Auto industry: Struggling to find a way out

Our country's automobile industry has 18 FDI enterprises and 38 domestic enterprises participating in production and assembly with a capacity of about 460,000 vehicles/year. However, in general, the development of the automobile industry is still limited, mainly stopping at rudimentary assembly stages, the localization rate is too low, making the cost of domestic cars too high. What is the way out for the automobile industry is still a big question.

impatient

For a long time, people and businesses importing cars have always wanted to reduce import taxes to lower car prices and stimulate consumption, because the special consumption tax on cars is quite high. According to car dealers, the car market at the beginning of this year showed signs of recovery and improvement when the import tax rate for completely built-up cars from countries in the Southeast Asian region was reduced to 50% and the new registration fee for passenger cars with less than 10 seats registered for the first time was also reduced to 10% nationwide (Hanoi still applies the collection rate of 12%).

The reduction of taxes and fees is good news for consumers, while previously many enterprises suggested not to reduce taxes to ensure the survival of the domestic automobile industry. Specifically, at the end of 2013, 8 automobile manufacturing enterprises with foreign direct investment from Japan and Vietnam, including: Isuzu Vietnam, Honda Vietnam, Hino Vietnam, Suzuki Vietnam, Toyota Vietnam, Vietnam Star (Vinastar), Xuan Kien Automobile Joint Stock Company (Vinaxuki) and Vietnam Engine and Agricultural Machinery Corporation (VEAM) sent a dispatch to the Prime Minister proposing not to reduce special consumption tax for passenger cars with less than 10 seats and a cylinder capacity of up to 2,000cm3 to stimulate consumer demand.

To survive in the current context, the prerequisite is that domestic automobile manufacturers must improve their competitiveness by increasing the localization rate and bringing to the market car models that suit the tastes and budgets of consumers.

These companies believe that tax incentives for imported cars will not contribute to the development of the domestic automobile industry. Moreover, incentives for imported cars will create more difficulties for domestically produced cars, in addition to the roadmap for reducing import taxes on completely built cars, reducing the competitiveness of domestically produced cars compared to completely imported cars.

Eventually, all domestic car manufacturers may have to consider stopping production and switching to importing completely built-up vehicles. In 2018, the import tax on completely built-up vehicles from ASEAN countries to Vietnam will be 0%, allowing consumers to buy imported vehicles from other countries in the region at a cheaper price than domestically produced cars.

According to some experts, in order to have a real automobile industry, in recent years, automobile manufacturing enterprises have received too many incentives from investment policies, taxes, land, etc. However, the plans outlined for the automobile industry have almost gone bankrupt.

Need adjustment

Since 2002, the Government has issued the Strategy and Plan for the development of Vietnam's automobile industry until 2010, with a vision to 2020. However, the automobile industry has not developed as expected and has not yet taken the shape of a real industry.

In the context of Vietnam's increasingly deep integration with the region and the world, competition in the automobile industry is increasingly fierce, and at the same time, it is necessary to implement a roadmap to reduce import taxes within the framework of AFTA and other free trade agreements. Reviewing and adjusting the development planning strategy of the automobile industry is an urgent requirement.

Reducing import tax will be a big challenge for domestic automobile manufacturing and assembling enterprises. Photo: M.TUAN

The Draft Strategy and Planning for Vietnam's Automobile Industry Development to 2020, with a vision to 2030, has been developed by the Ministry of Industry and Trade in accordance with prescribed procedures.

However, in order for the strategy and planning to be feasible, synchronized with the infrastructure system, ensuring overall efficiency, both economically, securely and socially, while continuing to affirm the long-term goal of building an automobile industry, it is necessary to supplement and adjust some contents: Focus on developing multi-purpose small trucks to replace farm vehicles, homemade vehicles, serving agricultural and rural production and medium- and short-range passenger cars running between provinces, districts, inner cities... suitable for terrain conditions, domestic traffic infrastructure and reasonable price, safety, convenience.

Carefully consider the choice of developing specialized and tourist vehicles from 4 to 7 seats. In the coming time, it is necessary to clearly identify strategic partners in developing the automobile industry and supporting industries to serve domestic and export needs, and participate in the value chain.

It is necessary to review mechanisms and policies, especially tax policies, with very specific criteria and conditions, ensuring feasibility and compliance with international commitments to develop the Vietnamese automobile industry.

According to kinhtesaigon