The Government recently issued Decree No. 175/2024/ND-CP (Decree 175), detailing several provisions and enforcement measures of the Law on Construction regarding the management of construction activities, which took effective on December 30, 2024 and replaces Decree No. 15/2021/ND-CP dated March 3, 2021 (“Decree 15”) and Decree No. 53/2017/ND-CP dated May 8, 2017 of the Government.
We set out below the notable changes under Decree 175 with respect to the management of construction activities.
- Decree 175 clearly lists out the types of planning and equivalent legal documents that serve as the basis for the formulation of the construction investment feasibility study report (“FS Report“) and the construction investment economic-technical report (“Eco-Tech Report“). This provides the owners of the construction investment projects with a clear legal ground to prepare their FS Reports and Eco-Tech Reports. Such types of planning and equivalent legal documents also serve as the basis for the construction authorities to consider the construction permit application dossier and issue the construction permit.
- Decree 175 now expands the type of construction investment projects that only need an Eco-Tech Report without having to formulate an FS Report (e.g. increasing the total investment capital of the project from VND 15 billion to 20 billion, increasing construction costs from VND 5 billion to 10 billion for projects whose main content is procurement of goods, provision of services, installation of equipment or repair and renovation projects that do not affect to the load-bearing safety of the project, adding Group C projects for maintenance and repair purposes, adding projects to dredge and maintain public navigation channels and inland waterways).
- Under Decree 175, local authorities (such as the provincial Department of Construction where the project is located, the “DOC”) will take primary responsibility for appraising the FS Report, appraising the construction design after the basic design (typically the technical design), and approving the results of final acceptance of the construction works.
- Decree 175 narrows down the definition of large-scale construction investment projects using other capital, which is subject to the appraisal of the FS Report by a specialized construction agency (the “Large-scale Projects”). Notably, housing and urban area construction investment projects which are subject to an investment policy approval according to the Law on Investment are no longer Large-scale Projects.
- Decree 175 increases the term of a new construction practicing certificate (i.e., the certificate granted to individuals who are Vietnamese citizens, Vietnamese residing abroad, and foreigners to legally engage in construction activities in Vietnam) from 5 years to 10 years. Regarding construction practicing certificates of foreigners, the term is determined according to the term stated in the work permit or the temporary residence card issued by the competent authority but not exceeding 10 years.
- Key changes in the administrative procedure, including:
- Regarding management of construction activity capacity, the local DOC now has the authority to issue Class I construction practicing certificates if delegated by the provincial People’s Committee.
- Regarding the construction operation license of foreign contractor, the application dossier no longer includes project approval decision or investment decision or project investment certificate.
- While under Decree 15, the Government encourages the application of building information modeling (BIM) in construction activities, Decree 175 mandates the application of BIM to new construction works of level II or higher of Group B projects.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
