Hanoi (VNA) - Deputy Prime Minister TrinhDinh Dung has asked the Ministry of Industry and Trade (MoIT) and relevantagencies to study the possibility of applying safeguards to protect thedomestic automobile manufacturing industry from looming zero-tariff carimports.

The move is also intended to boost the development of support industries forthe domestic automobile industry as it copes with a persistent low rate oflocal content and high production costs.

In a document sent to the MoIT this week, Dung asked the ministry to propose toPrime Minister Nguyen Xuan Phuc revisions of policies and mechanism to boostthe support industry, especially for the big investors and leading automakers.

Dung said a multi-sector working team should be set up to undertake acomprehensive evaluation of the domestic automobile market in correlation withregional and global markets.

The evaluation must focus on opportunities and difficulties ahead of 2018, whenthe import tax on complete built-up units (CBUs) from ASEAN countries will becompletely abolished. It should also provide a forecast of supply and demand inthe country and the region, and an assessment of the capacity and developmentpotential of local auto production, as well as domestic automakers’ ability toadapt to fierce competition given Vietnam’s commitment to ASEAN to opening itscar market.

The document tasks the finance ministry with coordinating with relevantagencies to tighten management of tariff value and origin of CBUs, which shouldmeet the ASEAN’s criteria of origin, in order to ensure the rightimplementation of tax regulations and international commitments.

Dung wanted the ministry to re-evaluate the special consumption tax level andregistration fee on pick-ups, which then would be submitted to the Governmentand the National Assembly to supplement and revise.

The ministry will have to check and study MFN (Most Favoured Nation) tariffs oncomponents and auto parts for revision, if needed, commensurate with theGovernment’s orientation on encouraging domestic auto part production.

The MoIT and ministries of Transport and Science and Technology will designtechnical barriers appropriate to domestic regulations and internationalcommitments to ensure “no bad quality cars are imported to Vietnam",according to the document. They should also protect the rights and interests ofconsumers and local automakers, simplify procedures and create favourableconditions for the automakers’ operation.

Vu Thanh Tu Anh, Research Director at theFulbright Economics Teaching Programme in Vietnam, told Thoi bao Kinh teViet Nam (Vietnam Economic Times)that in the mid-1990s, automobile producers like Toyota and Nissan promised toachieve a localisation rate of 40 percent within 10 years.

“But so far, their localisation rate is about 10 percent. This means theproducers got incentives but what they have done for Vietnam is not as much asthe Government expected,” said Anh.

Meanwhile, the import of cars is already surging. Vietnam Customs reported thatnearly 15,300 CBUs were imported in the first two months of this year, anincrease of over 4,000 units compared with the same period last year, of which60 percent were cars with nine seats or less.

The total value was estimated at 309 million USD, with an average import priceof about 20,200 USD each.-VNA