Besides high import duties, completely-built-up (CBU) automobiles imported from Europe are also subject to strict requirements in Vietnam, leading to the shrinking of the market share of European CBU automobiles, noted an official from the European Chamber of Commerce in Vietnam (EuroCham).

CBU autos imported from Europe are on display at an expo in HCMC

At a discussion of the Whitebook Briefing 2019, held by EuroCham in HCMC on March 20, Laurent Genet, chairman of EuroCham’s Mobility Sector Committee, remarked that one of the 17 European CBU automobile brands in Vietnam had halted its operations in the country while seven others had replaced their official distributors.

Last year, Vietnam reported a 69% surge in automobile imports but mainly from other ASEAN countries.

Meanwhile, the volume of CBU car imports from European countries went down by 14% year-on-year, with only 3,000 vehicles from 14 brands.

As a result, the proportion of CBU automobile imports from Europe plunged from 10% in 2017 to 5% last year.

According to Genet, the taxes imposed on cars imported from Europe into Vietnam are 2.7 to three times higher than those on cars from other ASEAN markets, which are entitled to tax exemptions under the ASEAN Trade in Goods Agreement.

Insiders attributed the higher import duties on European automobiles to the high value of these cars and their high engine capacities.

In addition to higher import duties, Genet complained about the complicated regulations on testing automobile batches.

For example, the Vietnamese Government’s Decree 116 on automobile manufacture, assembly, import, maintenance and warranty services requires that each shipment of automobiles imported into the country be subject to all checks on exhaust emissions and safety.

Meanwhile, completely knocked down units are subject to checks every three years, which is unfair for European automobile firms, Genet noted.

He remarked that the regulation does not help ensure the quality of vehicles but costs enterprises a great deal of time and money.

Accordingly, the testing costs will be doubled while the time needed to test all automobile shipments from Europe is 42 days on average, well above the two weeks needed to check CBU automobiles from the ASEAN, according to a report by the Vietnam Business Forum's car and motorbike working group.

The regulation is not aligned with international practices, specifically the 1994 General Agreement on Tariffs and Trade.

Therefore, EuroCham proposed checking emissions and safety on the first automobile shipment alone and to accept testing reports on other shipments.

Moreover, the Ministry of Transport’s Circular 41/2018/TT regulating the list of potentially unsafe products requires that these products be certified after customs clearance and before being launched in the market.

However, the circular has hindered the automobile sector due to the large volume of automotive accessories in the market.

SGT