At a seminar held in Hanoi on October 12, the Ministry of Industry and Trade’s (MoIT) said that the domestic auto demand could reach more than 600,000 units a year by 2025. At this scale, the market would be able to attract resources for sustainable development.
If the domestic auto industry could meet the local market demand, especially for cars with up to nine seats, it would help the country reduce roughly $3-7 billion of import turnover in 2025, and about $5-12 billion in 2030, contributing significantly to the balance of trade and macroeconomic stability, MoIT said.
This is also the reason why MoIT Deputy Minister Do Thang Hai said: "The automobile industry is still limited, but also has great potentials for development.”
Ministry of Industry and trade will support domestic automobile manufacturers to enhance the production capacity and competitiveness of several key products.
According to Hai, the industry had achieved remarkable results with total assembling and manufacturing capacity of 460,000 vehicles per year, including light trucks and passenger cars, meeting the goals it set. The industry had contributed trillions of VND to the State budget per year and generated hundreds of thousands of jobs.
However, he said, localization rates (the percentage of locally-made components used to assemble a car) are still low. The part suppliers’ production does not meet the automobile manufacturers’ demand. The supporting industries have not yet formed networks of large-scale auto part and material suppliers and there is no connection among automakers and local part suppliers.
In the context of globalization, the local automobile industry is facing many opportunities and advantages, but also difficulties and fierce competition. Starting next year, the import tariff on vehicles from ASEAN states will be zeroed out if the localization rate reaches 40 percent or higher.
According to MoIT, it will take comprehensive measures to boost the industry’s growth next time.
Firstly, it will create a market capacity large enough for domestic automobile manufacturers through applying technical barriers and taking measures against frauds to ensure the transparent and healthy development of the market.
Secondly, it will support domestic automobile manufacturers to enhance the production capacity and competitiveness of several key products which are capable of competing against other regional products and have high demands.
Besides adjusting the import tax rate of auto components and accessories according to the signed commitments, MoIT will also apply a special consumption tax rate reasonably for cars with high localization rates.
It will also research to apply commercial safeguard measures when the number of imported cars to Vietnam increases dramatically and affects significantly on domestic production in line with international commitments.
The development of supporting industries, aimed to increase the localization rate of Vietnam's automobile industry, will be also promoted.
Finally, policies to encourage businesses to invest in large-scale electric vehicles for local demand and export will be also implemented, MoIT said.