Hanoi (VNA) - The Ministry of Industry and Trade(MoIT) has asked the Ministry of Finance to remove the special consumption taxfor locally-manufactured auto parts.

This is part of a recommendation document that MoIT sent tothe finance ministry in order to revitalise domestic automobile industry in thefuture and reduce the import of autos.

The MoIT said that it is needed to have more measures to helplocal automakers cut production cost and accelerate the product’s competitioncapacity as well as revising policies on tax and fees.

The ministry wanted the finance ministry to exempt the importtax on materials for part and components manufacturers who invest in Vietnam,which should be in association with their commitment on long-term investment,volume of products, technology transfer and use of local labour force.

The MoIT also recommends the application of a tax paymentguarantee for a period of eight months instead of the current 30 days.

The MoIT expected the finance ministry to study to amend andsupplement a number of the above contents, which were proposed by Thanh CongGroup, with regard to laws on value-added tax, special consumption tax, andcorporate income tax, in addition to personal income tax and natural resourcesprotection tax.

Earlier, at the review conference of the industry and tradesector held in Hanoi on January 15, General Director of Hyundai Thanh Cong LeNgoc Duc proposed that the MoIT, in coordination with the finance ministry,consider several recommendations as those mentioned above.

According to Duc, in order to achieve the goal of developingthe automobile industry in Vietnam, the Government has issued decrees such asDecree 116 on conditions for production, assembly, import and business ofwarranty service, car maintenance, and Decree 125 that regulates the roadmapfor import duty exemptions of parts and components for manufacturers who meetconditions such as emission standards, engine displacement capacity for the carwith nine seats and less, passenger car and truck.

However, he said such privileges were not strong enough to beof significant priority for locally-assembled autos to help them compete withcomplete built-up units imported from ASEAN.

Under the ASEAN Free Trade Agreement (AFTA) commitments, azero percent tax has been applied on cars imported from the bloc with alocalisation rate of 40 percent or more in the country of origin from January 1.

A MoIT report quoted by enternews.vn showed that the price ofan automobile in Vietnam is currently high in the region but its quality islower than an imported one.

“Locally-assembled autos in Vietnam have a similar pricedoubling as those seen in regional countries and much higher than othercountries which have a stable automobile industry such as Japan and the UnitedStates,” said the report.

"The domestic automobile industry has not yet reachedthe standards of the real automobile industry because most are at the level ofsimple assembly; the production line mainly consists of four key stagesincluding welding, painting, assembly and inspection. There is no cooperation,linkage and specialisation between automakers and assemblers and partsuppliers. There is no such system used by material suppliers and large-scaleparts and components makers.

"The localisation rate of new autos is only between 7percent and 10 percent on average (compared to the target of 40 percent in 2005and 60 percent in 2010). Currently, locally-produced products with very lowtechnological content are tubes, tires, chairs, mirrors, cables, plasticproducts and batteries," the report pointed out.

The MoIT has on numerous occasions warned that if suchprivileges and incentives were not approved, the domestic automobile industrywould find it difficult to compete with imported cars.-VNA