The auto assembly industry will face fierce competition.

The 2014 White Paper of the European Chamber of Commerce (EuroCham) predicts that in 2015, when the ASEAN Economic Community (AEC) is established, Vietnam's automobile assembly industry is likely to only achieve a growth rate of 3% per year.

It is forecasted that in 2013, Vietnam's automobile market will be only equal to the level of 2007 (110,000 cars and trucks). On the other hand, the domestic automobile assembly industry is likely to achieve only 3% growth per year due to the establishment of the ASEAN Economic Community (AEC) in 2015, when domestic assemblers will face fiercer competition.

Even when ASEAN will exempt taxes on imported cars from member countries as well as countries that are members of economic cooperation agreements such as Japan, Korea, China, it will help imported products compete in price compared to domestically assembled products. Specifically, from 2014, import tax on complete cars from ASEAN countries will be reduced to 50%. This import tax will be further reduced to 35% in 2015 and 20% from 2016, 10% in 2017 and completely exempted in 2018.

EuroCham warned that if there are no measures for the 2014-2018 period, tax cuts will threaten Vietnam's fledgling automobile industry. Faced with this risk, the Government should establish a stable tax roadmap and a clear long-term industry development policy for sustainable development of the domestic assembled car market as well as the imported car market.

Mr. Michael Behrens - Head of the European automobile business group in Vietnam - said that in order for domestic assemblers to develop, or even survive, they should be supported to produce cars with a localization rate of 40% to qualify for favorable tax policies within the ASEAN bloc.

The European business community also believes that current administrative procedures are causing difficulties for businesses. Although there have been recommendations to reduce administrative procedures, the recent addition of a requirement for importers to submit a complete copy of each official contract for each imported vehicle for customs clearance is extremely complicated.

Therefore, EuroCham recommends that reducing administrative procedures will help save time, relieve pressure on customs agencies, and reduce operating costs. Customs agencies should allow importers to register within a period of a few years in the same way as the vehicle inspection department. In addition, the registration regulation should be removed for imported vehicles with Euro 2 certificates and higher to reduce administrative procedures and save costs for businesses and consumers. At the same time, importers should be allowed to use bank guarantees to clear customs and inspect new imported products.

According to baocongthuong