Offered incentives, auto industry sees light at end of tunnel
The government has once again offered investment incentives to automobile manufacturers, but analysts still doubt Vietnam can build its own automobile industry.
An analyst said that Vietnam still cherishes the dream of developing the automobile industry after it failed to do so for decades.
This can be seen in a series of new policies issued recently – offering investment incentives to domestic automobile manufacturers, prioritizing small-size cars with cylinder capacity of less than 1500 cc and restricting large-size cars.
Just some days before the long Tet holiday in early February, the government released a decision on policies to implement the automobile development strategy by 2025-2035.
The analyst commented that this would be the ‘last chance’ for Vietnam to implement its ‘automobile dream’. If it fails again, it will not have any other opportunities, because it will have to fully open the domestic market in some years.
Paving the way for small-size cars
The decision is believed to create most favorable conditions to develop production lines in Vietnam – MPV small-size vans used in agriculture which have the capacity of 3 tons, specialized vehicles, medium- and short-distance passenger vehicles, and cars with up to nine seats and cylinder capacity of 1500 cc.
The product lines will receive many tax incentives for manufacturing and trade.
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Meanwhile, large-size vehicles with cylinder capacity of 3000 cc and more would be barred with the high environment fee and luxury tax.
The institutions and individuals that make priority product lines will get preferential credit for their production lines from the Vietnam Development Bank.
The projects making priority products with the production capacity of over 50,000 products a year, and projects making engines and gearboxes will also get preferences to be determined by the Prime Minister.
State money to be spent on domestically made vehicles
Public cars to be used by state agencies and paid by the state budget must be domestically made products.
Pham Anh Tuan, deputy director of the Ministry of Industry and Trade’s Heavy Industry Department, stressed that this was a new policy which was not mentioned in Decision No 1168 in the past.
The new policy will help create a large market for domestic automobile manufacturers.
Tuan commented that tax incentives to automobile manufacturers will be attractive, but it will be more important to help create a market for them.
Pham Chi Lan, a renowned economist, has applauded the new policy, saying this will help stimulate domestic production and create jobs.
Commenting about the new strategy, Lan said, ‘"It's late, but better late than never."
