MoIT wants to cut tax for locally produced auto parts

An auto assembly line at the Đông Bản Việt Nam Auto JSC. — VNA/VNS Photo Danh Lam

HÀ NỘI — The Ministry of Industry and Trade (MoIT) wants to take advantage of market and policy opportunities to promote automobile manufacturing projects of domestic automakers including Trường Hải Auto Corporation (Thaco), Thành Công Group and VinFast.

The ministry submitted a report to the National Assembly deputies that said it aims to raise the output of domestic auto manufacturing and build up a supply chain for automakers in the country.

The MoIT also proposed the policy makers promulgate the revision of the special consumption tax rate for vehicles with a high localisation rate (measuring the use of local parts). Locally produced parts will be free from the tax.

The ministry said output of locally manufactured and assembled automobiles had increased in recent years. Domestic automobile manufacturing reached  二 八 三, 三00 units in  二0 一 六, up from  二00,000 the previous year. Vehicles have been exported to Laos, Cambodia, Myanmar and the Mid-America region. However, the MoIT said the industry had not yet created co-operation among businesses.

The localisation rate of several types of cars is still lower than the target because the industry lacks a network of material suppliers and large-scale parts producers. Although the target rate was set at  四0 per cent in  二00 五 and  六0 per cent in  二0 一0, it sits at just seven to  一0 per cent on average. Thaco leads among manufacturers with a rate of  一 五 to  一 八 per cent, while Toyota Motor Vietnam reaches  三 七 per cent for the Innova model alone.

Localised parts are primarily simple components like tubes, tires, sears, mirrors, wires, batteries and plastic products. Meanwhile,  八0 to  九0 per cent of the raw materials for automobile production, including steel, aluminum alloys, plastic resin and high tech rubber, are currently imported. This amounts to US$ 二- 三. 五 billion.

Until  二0 二 五 and  二0 三 五, the MoIT said the industry would focus on small sedans suitable for Vietnamese people and follow the worldwide trend of environmentally friendly vehicles like hybrids and electric cars.

The industry target is to meet  六0- 七0 per cent of market demand with a localisation rate of  三 五- 四0 per cent by  二0 二0. It will continue to focus on trucks, buses and specialised vehicles serving agriculture and rural development.

Total industry output in  二0 一 八 is not expected to be higher than in  二0 一 七. Automakers’ business results will depend on their ability to implement the Government’s Decree  一 一 六, which details acceptable conditions for production, assembly, import and handling of warranty and maintenance services. Car production this year is expected to reach  二 三 五,000 units, down  一. 三 per cent compared to  二0 一 七. — VNS