VietNamNet Bridge - The regulation that machines which have been used for more than 10 years will not be allowed to be imported to Vietnam is expected to affect Japanese FDI (foreign direct investment) in Vietnam.

Japan External Trade Organization’s (JETRO) Chief Representative Takimoto Koji said at a meeting with the local press on the occasion of MTA 2017, the largest annual exhibition for the manufacturing industry, that Vietnam is still a major destination for Japanese investors but the regulation has hindered them. 

Japanese manufacturers, when relocating their production bases abroad, tend to bring their own machines and equipment. 

Japanese investors have proposed amending the regulation to remove the barrier. No limitation on the age of machines should be imposed on investors who import machines for production activities of their companies, they said.

The proposal was by the Japanese Business Association which warned that the limitation may lead to a decrease in investment in Vietnam.

The regulation mentioned by JETRO is Circular 23 by the Ministry of Science and Technology (MST) which took effect on July 1, 2016. 

Circular 20 with strict requirements on the quality and usage time of used equipment, which faced strong opposition from the business circle, has been replaced with a new Circular 23.

The regulation that machines which have been used for more than 10 years will not be allowed to be imported to Vietnam is expected to affect Japanese FDI (foreign direct investment) in Vietnam.

Circular 23 stipulates that used equipment must have the usage time of less than 10 years to be eligible for import to Vietnam. The equipment must be made in accordance with Vietnam National Standards or G7’s safety, energy savings and environment standards.

However, the circular has been facing strong opposition from the domestic business circle and foreign investors who argue that the regulation is unreasonable.

The director of a Hanoi-based mechanical engineering company said it is unreasonable to impose the same limit of 10-year use on machines from different sources.

He said a machine made by G7 countries would be able to run well for tens of years, while a brand-new machine sourced from China may break after several years of operation.

The director said that unreasonable limitation will weaken the competitiveness of Vietnamese enterprises because they cannot use good used machines and equipment to cut costs.

In fact, the circular gives a ‘way out’ to enterprises. In special cases, enterprises can import the machines and products with more than 10 year use if their proposals are accepted by MST and agencies. 

However, investors are not satisfied about this, saying that this is a ‘ask and grant’ scheme.

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