Advantage for official auto import suppliers to stay

Friday, Jul 01, 2016 18:48

A corner of AutoExpo 2016 opened in Ha Noi last month. — Photo baotintuc
HA NOI (Biz Hub) — The Ministry of Industry and Trade is planning to continue its regulation on auto imports.

The regulations requires importers of complete built up (CPU) cars with less than nine seats to show proof that they are authorised dealers for foreign automakers.

The requirement was mentioned in the ministry's Circular 20, which came into effect in June 2011 and was to become invalid on July 1 this year. The aim was to tighten the import of CBU cars and compel businesses to ensure that after-sale services, such as warranty and maintenance, matched the manufacturers' standards.

Meeting these standards is very difficult for businesses because foreign automakers always choose only one official supplier in a foreign country.

The regulation is part of a draft decree, which revises, supplements and issues a number of regulations, on trade and investment conditions. The draft has been sent to relevant ministries and sectors for suggestions.

Many auto importers in Viet Nam are eagerly waiting for the decree.

If the regulation on auto imports is retained, importers, who are authorised dealers for foreign automakers, can set their mind at ease and continue doing business as normal. But if the regulation is removed, all businesses, including those are not authorised dealers for foreign automakers, can import CBUs to Viet Nam.

Speaking to, the deputy head of the ministry's Import-Export Department, Tran Thanh Hai, defended the regulation, saying that if the regulation on auto imports in Circular 20 was not put into the decree, it would lead to a series of negative impacts on the domestic automobile market.

Hai said that the lifting of the regulation would also put a halt to the national automobile industry's development planning, already approved by the Prime Minister, which includes the plan to boost the development of domestic auto assembling and manufacturing businesses.

In addition, two factors will push up auto imports in Viet Nam -- in 2018 when the auto import tariff for ASEAN members becomes zero per cent and when the country's reduction on special consumption tax on vehicles with small engine displacement comes into effect on July 1.

"If the regulation is removed, it will accelerate auto imports, leading to social problems, such as traffic jams and urban environment pollution," Hai said.

It's not that the ministry does not want to remove difficulties for businesses, but the lifting of the regulation will likely cause unhealthy competition in the market, like it was before 2011 when Circular 20 had not been issued yet," he added.

Lifting or not lifting

In response to the draft decree, the Vietnam Chamber of Commerce and Industry (VCCI) has recently asked to abrogate the circular's regulation and not put it into the decree.

VCCI said the requirement of having an authorised paper to become an official supplier of a foreign automaker had created advantages for some businesses that were authorised dealers.

Meanwhile, other businesses that did not have such a paper but wanted to import vehicles had to buy cars from authorised dealers to sell them in the market.

This not only led to unfair competition between the two groups, but also meant the consumers had to pay a higher price for the imported vehicles.

The Ministry of Justice has also opposed this regulation in its official letter sent to the government recently.

Earlier, many auto importers, official suppliers, the Vietnam Automobile Manufacturers' Association and the European Chamber of Commerce in Viet Nam, as well as the German Business Association in Viet Nam and the Vietnam Business Forum, sent documents to Prime Minister Nguyen Xuan Phuc proposing to keep the regulations on auto imports in Circular 20.

They also expressed their concerns that if the regulation was removed, the impact would be affect the domestic automobile industry and the auto market, lead to commercial frauds in auto import and losses in tax and influence the interests and rights of domestic consumers.

Auto imports down

According to a report from the General Statistic Office, Viet Nam imported an estimated 49,000 cars, worth US$1.18 trillion in the first half of this year, decreasing by 11.2 per cent in quantity and 21.2 per cent in value compared with the same period last year.

May and June were a ‘boisterous' period of high-value auto imports. This is because businesses and consumers had tried to import vehicles with 10 seats and below and with an engine displacement of more than 2,500cc before July 1 when the increase of special consumption tax comes into effect. — VNS

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