VietNamNet Bridge – The automobile and motorbike industries are not the subject to any investment encouragement policies. However, the government has been urged to change the current situation, because the development of the automobile production would bring about the development of other industries.

The Vietnam Business Forum (VBF), an event which always occurs on the sideline of the meeting of the group of donors to Vietnam, opened on December 3 in Hanoi. And the most important thing of the important event is the presence of the newly set up automobile and motorbike working group.

The working group, right at its debut, made a lot of suggestions to develop the automobile industry in Vietnam. One of the suggestions is adding the automobile and motorbike production into the list of high technology industries that need encouragement to develop.

At present, the industry is not subject to any investment encouragement policies. But if they are considered high technologies industries, i.e. they can receive investment incentives, they would bring big benefits to the economy.

Meanwhile, experts say in other countries, the automobile industry plays a very important role in their technology development. The development of the industry has a close relation with the nations’ development, skills and know-how, and the education system. The number of engineers of a nation can be seen as the tool that measures the renovation capability and the national competitiveness.

The heavy investments in supporting industries which can create high-value products such as engines, electric system and car parts would help Vietnam heighten its position in the world’s industrial production map.

Vietnam would turn into a country with the advantage in technological sustainability instead of a country with the advantage in the low production cost. Metallurgy, precise mechanical engineering, which are the important links in the automobile industry, still have not developed in Vietnam due to the lack of know-how.

However, the situation would be improved if Vietnam applies the encouragement policies which allow businesses minimizing the risks in joining the market.

In fact, Vietnam once dreamed of developing the automobile industry when it opened the market to a series of the world’s biggest automobile manufacturers. At the highest peak, 11 automobile joint ventures were present in Vietnam.

However, experts believe that Vietnam has failed completely in implementing its strategy to develop the industry. What Vietnam has now is not an automobile industry, but just an assembling industry.

The experts believe that it’s too late to begin developing the automobile industry by following a new way. However, the working group at the VBF 2012 still believes that Vietnam’s automobile industry still has a lot of opportunities to develop.

Vietnam now has the population of 90 million people, while the figure is expected to increase rapidly in the next 10 years. Meanwhile, its GDP per capita is 1200 dollars which would be 4000 dollars by 2020. The increase in the GDP per capita and the population would affect the habits of Vietnamese people in using and buying cars.

At present, there are only two cars per every 1000 people, but the proportion would increase in the future. It happened in other countries that the economic growth led to the increasing habit of using cars, which then led to the strong development of the automobile industry.

The Vietnamese automobile industry is now considered very small. However, it is still big enough to make 3-5 percent of GDP and creates 125,000 direct jobs and 500,000 indirect jobs. By the end of August, automobile enterprises had paid 457 million dollars to the state budget, even though the sales dropped by 65 percent in comparison with the same period of the last year.

TBKTVN