VietNamNet Bridge - The Ministry of Industry and Trade (MOIT) will offer investment incentives to auto manufacturers in an effort to continue the development of the country's automobile industry. 

Tuoi Tre reported that MOIT has proposed special policies to support both automobile manufacturers and consumers to help develop the industry.

The ministry has suggested preferential corporate income tax rates for large investments that would produce 50,000 vehicles a year at minimum and make car models encouraged by the State.

Regarding the policies to stimulate demand, MOIT has suggested giving financial support to consumers. Under the draft Prime Minister’s decision, those, who buy vans up to 3 tons and small-size multifunctional farm vehicles would be able to get loans worth 100 percent of product value, and 100 percent support  in interest rate in the first two years and 50 percent in the third year. 

The Ministry of Finance (MOF), when drafting the law on amending the tax laws, had previously suggested cutting tax rates on car models that Vietnam has been encouraged to make. It proposed imposing a high tax on car models with up to nine seats and cylinder capacity of over 3.0L. 

These are models which consume a lot of fuel and have large sizes which do not fit Vietnam’s transport infrastructure conditions and Vietnamese income.

The investment incentives MOIT and MOF plan to offer to automobile manufacturers show that Vietnam still nurtures the dream of developing its automobile industry despite failure in the last two decades.

Nguyen Van Nam, a renowned economist, while agreeing that it is necessary to offer investment incentives to lure investors, said he the incentives may not work.

“What if automobile manufacturers come to Vietnam just to enjoy investment incentives and then say ‘goodbye’ when they cannot receive investments anymore,” he said. 

Nam said that some automobile manufacturers have threatened to leave Vietnam if the government does not agree to investment incentives they want.

Toyota, for example, sent many documents to the government asking for tax incentives worth trillions of dong. In late November 2014, seven domestic automobile manufacturers sent a document to the Prime Minister and National Assembly’s Steering Committee, making suggestions on domestic auto industry. But they, in reality, were insisting on more investment incentives.

“Can Vietnam give investment incentives to automobile manufacturers for life?” Nam said. “What Vietnam strives for its an automobile industry of its own.”

Tran Thuy