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Frustrated with gov’t policy, automakers set up factories elsewhere

While Vietnamese ministries argue about policies on the development of the automobile industry, many auto manufacturers that once intended to invest in Vietnam have changed their mind and left the country.

VietNamNet Bridge – While Vietnamese ministries argue about policies on the development of the automobile industry, many auto manufacturers that once intended to invest in Vietnam have changed their mind and left the country.

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Japanese Mazda, for example, recently announced that its main production base in Southeast Asia would be located in Thailand. Besides an assembling factory, Mazda is now moving ahead with a plan to develop a factory specializing in engines in Thailand.

The building of an engine factory in Thailand will start the second phase of Mazda’s Eco-Car program. The Thai government has promised many investment incentives to foreign investors who make fuel-saving and environment-friendly automobile products.

Hyundai, the South Korean automobile manufacturer, has unexpectedly announced that it would beef up production lines in Malaysia.

An analyst noted that most of Hyundai’s car models released this year and sold in Thailand and Vietnam were made in Malaysia.

He said that with the automobile factory in Malaysia, Hyundai can enjoy benefits from AFTA’s CEPT, a preferential tariff program, which helps its products become more competitive in Southeast Asian markets.

He said that most of the world’s big automobile manufacturers have been eyeing Southeast Asian countries as places to set up production bases, because they can take full advantage of regional free trade agreements (FTAs).

However, no automobile manufacturer has explicitly said they would invest in Vietnam.

The problem is that the government of Vietnam still has not clarified its policies on automobile industry development. Meanwhile, other countries have publicized their policies for investors’ consideration.

Southeast Asia is considered the last potential automobile market in the world. It is expected that 4.7 million cars would be bought by 2018, and 8 million by 2030.

As multinational automobile groups have decided to invest in other Southeast Asian countries, Vietnam may have few opportunities as its policies are still on paper only.

Ministries and branches have been told to review current policies and make reasonable proposals to the Prime Minister by November 2014 at the latest.

Nguyen Manh Quan, Director of the Heavy Industry Department of the Ministry of Industry and Trade, said that his ministry had consulted with relevant ministries and branches about tax policies on automobile products. However, there have been very few replies.

The program on automobile industry development was initially planned to be submitted to the government before the opening of the eighth National Assembly’s session. However, no report has been submitted, though the session is expected to conclude in several days.

An official from MOIT said the auto industry policies could not be implemented in early 2015, as planned.

Tran Thuy

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