Import tax cut plan backlash

Trucks wait for sales in Ha Noi. A ministry plan to cut import taxes on trucks may harm local makers. - Photo Truong Vi

MoF has been collecting opinions concerning its draft that proposes cutting import taxes on trucks from the Viet Nam Association of Automobile Producers and the ministries of Industry and Trade, Planning and Investment, and Transport.

In accordance with the plan, tariffs would be cut from 80 per cent to 30 per cent for five-tonne trucks, from 54-55 per cent to 25 per cent for five-to 10-tonne trucks, from 30 per cent to 25 per cent for 10- to 20-tonne trucks and from 15 per cent to 8 per cent for 20- to 45-tonne trucks.

General director of the Xuan Kien Vinaxuki Automobile Joint Stock Company Bui Ngoc Huyen said the proposed low tariffs, to be implemented without a long-term schedule, would not help develop domestic auto production, but lead to the closure of factories.

Xuan Kien Vinaxuki began assembling autos in 2004 and had since poured VND1 trillion ($50 million) into expanding production, said Huyen.

"The company's localisation rate for assemblage of trucks also rose from 15 per cent to 50 per cent," he said. "But the proposal to cut import tax for trucks would have a negative impact on our investment in production of truck components as well as negatively affect the auto industry's development strategy, which was approved by the Government."

Huyen said that during times of economic uncertainty, the Government encouraged domestic producers to limit material imports to discourage the use of US dollars and to maximise works for local labourers, and in that context the import tax reduction would not be reasonable.

General director of Truong Hai Auto Joint Stock Company Tran Ba Duong said the tax cut would be implemented too quickly and far earlier than the deadline of 2018, as stipulated in the nation's commitments to the World Trade Organisation.

"Therefore enterprises haven't been able to make timely plans to deal with the impacts of a tax reduction of such size," said Duong.

The Ministry of Industry and Trade suggested the Finance Ministry cut the tariffs from 80 per cent to 70 per cent for five-tonne trucks, from 54-55 per cent to 50 per cent for five to 10-tonne trucks, and continue the current rate of 30 per cent for 10- to 20-tonne trucks.

Those rates would be applied by the end of 2011 and reviewed and adjusted from 2012 based on the development of domestic market as well as local production and assemblage of trucks, said the MoIT.