Toyota and Suzuki temporarily stop production in Indonesia due to difficulty exporting cars to Vietnam.
Indonesian automakers are facing a bleak future as they are unable to export cars to Vietnam due to new regulations from Decree 116.
According to the Straitstimes, Decree 116 regulates the conditions for production, assembly, import and business of automobile warranty and maintenance services issued by the Vietnamese Government and officially takes effect from January 1, 2018. This is a move to tighten vehicle imports.
With the new regulations, in addition to business licenses, automobile importers and dealers must have a copy of the Vehicle Type Approval Certificate (VTA) issued by a competent foreign agency or organization.
In addition, theimported carsmust be inspected by the quality management agency according to regulations for each imported vehicle batch. The representative car model of each car type in the imported vehicle batch must be inspected and tested for air load and technical safety quality according to regulations.
In which, the inspection agency will randomly select 1 or 2 representative sample vehicles for each type of car in the imported vehicle batch that has been inspected so that the importing enterprise can bring the vehicle to the testing facility and be granted a certificate of technical safety and environmental protection quality for each vehicle in the entire imported vehicle batch. The inspection is repeated for different shipments.
Speaking to the press on February 22, the Secretary General of the Indonesian Automotive Manufacturers Association (Gaikindo) said the new regulation would increase costs. At the same time, the inspection could take from 1 to 2 months. Meanwhile, other vehicles in the shipment would also have to stay at the port and businesses would have to pay storage fees.
At the same time, the Association also said that the new regulations of the Vietnamese Government have forced four car manufacturers in Indonesia, Toyota, Suzuki, Daihatsu and Hino, to temporarily stop producing 9,337 cars, which are said to be supplied to the Vietnamese market.
Major automakers with factories in Indonesia export about 30,000 cars to the Vietnamese market each year.
Also according to Indonesian statistics, car exports from Indonesia to Vietnam from January to November 2017 reached 241.2 million USD, a significant increase compared to 17.78 million USD in 2016.
At the same time, Indonesia has also become one of the three largest suppliers of completely built-up cars to Vietnam after Thailand and China, with a market share of 13.12%. If manufacturers do not want to export cars to Vietnam, Indonesia may lose about 85 million USD in the period from December 2017 to March 2018 (PV).
Meanwhile, in Vietnam, due to the inability to import, many car models in Vietnam have become scarce. The low supply has caused the selling prices of many car models to increase, especially during the shopping season before Tet.