A consistent and stable tax policy is needed.

The latest draft on the development of Vietnam's automotive industry until 2020, with a vision to 2030, is currently undergoing final revisions and consultations before being submitted to the Government for consideration and promulgation. One of the factors strongly impacting the automotive market, agreed upon by policymakers and many businesses, is the need for a long-term and transparent tax policy.

The automotive industry is still only at the stage of importing components and assembling them.

The market is experiencing negative growth.

Dr. Duong Dinh Giam - Director of the Institute for Industrial Policy Strategy (Ministry of Industry and Trade) - the unit tasked with drafting the plan - stated: The goal is to develop the automotive industry into a key industry of the country by 2020. This includes meeting basic domestic demand for passenger cars, common trucks, and some types of passenger cars; participating in the supply chain of components and parts for the regional automotive industry; exporting complete vehicles; reducing the trade deficit; and supporting the development of other industries. In reality, the opportunities for Vietnam's automotive industry are quite significant, given the international context and the trend of shifting foreign investment flows, giving the automotive industry the chance to participate more deeply in the ASEAN and Asian supply chains.

In fact, over the past 10 years, the automotive market has followed a clear sinusoidal curve, and currently, the curve is declining. Specifically, growth was 21.9% from 2000-2005, reaching 47.5% from 2006-2009, and then a negative growth rate of 21.6% from 2010-2012. The most frequently cited reasons remain inappropriate development policies, small market demand, a low level of economic development, and limited resources. To date, the automotive industry still relies heavily on importing components for assembly, with a low localization rate and underdeveloped supporting industries.

Tax policy is the "key" to unlocking the market.

Numerous policies aimed at stimulating the market, with specific directions for manufacturers and consumers, and targeting the development of supporting industries, have been implemented, with a strong focus on tax policies. Specifically, for the popular segment of vehicles with fewer than 10 seats, which significantly impacts demand, policymakers have proposed a 50% reduction in special consumption tax and registration fees for first-time registrations. For strategic vehicle lines: Exemption or a minimum 70% reduction in special consumption tax, registration fees, and other fees.

However, in the long term, a comprehensive strategy with consistent, unified, and time-bound policies, especially tax policies, is still needed for businesses to implement their business plans. Mr. Bui Ngoc Huyen, Chairman of the Board of Directors of Vinaxuki Company, expressed: “Why hasn't Vietnam been able to localize automobile production for the past fifteen years? Is it because Japanese and foreign companies haven't localized production in Vietnam? The reality is that it depends on government policy. Previously, we set a strategy for the development of the automobile industry that was too short-sighted, while this industry is quite complex, requiring investment in automobiles for at least 30 years and stable policies.”

A representative from Honda Vietnam stated:

Tax reductions for individual businesses are acceptable as long as they are profitable. However, to develop the automotive industry, there must be a comprehensive policy along with a reasonable tax policy to support all businesses in this sector.

According to Baocongthuong - PH