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Vietnam automakers back rigid import law
Publication Date : 10-09-2012
The trade organisation representing Vietnam's auto industry is voicing its support for a recent regulation requiring automobile importers to be authorised dealers of the auto manufacturer from which they are importing vehicles.
Ministry of industry and trade Circular No. 20, which took effect in June last year, has drawn fire from some dealers who said that the strict requirement had effectively created an auto import monopoly.
Last Thursday, the General Department of Customs joined in the calls to amend the circular, reporting to the ministry of finance that the requirement was signficantly reducing import tax revenues and harming car dealers.
According to Customs statistics, Vietnam imported 16,000 cars worth US$335 million in the first seven months of this year, a decline of 58 per cent in volume and 44 per cent in value from the corresponding period last year. Import tax revenues have therefore also declined. Ministry of finance figures concur, suggesting that a slump in auto imports could lower tax collections by as much as $2 billion annually.
In response, the Vietnam Automobile Manufacturers Association (VAMA) yesterday sent a letter to the ministry of industry and trade expressing surprise at the opposition to the regulation and urging the ministry to keep Circular No. 20 in place. VAMA argued that amending or abolishing the circular would create market, negatively affect local production, and harm the interests of the cars buyers.
The opposition to the regulation continues to argue, however, that the regulation effectively allows only joint ventures, most of which are VAMA members, to import vehicles with fewer than nine seats and threatened the operations of over three-quarters of the nation's private auto importers and dealers.
They complained that they would be unable to document that they are authorised dealers of various auto manufacturers, most of which grant only exclusive licenses to a particular distributor in the country.
They are calling for an end of this requirement, a move which would enable more importers and dealers to participate in the market while benefiting consumers by boosting the supply and variety of imported cars.
Hanoi Automobile Co director Nguyen Van Dung, one of the dealers opposing the regulation, said he would be able to resume importing foreign cars only if the regulation were loosened.
Dung late last year turned his 300sq.m showroom in Gia Lam District into a restaurant called the Hanoi Automobile Beer Restaurant.
Hung Long Automobile Co director Nguyen Ba Hoc said he was fined 40 million Vietnam dong last year for importing 16 Lexus sedans without proper documentation.
"The ever-changing regulations in the automotive sector have discouraged the development of the industry as a whole," Hoc said.
Following last week's Vietnam Auto Show 2012, VAMA attempted to forge solidarity with auto importers by announcing an alliance with a group of authorised importers. Representatives of domestic manufacturers and authorised importers also sat side-by-side and co-chaired a press conference last week to launch the auto show.
VAMA chairman Laurent Charpentier said the alliance would help develop the nation's auto industry as a whole.
While VAMA has argued for co-ordinated long-term policies to improve the transportation sector and avoid negative impacts of development, the organisation has long lobbied the government to apply stricter policies on auto importers in order to give a greater advantage to domestic producers.
In March, for instance, VAMA asked the ministry of transport to postpone a series of car fees, urging the government to first issue a policy to develop and diversify the transportation sector to meet public demand.
The ministry of industry and trade in April forecast that Vietnam's total car sales in 2012 would drop drastically and return to 2007 levels of around 80,000 units. Last year, sales reached 138,000 units, a drop of 5 per cent from the previous year.