A production line of TCIE Company in Viet Nam. — Photo baodanang.vn

HA NOI (Biz Hub) — Vietnamese consumers purchasing light-duty trucks, below three tones, and multi-purpose mini farm vehicles may soon receive loan support from the Government, according to a regulation drafted by the Ministry of Trade and Industry.

The proposal was listed in a draft decision on regulations and policies to facilitate the implementation of the Vietnamese automobile industry's development plan and strategy.

Under the draft, which is expected to be issued by the Prime Minister, the customer will be given 100 per cent of the interest for the first two years and 50 per cent in the third year.

The ministry also planned to support the automobile industry through investment credit policies and export credit.

Domestic automakers will be allowed to borrow from the State's development investment fund for their projects related to auto spare parts production and auto manufacturing and assembly. The interest rate will not exceed the maximum interest rate offered by the Governor of the State Bank of Viet Nam in any given period.

The domestic automakers, who are involved in the global supply chain for manufacturing and exporting spare parts and complete units, will benefit from the State's policies on export credit.

As for projects that manufacture high-priority vehicles, including trucks, buses, cars with 10 seats or fewer and concrete trucks, as well as fire trucks, ambulances and special vehicles for security and national defence personnel, the investors will also be considered eligible for capital from the national support fund for science and technology development, the national technology renovation programme and other capital resources. They can use these funds for the expenses related to technology transfer, purchase of a design copyright and software and recruitment of foreign experts for training human resources.

The ministry has proposed that the auto spare parts production and auto manufacturing and assembly projects in industrial parks, economic zones and hi-tech parks will receive an exemption on import tax.

At the same time, it will apply the import tax at the World Trade Organisation's ceiling level to spare parts, which the domestic makers can produce while meeting requirements for both quality and quantity.

The automakers are expected to see a reduction in corporate income tax for projects related to manufacturing high-priority vehicles, with a capacity of 50,000 units per year.

If this draft decision is approved by Prime Minister Nguyen Tan Dung, it would give domestic automakers the boost they need to recover their business as well as make the country's automobile industry development strategy a reality.

Under the Prime Minister's Decision No. 1168/QD-TTg of July 16 on issuing a strategy for Viet Nam's automobile industry development through 2025, with a vision toward 2035, Viet Nam will prioritise the manufacture of trucks and passenger cars with 10 seats or more, passenger cars with up to 9 seats and special-use vehicles.

Its overall objective is to build Viet Nam's automobile industry into a key industry that meets the domestic market's demands for various types of vehicles that are ready for export. This would be the driving force for the development of other industries and would increase the country's competitiveness as a supplier of auto components and parts in the world's automobile manufacturing chain.

By 2020, 2025 and 2035, the support industries will meet 30 per cent, 35 per cent and over 65 per cent of the demand for domestically produced components and parts, respectively.

The strategy also targets the export of some 20,000 locally made cars by 2020; 37,000 by 2025; and 90,000 by 2035.

The strategy further underscores the need to boost links and co-operation amongst auto makers and assemblers, as well as enterprises engaging in the support industry and research and training centres in all economic sectors. — VNS