Only days after Decree No. 101/2026/ND-CP took effect, concerns raised by businesses prompted Deputy Prime Minister Ho Quoc Dung to instruct ministries and agencies to review implementation issues and report back to the Prime Minister before July 25.

Among the most debated provisions is the decision to classify Euro 5 automotive manufacturing technology as a technology subject to restricted transfer.

The controversy stems from an apparent contradiction: while Euro 5 vehicles remain fully legal to manufacture, sell and operate in Vietnam, companies seeking to transfer the technology used to produce those vehicles may first need government approval.

When legal technology still requires permission

Automakers are still allowed to manufacture, sell and export vehicles that comply with the Euro 5 emissions standard.

However, under the new regulation, transferring the manufacturing technology for those same vehicles into Vietnam may require prior approval from the authorities.

This distinction lies at the heart of the concerns surrounding Decree 101.

Placing Euro 5 automotive and engine manufacturing technology on the list of technologies subject to restricted transfer does not prohibit its use or ban production.

Instead, it changes the regulatory approach by requiring technology transfers to undergo prior administrative approval rather than following standard commercial procedures.

For an industry where manufacturing technologies evolve continuously with every new vehicle generation, obtaining approval may not be a one-time process. It could become an additional compliance requirement throughout future investment cycles.

The central question is whether such a requirement is necessary.

Euro 5 remains Vietnam's current emissions standard for newly manufactured, assembled and imported vehicles.

If vehicles meeting that standard are already legally approved for production, sale and use, why should the technology used to produce them be subject to a separate pre-approval process?

If the objective is to assess technology quality, policymakers should clarify which authority will conduct the evaluation, what criteria will be applied and how the process adds regulatory value beyond existing emissions standards, technical regulations and product certification systems.

These are questions that deserve clear answers whenever new regulatory requirements are introduced.

Similarly, if environmental protection is the primary objective, Vietnam already has multiple regulatory tools available, including emissions standards, technical regulations, product inspections and manufacturer responsibilities.

The question then becomes whether an additional technology transfer approval process would meaningfully reduce emissions - or simply increase compliance costs.

Risks for investment and localization

The Vietnam Automobile Manufacturers' Association (VAMA) has not challenged the government's regulatory objectives.

Instead, the association has proposed removing Euro 5 technology from the restricted transfer list, clarifying how the regulation applies to automotive components and introducing more appropriate rules for technologies used to manufacture export products.

Behind these recommendations lies a practical concern.

Additional approval procedures could delay investment decisions, increase compliance costs and slow the introduction of new vehicle models.

More importantly, the policy could affect Vietnam's long-term industrial strategy.

Increasing local content requires manufacturers to continue transferring technology, expanding domestic production and bringing more value-added manufacturing processes into Vietnam.

If technology transfer becomes more complicated or less predictable, companies may instead choose to keep more production stages overseas while importing finished products or components into Vietnam.

In that scenario, a policy intended to regulate technology could unintentionally undermine efforts to strengthen Vietnam's automotive manufacturing base.

Regulate risk - not every technology

Businesses are not arguing against government oversight.

Their concern is that the same regulatory objectives may now require an additional administrative procedure.

The Ministry of Industry and Trade has suggested a different approach: exempt technologies used for export-oriented manufacturing, combine company commitments with post-transfer inspections, and focus stricter controls only on technologies that genuinely pose risks to national security, public health or the environment.

That proposal reflects a broader shift toward risk-based regulation.

Instead of requiring every technology transfer to obtain prior approval, regulators could concentrate resources on technologies presenting higher levels of risk while relying on commitments and post-market oversight for technologies already widely commercialized.

Such an approach could achieve the government's regulatory objectives without imposing the same approval process on every technology.

High-risk technologies deserve rigorous scrutiny.

Technologies that are already commercially established and legally used in Vietnam may be better managed through monitoring and post-transfer enforcement.

That philosophy also aligns with Vietnam's broader institutional reforms in recent years, which have emphasized reducing pre-approval requirements, lowering compliance costs and avoiding the creation of unnecessary administrative barriers.

If Vietnam hopes to attract the latest manufacturing technologies, investors are unlikely to be persuaded by additional licensing procedures.

What they seek instead is a legal environment that is stable, transparent and predictable.

Ultimately, the debate over Euro 5 extends beyond emissions standards or a single technical regulation.

It raises a broader policy question: as countries compete to attract advanced manufacturing technologies, should Vietnam rely on additional approval procedures - or strengthen its competitiveness through a more transparent, efficient and predictable regulatory framework?

Tu Giang