VietNamNet Bridge – Deputy Prime Minister Hoang Trung Hai has called on relevant ministries to work closely with the Japanese embassy over the drafting of an action plan for automobile industry development so that it can go before the Government next month.

Cars are assembled at a foreign-invested enterprise

The plan is part of the Industrialization Strategy within the Vietnam-Japan cooperation framework until 2020 with a vision towards 2030 already approved by Prime Minister Nguyen Tan Dung in his Decision 1043/QD-TTg in July 2013.

According to the decision, the production of autos and auto parts is one of the six sectors outlined in the Industrialization Strategy and will be funded to become one of the nation’s key industries with strong competitiveness in 2020. The other five sectors are electronics; agricultural machines; farm produce and seafood processing; shipbuilding; environment; and energy saving.

The industries are expected to apply state-of-the-art technologies to increase production value by at least 20% annually and contribute 35% of the nation’s total industrial output value.

For many times, Japan and its auto enterprises have requested Vietnam to work out an action plan comprising incentives and stable policies to woo major investors to the local auto industry and encourage them to make long-term investments here in this market.

Over the years, the Ministry of Industry and Trade has drawn up plans on tax and fee incentives in the hopes of providing catalysts for the development of the auto industry.

In mid-2014, the Prime Minister passed the auto development strategy until 2025 with a vision towards 2035 with an aim to enable Vietnam to build a strong auto industry and become part of the world’s auto production chain in 2026.

As envisioned in the auto strategy, Vietnam would manufacture some 460,000 vehicles by 2020, three times higher than the volume of cars sold a year at the moment, and more than 1.5 million cars a year in 2035.

In the strategy, 30% of a car’s parts would be made in Vietnam by 2020. Supporting industries are projected to bring in export revenue of US$10 billion by 2035.

The Prime Minister has ordered the industry ministry to coordinate with relevant agencies to review and revise mechanisms and policies, particularly those on taxes and fees in accordance with Vietnam’s commitments to bilateral and multilateral trade agreements.

Revised policies should be kept stable for at least a decade to stimulate enterprises to make long-term investments in this market.

According to industry insiders, it is good for Vietnam to cooperate with Japan in making the auto industry a strong one as Japan is one of the world’s leading auto producers. But the question is that whether Vietnam has sufficient time to make its auto industry competitive in the ASEAN region when tariffs on completely built-up units imported from the regional bloc will be slashed to a common rate of 0% in four years’ time.

Therefore, Deputy PM Hai, head of the Steering Committee for the Industrialization Strategy, has demanded close cooperation among ministries and agencies to quickly prepare action plans for the Industrialization Strategy, according to the Government’s portal chinhphu.vn.

The Ministry of Planning and Investment has been told to work out an implementation program for these action plans for submission to the committee for consideration and approval before February 27.   

The Ministry of Planning and Investment should update fields and products which have much potential for cooperation with Japan in preparation for investment promotion trips in Japan in the coming time.    

SGT