types of CP

LOC 2020 provides CP with definite-term is one type of CP. Hence, from 01 January 2021, there are 04 types of CP as following:

  • New CP;
  • Repair and renovation permit;
  • Relocation permit; and
  • Definite-term CP.

Accordingly, LOC 2020 supplements 02 conditions on granting definite-term CP:

  • Belonging to the planning of functional construction zones or detailed planning, detailed planning of functional construction;
  • Suitable for the land use purpose determined in the lawful documents.
Thirdly, licensing period for CP

The duration for obtaining CP for construction work is 20 days from the date of receiving full valid dossier. It is shortened by 10 days compared to LOC 2014. For separate house, period of issuance is consistent with LOC 2014, which is still 15 days.

Finally, competence to issue CP

Pursuant to LOC 2020, special level construction is no longer under competence of the Ministry of Construction. It shall be under the management of Provincial People’s Committee. Licensing competence is specified in LOC 2020 as following:

  • District People’s Committee issues for level III, level IV construction work and separate house in their territory; and
  • Provincial People’s Committee issues for remaining construction works and houses, including special level construction.

6. Conditions for starting construction work

One of conditions for starting construction work following LOC 2014 is allocating sufficient capital according to the work construction progress. LOC 2020 has removed such condition and provided term of sending prior notice of construction. Such notice must be sent before at least 03 working days from the date of starting construction work. These followings are conditions that investor must meet to start a construction work, in which must have:

  1. Construction ground for handover in whole or in part according to the construction progress;
  2. CP;
  3. Approved checked and certified construction drawing design of to-be-constructed items or works by the project owner;
  4. Construction contract with selected contractor;
  5. Measures of safety and environment protection;
  6. Prior notice of construction starting date at least 03 working days.

7. Demolition of construction work

LOC 2020 supplements regulation on demolishing construction of work in case of following event:

  1. urgent demolition to promptly prevent, fight and remedies of natural disasters;
  2. catastrophes and epidemics; and
  3. urgent missions to ensure national defense, security and foreign affairs under decisions of competent state agencies.

Besides, LOC 2020 set out procedure for demolition of construction work to ensure safety and environment protection as following:

  • Making plans, solutions to demolish construction work;
  • Examining and approving designed plans, solutions to demolish construction work that greatly affect safety and community benefits;
  • Demolishing construction work;
  • Conducting supervision and acceptance of construction work demolition.

Notably, regulations regarding appraisal and competence of the Provincial People’s Committee with CP have taken effect from 15 August 2020.

In conclusion, new points of LOC 2020 make construction activities carried out more convenient and obvious. That can bring a certain development step to the economy of country.

Read more about 3 notes when registering address change for PMO of foreign contractors or new points of Law on Enterprises 2020 and Law on Investment 2020 of Vietnam.

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