The Ministry of Industry and Trade has proposed to lower import duties for spare parts to support the car manufacturing industry after ASEAN trade pacts.

The Ministry of Industry and Trade suggested letting the Ministry of Finance revise the import taxes and preferential taxes on auto parts. The Ministry of Industry and Trade will also adjust excise tax policy and Law on Value Added Tax.

Due to the country’s weak support industries, local manufacturers still have to import most car parts at an import tax rate of 15-18%. That is why production costs in Vietnam are much higher than in Thailand or Indonesia.

When various trade agreements take effect from 2018, the whole-car import tax from many ASEAN countries will be exempted and local car industry will face even tougher competition. Many manufacturers have asked the government to help reduce production costs.

Bui Quang Vien, chairman of Vietnam Engine and Agriculture Machinery Corporation, one of the key manufacturers and spare part suppliers in Vietnam, said it would be a huge help if the government lower import duties on the parts and can be locally made to boost local competitiveness.

Lower production cost also means can have more financial means to localise more vehicle parts, he said.

dtinews