This proposal seems in sync with the pace of reform, as sectors must cut business conditions. However, behind it lies a developmental choice: does Vietnam still want to build an automobile industry, or accept becoming a consumer market for the world?

From a policy perspective, grouping manufacturing/assembly and importation into one conditional business sector is unreasonable, as these two activities have different natures.

Importing is essentially a commercial activity that can be regulated by tariff, technical standards, and quality control. Auto manufacturing and assembly are industrial activities linked to the goals of developing technology, supporting industries, and domestic production capacity. Therefore, it is necessary to separate these two groups into distinct sectors to have an appropriate policy approach.

The decision carefully weighed

Since Toyota Motor Vietnam entered Vietnam in 1995, the automobile industry has developed under a framework of deliberate protection, aligned with the country’s broader integration trajectory.

In 2011, MOIT issued Circular 20, erecting barriers against imported cars to "support" FDI auto assembly enterprises in increasing their localization rate after more than two decades of protection. 

In early 2016, at the start of a new term for the Government and the National Assembly, a fierce policy debate took place: should Vietnam open up completely or continue to protect the automobile industry?

One side argued for the removal of administrative barriers to let the market decide, as prolonged protection had yet to form a true automobile manufacturing industry. The other side viewed the problem as an industrial security puzzle: if opened while internal strength remained weak, Vietnam would quickly become a pure consumer market, or even a place for obsolete car models.

Ultimately, both the Government and the National Assembly agreed to choose the second option. The manufacturing, assembly, and importation of automobiles were included in the list of conditional business fields in the Law on Investment. 

The Government sent a clear message: this is an industry that needs deliberate protection to develop.

An industry begins to take shape

Since 2017, following that decision, a wave of investment has taken place in the auto manufacturing and assembly industry.

VinFast is the largest project, with total capital estimated at billions of dollars, and a factories in Hai Phong and Ha Tinh, bringing domestic capacity to 450,000–500,000 vehicles per year.

THACO continues to expand the Chu Lai complex, accumulating an investment capital of about several billion dollars, with a total capacity of about 250,000–300,000 vehicles per year. Additionally, Hyundai Thanh Cong raised its capacity to about 180,000 vehicles per year.

Recently, new projects and joint ventures such as Skoda Auto, Geely, and Chery are adding several hundred thousand more vehicles to the capacity. 

Along with the large investment, the Vietnamese automobile market is also expanding very quickly and has reached a large enough scale to serve as a foundation for an industry. In 2024, 500,000 cars were sold, and in 2025, the figure reached 600,000.

However, alongside that growth, imports also increased at a similar rate, from over 173,000 vehicles in 2024 to over 205,000 vehicles in 2025, with a total turnover of nearly $5 billion.

The market is large enough, but domestic production capacity has yet to keep up with demand. Vietnam remains both a fast-growing market and one significantly dependent on external supplies.

While Vietnam is considering loosening import conditions, large economies are doing the opposite. The US imposes high tariffs and gives strong support to domestic production, while the EU installs strict technical barriers.

What’s happen if VN clears the way for trade?

If automobiles are removed from the conditional business sector, the market will open up in a truly free sense, with entry barriers nearly disappearing. In the short term, consumers may benefit from lower prices, and importing enterprises will have more room to expand their market share.

However, in an industry requiring large scale and capital like automobiles, new capital flows are likely to concentrate on trade, and imports will increase faster than domestic production. When that happens, large investment projects will struggle to reach optimal scale, and supporting industries will lose further development momentum. 

The greatest price does not lie in short-term benefits but in the possibility of losing the opportunity to form a strong enough domestic supply chain. For the automobile industry, business conditions are not just administrative barriers but also policy tools to screen investors, orient production scales, and link industry development with supporting industries.

Tu Giang