Viet Nam’s auto industry still needs Government support to develop a clear and long-term growth strategy, said the European Chamber of Commerce (Eurocham) in Viet Nam.
Despite the industry having great potential, it currently lacked a stable road map, Eurocham added.
At the launch of its White Book of Trade Investment Issues and Recommendations, Euro-cham said the domestic car manufacturing market consisted of new and used imported CBU (completely built up) units and domestically assembled CKD (complete knocked down) units.
The Vietnamese Govern-ment’s industrial policy and negotiations with ASEAN over export/import tariffs had been vital in promoting the domestic CKD market to its current position. CKD manufacturers are investors with a long-term commitment to Viet Nam and the domestic car manufacturing industry.Car sales decline 9% in November
The increasing production levels of domestic CKD provide an opportunity to Viet Nam to achieve a higher localisation rate for automotive parts. By attracting further investment into the automotive components industry, it will help the sustainable overall growth of the car industry.
However, development of the domestic industry was set to face a challenge due to the elimination by 2018 of ASEAN tariffs on cars imported into Viet Nam, said Eurocham.
“The elimination of tariff barriers will result in Vietnamese CKD manufacturers competing directly with established volume-based automotive assemblers based in Indonesia, Thailand and Malaysia,” the organisation said.
“It is important that the Vietnamese Government and the domestic auto industry for CKD and official importers for CBU work together to develop a clear roadmap for automotive industrial policy to cover the critical period up to 2018.”
“But such a roadmap can be defined if relevant ministries and car-makers work closely together with strategic goal in mind: the further development of domestic component suppliers and exports of cars to make Viet Nam a major ASEAN production-hub and export base.”
Eurocham recommended avoiding any tax increases or tax changes and commended the Government for maintaining the stability of tax policies affecting the automotive sector in 2011.
It said the Government should consider providing specific investment incentives for the development of a local supply chain for automotive components in Viet Nam.
The Government should consider supporting the CKD assembly industry by reducing the import duty on CKD parts to zero. This would give domestic assemblers the confidence to expand their production bases and enable them to better serve growing domestic demand.
This and additional regulations should also focus on boosting export possibilities for suppliers and auto manufacturers.
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