Import tax on CBU (completely built unit) cars from Southeast Asiannations will be reduced to zero by 2018, posing a challenge forVietnamese policy-makers and car producers, who now need to find ways toboost the domestic automobile industry further.
According to the Ministry of Industry and Trade, Vietnam’s automobileindustry currently almost meets domestic demand; 80 percent of thedemand for passenger cars and 60 percent of the demand for trucks aremet domestically.
Meanwhile, a domestic componentmanufacturing sector has been established, supplying numerous types ofspare parts for domestic automobile production and assembly.
Additionally, the broad participation of businesses, includingworld-famous manufacturers like Toyota, Honda, Nissan, Mercedes-Benz andFord, is boosting the local car industry. There are now 18foreign-invested businesses and 38 domestic businesses involved inautomobile manufacturing and assembly with a capacity of around 460,000cars per year.
According to statistics from theVietnam Automobile Manufacturers’ Association (VAMA), its memberscontributed approximately 1 billion USD generated in taxes to the Statebudget in 2013, and created jobs for around 600,000 people, bothdirectly and indirectly.
However, the localisationratio for automobiles assembled in Vietnam is very low, approximately7-10 percent for cars with less than ten seats, and 35-40 percent forlight trucks. Large manufacturers such as Toyota and Ford have failed toachieve their localisation ratio targets.
Meanwhile, prices for cars in Vietnam are 20 percent higher than in other ASEAN countries.
Jesus Metelo Arias, VAMA Chairman and Ford Vietnam Managing Director,said that rapid policy changes are preventing the auto sector fromgrowing, since automobile manufacturers usually plan their business andproduction activities for at least 5 years ahead.
Looking at Thailand, Vietnam’s neighbour, he said that the country nowranks amongst the world’s top 10 largest automobile exporters, producingaround 2.8 million units each year with 1 million units for export. Thesuccess can be attributed to such policies as protecting import tariffsfor manufacturing materials, lowering taxes from 30 percent to 20percent for automobile manufacturers, and encouraging local enterprisesto invest in manufacturing spare parts.
In an effortto boost Vietnam’s automobile industry, Prime Minister Nguyen Tan Dungrecently approved a master plan on the development of the industry by2020, with a vision for 2030. The automobile industry is to become animportant domestic sector, capable of meeting domestic demand fortrucks, passenger cars and some types of special-purpose vehicles.
Priority will be given to vehicles with less than nine seats, in linewith rising demand for this type of car. Estimates reckon that Vietnam’spopulation will exceed 100 million by 2020, and per capita income willreach 2,000 USD per year.
The State will also offerincentives to people purchasing both cars which suit the country’sinfrastructure and trucks intended for use in manufacturing andproduction.
Tran Ba Duong, Truong Hai Auto Chairman,said that Vietnam’s automobile industry requires the use of appropriatetechnologies that satisfy price requirements, rather than high techsolutions.
He also stressed the need for the countryto integrate itself more deeply into global supply chains and producecomponent parts in line with international standards.
To develop industries supporting the automobile industry, expertssuggested Vietnam put forward more preferential policies, such asreducing taxes, attracting more investments in the industry, andproviding loans for businesses.-VNA
According to the Ministry of Industry and Trade, Vietnam’s automobileindustry currently almost meets domestic demand; 80 percent of thedemand for passenger cars and 60 percent of the demand for trucks aremet domestically.
Meanwhile, a domestic componentmanufacturing sector has been established, supplying numerous types ofspare parts for domestic automobile production and assembly.
Additionally, the broad participation of businesses, includingworld-famous manufacturers like Toyota, Honda, Nissan, Mercedes-Benz andFord, is boosting the local car industry. There are now 18foreign-invested businesses and 38 domestic businesses involved inautomobile manufacturing and assembly with a capacity of around 460,000cars per year.
According to statistics from theVietnam Automobile Manufacturers’ Association (VAMA), its memberscontributed approximately 1 billion USD generated in taxes to the Statebudget in 2013, and created jobs for around 600,000 people, bothdirectly and indirectly.
However, the localisationratio for automobiles assembled in Vietnam is very low, approximately7-10 percent for cars with less than ten seats, and 35-40 percent forlight trucks. Large manufacturers such as Toyota and Ford have failed toachieve their localisation ratio targets.
Meanwhile, prices for cars in Vietnam are 20 percent higher than in other ASEAN countries.
Jesus Metelo Arias, VAMA Chairman and Ford Vietnam Managing Director,said that rapid policy changes are preventing the auto sector fromgrowing, since automobile manufacturers usually plan their business andproduction activities for at least 5 years ahead.
Looking at Thailand, Vietnam’s neighbour, he said that the country nowranks amongst the world’s top 10 largest automobile exporters, producingaround 2.8 million units each year with 1 million units for export. Thesuccess can be attributed to such policies as protecting import tariffsfor manufacturing materials, lowering taxes from 30 percent to 20percent for automobile manufacturers, and encouraging local enterprisesto invest in manufacturing spare parts.
In an effortto boost Vietnam’s automobile industry, Prime Minister Nguyen Tan Dungrecently approved a master plan on the development of the industry by2020, with a vision for 2030. The automobile industry is to become animportant domestic sector, capable of meeting domestic demand fortrucks, passenger cars and some types of special-purpose vehicles.
Priority will be given to vehicles with less than nine seats, in linewith rising demand for this type of car. Estimates reckon that Vietnam’spopulation will exceed 100 million by 2020, and per capita income willreach 2,000 USD per year.
The State will also offerincentives to people purchasing both cars which suit the country’sinfrastructure and trucks intended for use in manufacturing andproduction.
Tran Ba Duong, Truong Hai Auto Chairman,said that Vietnam’s automobile industry requires the use of appropriatetechnologies that satisfy price requirements, rather than high techsolutions.
He also stressed the need for the countryto integrate itself more deeply into global supply chains and producecomponent parts in line with international standards.
To develop industries supporting the automobile industry, expertssuggested Vietnam put forward more preferential policies, such asreducing taxes, attracting more investments in the industry, andproviding loans for businesses.-VNA
