Automakers urge solutions for looming tariff drop

They warned that unless solutions are found, they would seriously reduce their domestic production and assembly.

They made their request at a recent meeting with officials of the Ministry of Industry and Trade, at which they laid out their concerns over the looming tax change mandated by the roadmap of the Association of Southeast Asian Nations (ASEAN).

Less production, more imports

Toyota Vietnam (TMV) General Director Toru Kinoshita said TMV produced five models in 2016 and will make only four models in 2017 and even two to three models in the following years, and that the corporation will focus on improving competitiveness. Kayano Kiwamu, deputy general director of Honda Vietnam (HVN) said HVN will maintain domestic production of models for which the market has a high demand, such as City and CRV, while importing Civic and some other models.

Kayano Kiwamu suggested that relevant Vietnamese authorities formulate policies to promote sustainable development of automobile manufacturing and assembly, and support industries in Vietnam. The adopted measures should include assisting producers to reduce the gap between the costs of domestically assembled or manufactured cars and imported vehicles through component import duty.

Toru Kinoshita, a representative of the Vietnam Automobile Manufacturers' Association (VAMA), predicted that the number of imported CBUs would increase considerably in 2018, and that a number of VAMA members would find it hard to survive the tough competition. Therefore, he suggested, the Government of Vietnam should adopt appropriate tax solutions to create a difference between domestically produced and imported vehicles.

Consistent policies

Truong Thanh Hoai, director of the Department of Heavy Industry under the Ministry of Industry and Trade, said the Ministry has introduced three groups of solutions to address the problems of the domestic automakers and assemblers.

First, to encourage domestic production through market protection measures, such as technical barriers and barriers controlling fraud related to tax declaration and C/O (Certificate of Origin); to ensure fair competition between imported and domestically produced vehicles; to submit to the government for issuance of a draft decree on automobile assembly, manufacturing and import on July 1, 2017.

Second, to assist manufacturers to decrease production costs and increase competitiveness by issuing component and spare part standards; to make the import duty on components and spare parts lower than the import tax on CBUs according to the signed commitments; to consider an excise tax on vehicles with a high local content.

Third, to encourage automobile assemblers and manufacturers to cooperate with domestic producers of components and spare parts; to assist domestic support industry enterprises to manufacture components and spare parts through a support industry development program.

(Source: VEN)