New tax scheme implemented to strengthen Vietnam‘s auto industry

It is said that tax policies issued in the past have offered priority and indulgence for the auto industry, weakening locally-made products' competitiveness compared to foreign ones, what is your opinion of this?

It is not totally true to say this as we have taken very careful considerations on tax policies, especially on completely built unit (CBU) auto spare part imports, in line with commitments with foreign partners.

In reality, quality of domestically-assembled autos is lower than imported ones, but their prices are almost equal to imported vehicles. Is the new special consumption tax policy aimed to sharpen local competitiveness?

That is our intention. Therefore, our policy is expected to create an equal race, forcing Vietnamese auto firms to compete with foreign rivals in both quality and price.

The new special consumption tax policy is designed to standardise old regulations and be suitable for the the Vietnamese market.

The Vietnam Automobile Manufacturers Association (VAMA) complained that this policy will push the local auto industry into a difficult spot. What do you think about this?

The policy will stipulate special taxes for each kind of automobile. A separate tax mechanism will be applied for auto lines which are of high quality. Our goal is to build a genuine auto industry, not a purely assembling industry.

We have proposed that the Ministry of Industry and Trade jointly assess the auto industry. This is a complicated issue due to harmonious settlement of many problems. For instance, lowering the tax sharply will lead to massive auto imports, hurting the trade balance. As a result, the country is likely to be faced with inflation risks in the context of the changing world market.

Is the Vietnamese auto production industry unable to fulfill its localisation target due to the tax policy?

I think that the Ministry of Industry and Trade will give a clear answer to this question. Nevertheless, in my opinion, it is not just because of the tax policy but also a result of our country’s small-scale production and investment strategy.