Key highlights of the Law amending and supplementing the Law on Construction

27
August
2020

In an effort to provide practical certainties for issues under the current Construction Law and to streamline procedures for construction operations, the National Assembly of Vietnam has approved Law No.62/2020/QH14 (the “Revised Construction Law”) on the amendments and supplements to the current Construction Law. The Revised Construction Law takes effect on 1 January 2021 and introduces the following key highlights/ changes:

No. Current Construction Law Revised Construction Law
1.         New instances are added where construction permit is exempted:

  • advertisement works as prescribed by the Law on Advertisement; and
  • passive infrastructure works as prescribed by the Government of Vietnam.
2.         Contractors for execution of buildings works are encouraged (but not obligated) to obtain the insurance in respect of civil liability to third parties. Contractors for execution of buildings works must obtain a new mandatory insurance in respect of civil liability to third parties.
3.         The timing for competent authority to review application dossier and issue construction permit:30 days upon the receipt of valid dossier. The timing for competent authority to review application dossier and issue construction permit:20 days upon the receipt of valid dossier.
4.         The requirement of sufficient allocation of funds as a condition for commencement of construction work. This requirement is removed.
5.         The project developer must prepare a preliminary feasibility report prior to preparation of a feasibility study report for projects of national importance and group A projects. The project developer must prepare the preliminary feasibility study report for the following projects prior to preparation of a feasibility study report:

  • projects of national importance or group A projects funded by public investment funds;
  • PPP projects in accordance with the Law on PPP Investment; and
  • projects whose investment policy decision is approved by the National Assembly or the Prime Minister in accordance with the Law on Investment.

Note: The Revised Construction Law adds the preliminary environmental impact assessment as a new item in the preliminary feasibility report.

6.         Design for construction comprises:

  • concept designs in the preliminary feasibility study report;
  • preliminary designs in the feasibility study report;
  • technical design;
  • design drawings for execution of building works during the implementation period of the project; and
  • other design steps (if any) in accordance with international practice.

There is no provision in respect of Front-End Engineering Design (“FEED Design”) in the Current Construction Law.

Design for construction comprises:

  • concept designs in the preliminary feasibility study report for investment in construction;
  • preliminary designs in the feasibility study report for investment in construction or design drawings for execution of building works in the eco-technical report on investment in construction of the works; and
  • designs formulated after the preliminary design, comprising of FEED Design; technical design; design drawings for execution of building works; and other designs steps (if any) in accordance with international practice.

The Revised Construction Law (a) expressly categorised FEED Design as a design for construction; and (b) clarified that FEED Design is a construction design formulated after the preliminary design.

 

Do note that the following legal issue remains not addressed by the Revised Construction Law:

  • the requirement for foreign contractors to obtain a construction permit, which consequently requires:
    • establishment of project management office; or
    • joint venture or sub-contract with a local contractor.

If you have any questions or require any additional information on the Law amending the current Construction Law, please contact Kevin Hawkins and Crystal Cheong of ZICO Law Vietnam.

This alert is for general information only and is not a substitute for legal advice.