Vietnamese people are "disillusioned" because they cannot have imported cars with 0% tax.
Many people who expected to buy cheap cars right after January 1, 2018 when the import tax on cars from ASEAN was reduced to 0% have had their dreams shattered, because the market has not had any imported cars with this tax rate.
Want a new car, have to wait
According to some businessmen, Decree 116 is the biggest "obstacle" preventing companies from importing cars into Vietnam in time for January, but at the earliest after March this year. Mr. Thanh, owner of a car shop on Pham Hung Street (District 7, Ho Chi Minh City), said that in order to enjoy a 0% tax rate for cars imported from ASEAN countries, importers must have a certificate of quality of imported cars, issued by competent organizations abroad.
“As far as I know, only a few major importers have this license, mainly cars from Europe. The majority have not yet been granted a certificate. The cars in short supply are mostly new models, but there are still many old models because some importers rushed to import them from the end of 2017 to “avoid” Decree 116,” Thanh explained.
Figures from the Ho Chi Minh City Customs Department show that in December 2017, at Hiep Phuoc port alone, to “avoid” Decree 116, the number of cars with less than 9 seats and pickup trucks increased 3 times compared to the previous month.
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| With a series of additional expenses, imported cars are unlikely to be as cheap as expected. Photo: Thai Nguyen |
Mr. Dang Huu Hiep, Director of the American Car Market Company, commented: “A new regulation always has a certain delay, a delay of a few months for a product like a car is completely acceptable. Because the new regulation was clarified at the end of 2017, the companies then placed orders at factories abroad, added some new licenses, transported, did import procedures, inspected, cleared customs... so it is normal for new cars to be available in April.”
Taxes decrease, fees increase, cars are hard to get cheap
Thus, to buy an imported car with 0% tax, consumers must wait until about April this year. With this tax rate, the price of the car has dropped quite sharply. For example, before January 1, 2018, an imported car was declared at 10,000 USD, plus import tax, special consumption tax, value added tax, the price of the car was up to nearly 21,000 USD. After January 1, 2018, the same car will have a total price of nearly 16,000 USD. Thus, the difference compared to before is nearly 5,000 USD.
However, according to analysis by the business community, the change in the calculation of special consumption tax and other arising costs such as the fee for custom-made products for right-hand drive vehicles must be added 10-15% compared to the price in the Thai market; the fee for applying for new licenses abroad as stipulated in Decree 116; the fee for inspecting each batch of imported vehicles instead of inspecting each type of vehicle as before... will cause the price of the vehicle to increase.
A car importer from the European market said bluntly: "There are no cheap imported cars to wait for." This person analyzed that applying for an import license under Decree 116 is only step 1. Step 2 is that to import and clear customs, you must have a type certificate of the manufacturer issued by a competent authority abroad to that manufacturer. Some companies with factories in Thailand want to import to Vietnam, they have to order a special right-hand drive car because Thailand produces left-hand drive cars.
But this country does not issue certificates for vehicles not circulating domestically, so importers are facing difficulties. "Many regulations create additional costs and the new method of calculating special consumption tax will make it difficult for car prices to be cheap in the near future, even if importers solve the problem of foreign type approval certificates...", this person said.