Russia and Vietnam establish joint venture to produce automobiles

Vietnam and Russia officially signed a Protocol on supporting automobile production in Vietnam.

On March 21, 2016 in Moscow, Russian Federation, Minister of Industry and Trade of Vietnam Vu Huy Hoang and Minister of Industry and Trade of the Russian Federation Denis Valentinovich Manturov, on behalf of the two countries' Governments, officially signed the 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 (Automotive Cooperation Protocol).

Illustrative image.

According to this Protocol, 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 (UAZ) and a number of other specialized vehicles.

Russia has committed to achieving a localization rate in Vietnam of 25% for specialized vehicles, 30% for trucks and 35% for passenger cars with 10 seats or more by 2020. The localization rate in 2025 is 40% for specialized vehicles and sport utility vehicles, 45% for trucks and 50% for cars with 10 seats or more.

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.

The commitment clearly states that after 10 years, if any joint venture fails to achieve the above localization rate, its operating license will be revoked./.

According to VOV