A couple of Russian and Belarusian companies are preparing to set up auto joint ventures in Vietnam to benefit from two protocols between Vietnam and the two nations on production of vehicles here in the country.

The two protocols were signed within the framework of the free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) that went into force on October 5. 

Baturo K.G. of the Belarusian Embassy in Vietnam told a conference in HCMC on Wednesday on ways to boost Vietnam’s exports to EAEU after the FTA becomes effective that MAZ trucks would be assembled at a plant of Saigon Transportation Mechanical Corporation (SAMCO).

The Belarusian manufacturer will cooperate with Vietnamese partners to build more plants to assemble MAZ trucks and buses. He noted MT’s tractors and BelAZ’s earth moving equipment have been sold in Vietnam for years.

Russia’s trade representative in Vietnam Ivan Gumnikov told the press in HCMC early this month that Russian trucks and passenger cars are expected to report strong sales in Vietnam.

Vietnam gives duty-free auto import quotas to Vietnamese-Russian joint ventures but the latter must meet a number of requirements.

Gumnikov said Russia sees no obstacle to setting up such joint ventures. Russian auto manufacturers KAMAZ and UAZ are in negotiations with Vietnamese partners to establish join ventures.

To fulfill commitments in the Vietnam-EAEU FTA, Vietnam signed two protocols with the governments of Belarus and Russia on production of automobiles in Vietnam. Draft decisions of the Prime Minister on the implementation of the two protocols have been passed around for comment.

According to the draft decisions, joint ventures between three Russian firms, GAZ, KAMAZ and UAZ, and Vietnamese enterprises can enjoy tax exemptions within the auto import quota agreed by the two sides. Joint ventures between Vietnamese firms and Belarusian’s MAZ enjoy the same incentive.

The protocols only benefit joint ventures between Vietnamese and Russian or Belarusian businesses. Just three Russian firms and one Belarusian company can establish joint ventures with local enterprises. 

They are required to map out annual production plans in Vietnam, which must include terms on technology transfer and personnel training. These plans must go before Vietnam’s competent authorities for approval.

The local content ratios of special-purpose vehicles and sport cars, trucks and over-ten-seat autos must reach 40%, 45% and 50% in 2025, respectively.

Import quotas for all Vietnamese-Russian joint ventures are estimated at 800 units in 2016, 850 in 2017 and 900 in 2018. Russia has to write to Vietnam’s Ministry of Industry and Trade informing the quota for each business.

In addition, joint ventures must seek permission from the ministry for each duty-free auto shipment.

According to the draft decisions, import quotas will drop on an annual basis.

SGT