Hanoi (VNS/VNA) - The Ministry of Industry andTrade (MoIT) wants to take advantage of market and policy opportunities topromote automobile manufacturing projects of domestic automakers including TruongHai Auto Corporation (Thaco), Thanh Cong Group and VinFast.

The ministry submitted a report to the National Assemblydeputies that said it aims to raise the output of domestic auto manufacturingand build up a supply chain for automakers in the country.

The MoIT also proposed the policy makers promulgate therevision of the special consumption tax rate for vehicles with a highlocalisation rate (measuring the use of local parts). Locally-produced partswill be free from the tax.

The ministry said output of locally manufactured andassembled automobiles had increased in recent years. Domestic automobilemanufacturing reached 283,300 units in 2016, up from 200,000 the previous year.Vehicles have been exported to Laos, Cambodia, Myanmar and the Mid-Americaregion. However, the MoIT said the industry had not yet created co-operationamong businesses.

The localisation rate of several types of cars is still lowerthan the target because the industry lacks a network of material suppliers andlarge-scale parts producers. Although the target rate was set at 40 percent in2005 and 60 percent in 2010, it sits at just seven to 10 percent on average.Thaco leads among manufacturers with a rate of 15 to 18 percent, while ToyotaMotor Vietnam reaches 37 percent for the Innova model alone.

Locally-made parts are primarily simple components liketubes, tires, sears, mirrors, wires, batteries and plastic products. Meanwhile,80 to 90 percent of the raw materials for automobile production, includingsteel, aluminum alloys, plastic resin and high tech rubber, are currentlyimported. This amounts to 2-3.5 billion USD.

Until 2025 and 2035, the MoIT said the industry would focuson small sedans suitable for Vietnamese people and follow the worldwide trendof environmentally friendly vehicles like hybrids and electric cars.

The industry target is to meet 60-70 per cent of marketdemand with a localisation rate of 35-40 percent by 2020. It will continue tofocus on trucks, buses and specialised vehicles serving agriculture and ruraldevelopment.

Total industry output in 2018 is not expected to be higherthan in 2017. Automakers’ business results will depend on their ability toimplement the Government’s Decree 116, which details acceptable conditions forproduction, assembly, import and handling of warranty and maintenance services.Car production this year is expected to reach 235,000 units, down 1.3 percentcompared to 2017.-VNS/VNA