Vietnamese businesses will have to put in at least 50 per cent of the charter capital if they are entering into automobile joint ventures with partners from Russia and Belarus.

As per Government Decision 08/2017/QĐ-TTg, a guideline for businesses on implementing the protocol signed between Việt Nam and Russia on supporting automobile production in Việt Nam, every authorised Russian business is allowed to be part of one joint venture, which will undertake operations for a minimum period of 10 years and a maximum period of 30 years.

Russian businesses are not allowed to transfer their capital in the joint venture to a third party from a third country.

The protocol was negotiated and signed based on the priority clauses for investment projects under the free trade agreements between Việt Nam and the Eurasian Economic Union (EAEU). Under the agreement, Russian vehicle manufacturers such as KAMAZ, GAZ and UAZ can tie up with Vietnamese partners and set up joint ventures to manufacture and assemble trucks, cars with 10 seats and above, crossover utility vehicles (CUV) and a number of special-use vehicles.

The joint venture enterprises will have to assemble cars in compliance with Việt Nam’s automobile industry development plan till 2020, with a vision towards 2030.

The local supply rate will be 25 per cent for special-use vehicles, 30 per cent for trucks and CUVs, and 35 per cent for cars with 10 seats and above by 2020. The rate will be increased to 40 per cent, 45 per cent and 50 per cent by 2025, respectively.

If the joint venture fails to meet the fixed local supply rate after 10 years of operations in Việt Nam, its licence will be revoked.

The joint ventures will also export to other countries, especially the Southeast Asian bloc, where there will be no import tax on automobiles, under the condition of 40 per cent localisation rate among members from 2018. — VNS