Foreign-invested Auto Manufacturers Shift To Selling Imported Models

Auto manufacturers voice concern over Decree 116

A meeting on the new Decree 116 between the leaders of ministries and representatives of automobile enterprises was held on February 26 at the Government Office.

Toyota Vietnam’s general director Toru Kinoshita and chair of the Vietnam Automobile Manufacturers’ Association (VAMA) showed concern about regulations in the decree, which he described as failing to observe international practice, affecting the production and business activities of VAMA’s member companies.

Automobile joint ventures had complained many times about the decree before the meeting was organized.

An analyst said that foreign-invested automobile manufacturers have repeatedly claimed that policies would pave the way for car models, especially those made in two  Indonesia and Thailand, to flood Vietnam.

“They plan to stop assembling in Vietnam. Instead, they will import cars for domestic sales,” he said.

Nguyen Minh Dong, an automobile expert, said auto manufacturers are becoming sellers.

According to Dong, big auto manufacturers several years ago spent hundreds of million of dollars to set up factories in Thailand and Indonesia, which targeted the Vietnamese market. They now want to scale down production in Vietnam and shift to importing cars.

A 2017 report on socio-economic development from the Vinh Phuc provincial authorities showed that the auto industry saw the sharpest decrease in the industrial production index.

The decreases were seen every month in comparison with the same periods of the year before. The decrease reached 19.16 percent by the end of 2017.

The output of 5-14-seat cars in December 2017 was 5,008 and 51,820 in the entire year of 2017, or 80.8 percent of the figure in the same periods of the year before.

The provincial taxation agency predicted that it would collect VND27.751 trillion in tax from foreign-invested enterprises. However, it collected VND18.001 trillion only.

Meanwhile, in Hai Duong province, where Ford Vietnam has an assembling factory, the taxes collected from foreign-invested enterprises totalled VND3.569 trillion, or VND1.431 trillion lower than the expected level.  This occurred after Ford Vietnam began focusing on selling imported cars. 

Nguyen Minh Phong, a renowned economist, commented that even though foreign auto companies have been enjoying many preferences, they are not willing to develop the Vietnamese auto industry. 

VAMA announced that it sold 27,882 automobile units in December 2017, up 13 percent from the previous month. Last year, a total of 272,750 units were sold, down 10 percent yearly.

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Tran Thuy