Russia joint venture to manufacture and assemble cars in Vietnam

Vietnam and Russia have just signed a Protocol on supporting the production and assembly of motor vehicles in Vietnam.

With the authorization and consent of the Prime Minister, Minister of Industry and Trade of Vietnam - Vu Huy Hoang led a working delegation to visit and work in the Russian Federation from March 21-22. On March 21, at the headquarters of the Russian Ministry of Industry and Trade in Moscow, Minister Vu Huy Hoang and Minister of Industry and Trade of Russia Denis Manturov signed a Protocol between the Government of the Socialist Republic of Vietnam and the Government of the Russian Federation on supporting the production of motor vehicles in the territory of the Socialist Republic of Vietnam.

This Protocol was negotiated and signed based on the Article on Support for Priority Investment Projects under the Free Trade Agreement between Vietnam and the Eurasian Economic Union (EAEU). The basic content of the Protocol includes that Russian automobile manufacturers (KAMAZ, GAZ, UAZ...) will, together with Vietnamese partners, establish a number of joint ventures to produce and assemble trucks, vehicles with 10 seats or more, off-road vehicles and some types of specialized vehicles in Vietnam.

The Ministers of Industry and Trade of the two countries exchanged the signed Protocol.

The two sides committed that the vehicles assembled in Vietnam will comply with Decision No. 1211/QD-TTg dated July 24, 2014 of the Prime Minister on approving the development plan of Vietnam's automobile industry to 2020, with a vision to 2030, achieving a localization rate of 25% for specialized vehicles by 2020, 30% for trucks and off-road vehicles and 35% for vehicles with 10 seats or more and achieving a localization rate of 40% for specialized vehicles and off-road vehicles, 45% for trucks and 45% for vehicles with 10 seats or more by 2025.

In addition to the domestic market, joint ventures also aim to produce cars for export to third countries, first of all Southeast Asian countries, because cars with a localization rate of 40% or more from Vietnam will be exempt from import tax to ASEAN countries.

Speaking at the signing ceremony, Russian Minister of Industry and Trade Denis Manturov highly appreciated the significance of this Protocol, affirming that this is an important event, contributing to strengthening the strategic partnership between the Russian Federation and Vietnam. The signing of the Protocol will open up opportunities to create more new jobs for Vietnamese workers, and not only help Vietnam produce cars, but also export cars to third countries.

Mr. Denis Manturov hopes that Russia and Vietnam will continue to cooperate in developing light industry in Moscow province and the Russian Far East, as well as in Russia's provision of Sukhoi Jet-100 aircraft to the Vietnamese aviation industry.

Assessing the significance of the signing of this Protocol, Minister Vu Huy Hoang emphasized: “The signing of the Protocol between the Socialist Republic of Vietnam and the Russian Federation on cooperation between the two sides in the assembly and production of means of transport in the territory of Vietnam is a part related to the Free Trade Agreement (FTA) signed between Vietnam and the Eurasian Economic Union in May 2015. Along with the signed Protocol, the Russian Federation will immediately implement the official ratification of the Free Trade Agreement signed between the two sides.”

According to Minister Vu Huy Hoang, the establishment of joint venture projects to assemble and produce Russian cars in Vietnam, in addition to being a part of the signed Free Trade Agreement, also has a direct meaning, related to the strategy and planning for the development of the automobile industry that Vietnam is looking to implement, with the goal of having automobile products manufactured in Vietnam with significant localization content.

“If these projects are successfully implemented as committed, the Russian Federation will transfer technology. After a relatively short time, the localization rate of these products will reach at least 40% and will gradually increase in the following years,” said Minister Vu Huy Hoang.

On the same afternoon at the headquarters of the Eurasian Economic Union (EAEU), Minister Vu Huy Hoang met and worked with Ms. Veronika Nikishina - Minister of Trade of this Union to discuss bilateral cooperation.

According to VOV