A Toyota Yaris model on display at a trade show. The Ministry of Industry and Trade would abrogate its circular on supplementary procedures for importers of passenger cars with nine seats or less as soon as the Ministry of Transport issues regulations with similar effects for road vehicles. – VNA/VNS Photo The Duyet

HA NOI (Biz Hub) — The Ministry of Industry and Trade (MoIT) said it would abrogate its circular on procedures for importers of passenger cars with nine seats or less, as soon as the Ministry of Transport issues regulations with similar effect for road vehicles.

The MoIT made the suggestion in a report sent to Prime Minister Nguyen Xuan Phuc last week, after collecting official opinions about Circular No 20/2011/TT-BTC, which has reportedly discouraged many car importers since it took effect on June 26, 2011.

The circular states that importers of unused cars with nine seats or less, besides performing current import procedures, must be designated or authorised by official carmakers or dealers as their distributors in Viet Nam.

It also requires the importers to obtain certificates proving adequate qualifications for car guarantee and maintenance, from the transport ministry.

The MoIT said it issued the circular to deal with "an unreasonable situation": global carmakers frequently recalled vehicles due to manufacturing errors from around the world, but not from Viet Nam.

The circular forced domestic distributors to, on behalf of official manufacturers, be responsible for the imported vehicles. This was needed to protect consumer interests and assure road traffic safety, the ministry said.

However, Circular 20 came under fire over the last few months, with many experts arguing that the document was causing business inequality against national efforts to create a better business environment.

Debates

Debates happened among the MoIT and relevant ministries and sectors, besides the Viet Nam Chamber of Commerce and Industry (VCCI), Viet Nam Automobile Manufacturers Association (VAMA), and Viet Nam Association of Mechanical Industry (VAMI).

According to the MoIT report, these are the major arguments against Circular 20:

- The circular contains business conditions. It violates the latest Investment Law, which does not stipulate any business conditions for car import activities.

- The circular virtually grants the right to import cars for a limited number of enterprises, which can obtain official authorisation of manufacturers, and restrict choices for consumers. This violates laws on competition and consumer rights.

- The circular violates laws on intellectual property rights, since these laws do not let carmakers ban anyone from importing cars into Viet Nam, once the vehicles are sold in other markets.

- The circular aims at restricting imports to curb trade deficits. In this sense, the authorities failed to reach their purpose because car imports still rose over the last five years.

Government portal chinhphu.vn recorded the following opinions from recent discussions, with less ‘for' than ‘against':

Audi Ha Noi director Nguyen Van Dung said he advocated maintaining the circular as it helped consumers avoid disadvantages. The authorised car distributors could make sure of the quality of vehicles and fix errors if necessary.

Pham Anh Tuan from VAMA said this association also supported the circular. Its view was backed by authorised importers of Audi, Porsche and Rolls-Royce, who said authorisation certificates are a must to avoid trade fraud and tax revenue shortfalls.

However, Nguyen Dinh Quyet from Hung Ha Company said: "I hope the circular will be abolished… As the circular exists, only large firms [that meet requirements of manufacturers] can import cars. Business conditions must be advantageous and unbiased for all firms, including small- and medium-sized enterprises."

"I suppose that the circular is counter-competition," said VCCI legislation department director Dau Anh Tuan, adding that Viet Nam already has enough regulations, including car-registration regulations, to assure traffic safety.

"The game will be much more open for all if the circular is eliminated, although small firms are likely to be in a disadvantaged position," said Nguyen Dong Phong from the Viet Nam Register.

Deputy Minister of Planning and Investment, Dang Huy Dong, agreed that any enterprises have the right to do business and the authorities had better let buyers decide which cars to buy, rather than stipulating who can import the vehicles.

Another planning and investment official, Le Thuy Trung, suggested that finance authorities should study tax policies and the transport ministry work out technical standards for better vehicle management.

No law violations

In last week's report, the MoIT said Circular 20 violated no laws.

The ministry said regulations of the circular are not business conditions because it does not intervene in investors' use of capital to establish an economic entity to operate their car business.

The document merely provides an administrative procedure applied for imported vehicles, just like many other procedures performed at border gates such as requirements for a certificate of origin, or a sanitary certificate.

All countries stipulate that new cars can be sold to consumers only if the vehicles are accompanied with clear guarantees and maintenance policies of manufacturers, and normally, no businesspeople are allowed to deal in car maintenance without their commission.

"Getting official authorisation will show local distributors' respect for manufacturers' policies," the ministry said.

According to the report, Circular 20 gives no discriminatory treatment to car importers, as it does not force consumers to buy cars from any specific firms. Whether importers can manage authorisation of manufacturers is absolutely up to negotiations between them.

Many importers have tried to better themselves to be qualified for authorisation of manufacturers. Data from the transport ministry showed that the number of car importers in Viet Nam fell from nearly 540 to less than 60 in 2012, after the circular was issued. However, the number rose back to more than 300 last year.

The Ministry of Science and Technology affirmed that the circular did not violate laws on intellectual property rights.

The MoIT reaffirmed that the circular did not aim at import restriction, so it was inappropriate that some experts cited increasing car imports during 2011-15 asking for removal of the circular.

According to the MoIT, Circular 20 has legitimate targets, yet it is not a comprehensive measure to protect consumer interests and guarantee traffic safety.

The circular only regulates imported cars with nine seats or less, while the overall targets require regulations for all types of vehicles, either they are imported or domestically built. The transport ministry is a single agency that has the authority to issue such regulations.

As the circular does not impact used cars, as well as cars imported as gifts or moved assets, some firms also modify cars so that they can import them. These vehicles must be regulated in registration phases, too.

The MoIT proposed to Prime Minister Phuc that the transport ministry will coordinate with relevant agencies to build regulations with similar effects to Circular 20, to control the registration of all means of road transport.

Vehicles must be registered in a manner that they can be maintained or fixed in line with international practice, and domestic safety standards, the ministry said.

"The MoIT will abolish Circular 20 when regulations of the transport ministry officially take effect," its report said.

Telling Tuoi tre (Youth) newspaper why Circular 20 is not abolished immediately, Deputy Minister of Industry and Trade Tran Quoc Khanh said: "We are busy with discussions about Circular 20 without noting that from July 1, 2016, the day Circular No 19/2012/TT-BGTVT of the transport ministry became invalid in accordance with the Investment Law 2014, there are no other documents stipulating importers' responsibilities and methods to guarantee and maintain cars.

"In this context, we cannot abrogate Circular 20 yet. Although it can only help consumers in a small market segment…it is better than having no measures," Khanh said. — VNS