Posted on 05 Jun 2009
Next year in 2010 has been
Some say the government gave too many preferences to the industry and vehicle assemblers gave an ultimatum that they would enhance imports instead of producing and assembling cars domestically.
It is the second time during the past two years, the Ministry of Finance said “no” for the proposal on lowering special consumption tax (SCT) on 6-9 seat cars.
The first agreement between Ministry of Finance and Ministry of Industry and Trade happened last year. At that time, the trade ministry said that the kind of multi-specialised car is subjected to the country’s automobile domestication so it demands for preferences. Secondly, Vietnam Association for Automobile Manufacturers (Vama) and
Citing the ultimatum, under the Common Effective Preferential Tariff (CEPT) scheme, the duty on CBU import will be cut down to 60 percent in 2013 and 0 percent in 2018 whereby prices of imported cars will decrease gradually from 2018 as a result.
Therefore, the domestically made cars will have to compete fiercely with imported ones. If receiving preferences and priorities, the kind of 6-9 seat cars expects to see a sharp rise in sales, leading to the development of support industries, upgrading the domestication ratio and competitive strength, and reducing selling prices.
According to car traders, this could be the final decision ending the lawmakers’ overindulgence as for car manufacturers.
Nguyen Minh Dung, director of car trading enterprise explained that car dealers and buyers were sick of galloping car prices and quality of domestically made cars. In fact, these enterprises [car non-manufacturing firms) only concentrated on importing automobile spare parts, assembling or transferring profit to the parent firm. Agreeing with the point of view, an official from the industry and trade ministry analysed, after much big efforts, Vietnam cut down the automobile import duty to 60 percent in 2007 but the tariff was raised to 83 percent again in a half of a year later. Since March, import tariff and VAT on automobile accessories have been reduced for two times. In addition, these car firms also enjoyed too many preferences in investment, tariff, recently CIT. But in return, these companies almost did not lower selling price of cars to customers and fully not implement their commitments with Vietnamese automobile industry.
As explained by specialists, it is humorous to hear carmakers’ explanation. With too many preferences during the last decade since car joint ventures were established, they [domestic firms] only built up an automobile assembly industry instead of a car manufacturing industry.
Factually, the crisis started up long time ago, even from 2005 when
Clearly, domestic carmakers always required and took the tariff policy as a shield for their weakness which was shown in Vama’s cry for help while local consumers turn back on the domestically made cars.
As a result, the car sales plunged 68 percent in April 2009 while the car imports surged sharply.
The domestication ratio of car industry at 40-60 percent by 2010 and vision to 2020 can fail.
