Hanoi (VNS/VNA) - The Governmentwill soon issue a revision to Decree 116/2017 on the conditions for production,assembly, import and business of automobile warranty and maintenance services,removing a number of regulations relevant to auto imports.

The statement was released by Minister and Chairman of Government OfficeMai Tien Dung at a recent conference held in Hanoi.

He said the revision would include changing from the currentinspection for each batch of imported vehicles to type of vehicles, which areconsidered to be difficult and expensive for businesses.

With the current capacity of auto registration centres, Dung said theinspection of imported automobiles should change from the currentpre-inspection to post-inspection.

The revision, drafted by the Ministry of Industry and Trade (MoIT), wouldnow be open to opinions from businesses and the public.

“In the past two years after the decree was issued, the domestic automobileindustry has made progress, protecting the interests of consumers while Statemanagement has also been stricter in the import of vehicles,” Dung said.

According to Dung, the revision of Decree 116 is appropriate in the contextof the automobile market and the import of cars has stabilised. Evidence isthat all auto businesses have confirmed the origin and type of imported cars,strictly complying with the provisions of Decree 116. Meanwhile, the number ofimported vehicles has increased.

According to a report by the MoIT, after the import duty was reduced tozero from 2018 under the ASEAN Trade in Goods Agreement (ATIGA), domesticmanufacturers initially affirmed their role and position in the automobilemarket. Especially, Decree 116 has played an important role in protecting theproduction and assembly of cars in the country.

The report shows that after the decree was issued, some ASEAN countriessuch as Thailand, Indonesia, Malaysia, the Philippines and other WTO memberssuch as the US, Japan and EU raised concerns about Decree 116, saying it maycreate additional procedures and hinder businesses in exporting cars to Vietnam as well as violating national treatment principles.

“The import of cars has slowed down due to Decree 116 but has increasedsharply again,” stated the report.

The MoIT said that the current output between domestically-producedvehicles and imported vehicles had changed significantly. In 2017, the numberof domestically-produced vehicles was 2.5 times higher than imported ones. Thefigure was 3.72 times in 2018. In the first six months of this year, itdecreased to 1.74 times.

However, the ministry said that the domestic sector would not maintain itsadvantage in the market if it did not attempt to improve quality and lowerproduction costs to increase competitiveness, especially against vehiclesimported from ASEAN, which enjoy preferential import tariffs.

The ministry said it needed to issue solutions supporting and promoting thedomestic automobile industry to compete with imported cars, especially thosefrom ASEAN.

Nguyen Minh Dong, an expert in the automobile industry, told plo.vn thatimported cars were increasingly narrowing the sales gap withdomestically-assembled cars because the auto businesses had met requirements ofDecree 116, increasing supply.

“In addition, imported models are hitting the low-cost segment that used tobe the playground for locally-assembled cars,” Dong said.

To increase the competitiveness for domestic automobiles, Dong said it wasnecessary to adjust tax and fee policies to help domestic automobilemanufacturers and assemblers reduce costs.

“But the most important thing is that domestic automakers must strive toimprove quality and lower production costs to enhance competitiveness. Theprice of domestically-manufactured and -assembled cars is still high, making itdifficult to promote the industry,” he added.

To solve the problem, the MoIT proposed the Government not apply specialconsumption tax for automobiles which are locally-produced, as part of effortsto reduce the price of cars.

The ministry also expected the Government to adjust import tax on theprinciple that the import tax rate on components, spare parts and raw materialsmust be lower than the import tax rate on completely built-up cars, or at floorlevel according to international commitments in each period.

In addition, the tax rate will be reduced to zero per cent for items on carswith nine seats or fewer, such as engines and gearboxes, which are valid until2025. — VNS/VNA