VietNamNet Bridge – If the automobile industry development plan is implemented as expected, cars would get much cheaper in just some years.

The Ministry of Industry and Trade (MOIT) has confirmed that the automobile industry development plan by 2020 has got the concurrence from relevant ministries.

Regarding the tax policy, a member of the plan compilation committee said 3 scenarios have been suggested.

As for the first scenario, Vietnam would cut down the luxury tax and the car ownership registration tax by 30 percent on the domestically made cars with the cylinder capacity of less than 2.0L.

The ministry has suggested the 50 percent and 70 percent tax on the strategic car lines in the second and third scenarios, respectively.

Of these, relevant ministries and branches have expressed their agreement to the second scenario, which means that the five-seat car models with the cylinder capacity of less than 2.0L would see sharp tax reductions.

Once the tax rates are lowered, people have every reason to hope that cars would get much cheaper.

When asked about the plan implementation, the above said official said MOIT and the Ministry of Finance would still need to work out on the plan compilation before it is submitted to the government. However, he said the plan implementation may be kicked off by 2014, because Vietnam does not have much time until the tariff cut deadline.

The automobile industry development plan would be designed in a way that fits the Vietnamese strategy to develop the industry into one of the 6 sectors for the strategic development cooperation between Vietnam and Japan.

A car dealer said that if the luxury tax on less than 2.0L models decreases by 50 percent, a car priced at $30,000 would have the selling price down by $5,000. Meanwhile, the 50 percent ownership registration tax cut would help buyer save VND30-45 million.

As such, buyers would be able to save $6,500-7,000 when buying a car. This is really the good news not only to those who dream of possessing cars, but also to automobile manufacturers, who hope to boost sales.

With the development plan, Vietnam has confirmed its intention to develop the automobile industry, putting and end of the long lasting arguments about whether Vietnam should develop an automobile industry of its own.

The plan has also pointed out that 5-seat cars and trucks would be the two main automobile lines.

The main principle of the domestic automobile industry development plan is that Vietnam would focus on some types of cars, thus allowing to create the capacity big enough to encourage the development of supporting industries. Vietnamese enterprises would cooperate with some big automobile manufacturers and AFTA countries to step by step join the global automobile production chain.

Especially, the MOIT’s official said that the new policy on the automobile industry development, once laid down, would be stable and it would be unchanged at least for 10 years. Only the government would have the right to make changes with the policy.

The information would reassure automobile manufacturers who complain that the policies are so changeable that they cannot set up long term business plans.

However, analysts have warned that Vietnam may not be able to attract big investments in the automobile industry. The policies applied so far have discouraged automobile manufacturers and many of them have decided to set up their production bases in other regional countries.

Tran Thuy