Remove import tax on auto components, VBF proposes

The development of the entire automobile industry has not met the demands of the Government and investors since its total capacity is just nearly 500,000 units per year. - Photo brandsvietnam.com

The aim is to make prices competitive for locally-made products.

The proposal, based on the report from VBF’s auto-motorbike research group, was made at the annual forum organised by the International Finance Corporation and the World Bank Group in collaboration with Vietnamese Ministry of Planning and Investment in Ha Noi on December 6.

VBF said the production cost for a locally-manufactured car could be 20 per cent higher than the cost of a similar vehicle made in Thailand and Indonesia when the tax on complete built up units (CBU) is down to zero per cent in 2018, under the ASEAN Free Trade Agreement.

According to the report, thanks to efforts by the Government along with the growth rate this year, the sale of CBUs and complete knock down units was estimated to increase by 300,000 units, a year-on-year rise of 22 per cent. However, development of the entire automobile industry, with more than 20 companies and 40 brand names in Viet Nam, has not met the demands of the Government and investors since its total capacity is just nearly 500,000 units per year.

VBF said the failure in reaching full capacity could worry investors and even force them to question the possibility of new investment in the future.

According to the VBF report, domestic automakers are facing many disadvantages due to small-scale production. They have to import almost all the components for assembling; it is costly to pay expenses for transport and package services, besides also paying import taxes.

To boost the local automobile industry, VBF also asked the Government to tighten and make supervision of the import of CBUs and used vehicles more transparent.

In addition, the Government should clarify the content of its policies to support domestic automobile production, which is mentioned in the prime minister’s Decision 229/QD-TTg, issued on February 4, 2016.

VBF said the support policies were crucial for domestic automakers to develop their business. However, they were unclear, so it was difficult for automakers to prepare production projects and ask the Government for support.