Hanoi(VNA) — The domestic auto industry will need several supporting measuresincluding technical barriers to “create differences” between locally-made andimported cars, officials and industry insiders agree.

At a recentseminar held in Hanoi, officials of the Ministry of Industry and Trade (MoIT)and representatives of local auto makers discussed ways to address thechallenges posed by the zero percent import tax on cars from the ASEAN bloc,which takes effect next year.

TruongThanh Hoai, Director of the Department of Heavy Industry under the MoIT, saidseveral firms currently assembling cars in the country are likely to switch toimporting them.

He notedthat some firms have eased production to focus on key models that are morecompetitive in the market.

He saidthe use of cars is rapidly increasing, with consumption having reached thefigure envisaged for 2020, but the domestic auto industry faced a lot ofshortcomings, and will be hit hard in 2018 when taxes on ASEAN imports drop tozero.

Statisticscompiled by his department show that in the 2013-2016 period, the volume oflocally-assembled cars and imported cars accelerated with an average growth of30 percent per year. Of this growth, locally-assembled cars met 70 percent ofthe market demand.

A few domesticbusinesses also entered the global auto manufacturing chain; however, aftermore than 20 years of development, the industry faced several shortcomings, Hoaisaid.

Itsprices are high compared to other countries in the region, quality is not as goodas imports, as per consumer evaluation, it has failed to develop into a realauto industry, remaining at the basic assembling level and it had a lowlocalisation rate for cars with nine seats and less.

ToruKinoshita, General Director of Toyota Motor Vietnam, said his firm had alwaystried to increase the localisation rate. However, in the current context,Toyota had reduced its production from five to four types of cars, whosevolumes will be increased, he said.

The dropof import tax to zero percent by 2018 is a good sign from a market angle, but ahuge pressure on the domestic auto industry, said Kinoshita, who is also thePresident of Vietnam Automobile Manufacturers’ Association.

He saidthe Ministry of Industry and Trade needs to propose to the Government that itsupports the domestic industry, failing which the automakers will run the riskof becoming uncompetitive and even going bankrupt as imported cars take overthe market.

Kinoshitasaid it is possible for the domestic auto industry to develop, but the State’smanagement agencies need to consider policies which can “create differencesbetween locally-made and imported cars.”

Theministry suggested three groups of measures to develop the industry, with themain targets of maintaining local manufacturing and boosting the supportingindustry.

The firstgroup will focus on creating technical barriers, preventing trade fraud in taxdeclaration and fraud in the certificate of origin for enjoying preferentialtariffs.

Thesecond group will support automakers cut the prices and raise competitivenessby issuing standards for components and parts, adjusting import taxes oncomponents and parts.

The thirdgroup will focus on developing the supporting industry, with local businessesasked to take part in manufacturing components and parts. It will also helplocal parts suppliers through the supporting industry development programme.

DeputyMinister of Industry and Trade Do Thang Hai said policies for automobileindustry development will primarily target the community’s interest, not ofgroup of businesses.

“First ofall, we will focus on maintaining local assembling and developing thesupporting industry at the same time. The ministry’s measures will aim tocreate the market capacity to ensure development,” said Hai.

Based onthis, it will boost other sectors’ production and ensure fair competitionbetween imported and locally-assembled cars, he said.-VNA