Hanoi (VNA) - Vietnam needs to issue special policies for theautomobile industry to catch up with other countries in the ASEAN region, saidexperts at a conference held in Hanoi on October 22.

Hosted by the Central Institute for Economic Management (CIEM), expertsdiscussed solutions to complete tax policies and financial support to boost thedevelopment of the industry of automobile and auto parts.

According to CIEM deputy head Nguyen Thi Tue Anh, the production of automobileand auto parts is one of six key industries of Vietnam.

She said it was needed to clarify the situation, inadequacies and limitationsin the implementation of policies as well as proposing solutions whilemotivating businesses to develop.

Statistics from the Ministry of Industry and Trade shows the country’sautomobile business has grown rapidly in recent years. The number oflocally-assembled vehicles has annually risen 10 percent in the period 2015-18,reaching 250,000 units in 2018.

Weak production is one of the reasons the industry failed to cope with thecompetition on tax cuts, which was eliminated for cars from ASEAN countrieslast year.

After nearly 20 years of development, there are only segments of passenger carsand trucks meeting local targets of localisation rate (local part supply) at 20percent and 45 percent, respectively.

In term of car with less than nine seats, the localisation rate reached anaverage of 7-10 percent, much lower than the set figure. The locally-producedproducts are simple such as tires, seats, mirrors and batteries. Meanwhile, thelocalisation rate of countries in the region has reached an average of 70 percent,even 80 percent in Thailand.

Nguyen Trung Hieu, head of Policy Department under Vietnam AutomobileManufacturers Association (VAMA), said that by the end of 2018, the country had358 automobile-related manufacturing enterprises with 50 automobile assemblingunits, 45 enterprises producing chassis, bodies and trunks and 214 auto parts.

This figure is much lower than other countries in the region such as Malaysiaand Thailand, he said.

Hieu added the domestic support industry enterprises have good capacity in someareas such as moulds, bicycle and motorbike components and standard mechanicalcomponents.

The automobile industry is about 20 years behind countries in the region suchas Thailand and Indonesia, so there should be special policies to encourage businessesto make breakthroughs, Hieu said.

Nguyen Thi Hai Binh, an expert from the finance ministry’s Institute ofFinancial Strategy and Policy, said it is necessary to focus on studying andplanning policies to encourage businesses.

Binh also proposed to exempt special consumption tax on domestically-producedgoods, which are not imported from foreign countries, in addition to incentivesrelevant to land and credit to develop automobile manufacturing complexes inchain.

According to Deputy Chairwoman of Vietnam Association of Supporting Industries TruongThi Chi Binh, it needed to give more credit incentives to help support industryfirms raise competitiveness, like the fund for small and medium enterprisesthat has given priority to manufacturing and supporting industry firms./.