Domestic automakers are moving towards importing cars that were previously manufactured and assembled in the country, as the import tax on cars from ASEAN countries will be removed from 2018.

The use of automobiles is rapidly increasing and the current consumption has reached the country’s 2020 estimate already.

Speaking to representatives of domestic automakers at a seminar in Ha Noi on Tuesday, Truong Thanh Hoai, the Ministry of Industry and Trade’s (MoIT) heavy industry department director, said some auto companies had reduced the production of available car types to focus on key types that were highly competitive in the market.

“The use of automobiles is rapidly increasing and the current consumption has reached the country’s 2020 estimate already. But the domestic industry still has a lot of shortcomings, keeping in mind the removal of import tax on cars from ASEAN countries by 2018,” Hoai said.

In the 2013-16 period, the department statistics showed that the volume of locally assembled cars and imported cars had accelerated, recording an average growth of 30 per cent per year. Locally assembled cars met 70 per cent of the market need. 

Several domestic businesses also were part of the global auto manufacturing chain, forming an automobile industry in this area.

However, after more than 20 years of development, there are shortcomings such as the price is still high; the quality is not as good as imported vehicles according to users; the required global norms for the auto industry have not been achieved and the sector is more a simple assembling industry; and the localisation of vehicles with nine seats or less remains low.

At the seminar, Toru Kinoshita, general director of Toyota Motor Vietnam, said his firm had always tried to raise its localisation rate, but that in the current context, Toyota had reduced its production from five to four types of cars, whose volume would be increased.

The removal of import tax is a good signal, but it puts high pressure on the domestic auto manufacturing industry, said Kinoshita, who is also the president of Vietnam Automobile Manufacturers’ Association.

He said the MoIT must propose to the Government that it support the auto sector. If not, domestic manufacturers may not be able to face the pressure of competition and cheaper imported cars and could go bankrupt.

“The development of the domestic auto manufacturing industry is possible, but a drop of import tax will cause an increase in the volume of imported cars. State management bodies must consider policies that can create a differentiation between locally manufactured cars and imported ones,” said Kinoshita.

To solve the problem, the ministry has suggested three types of steps to encourage local manufacturing and boost the auto support industry.

The first type focuses on creating technical barriers and preventing trade frauds in tax declaration and frauds in the certificate of origin for better tariffs.

The second group of measures is to support automakers in cutting the price and raising the competition bar by issuing standards for components and parts and adjusting import tax on component and parts.

The third step is to focus on developing the auto support sector, wherein local businesses will be encouraged to manufacture components and parts and existing local parts suppliers will get help through a support industry development programme.

Do Thang Hai, deputy minister of industry and trade, said the criteria for policies for the development of the automobile industry would be that it was not for any business or group of businesses but for the community, for the economy and the right and interest of the consumers.

“We will focus on maintaining local assembling and developing the support industry at the same time. The ministry’s measures aim to create the market capacity to ensure development,” Hai said, adding that it would ensure fair competition between imported cars and locally assembled cars. 

VNS