VAMA asks government to break applying car fees

The Viet Nam Automobile Manufacturers Association (VAMA) has asked the Government and relevant authorities to postpone the implementation of a series of car fees initiated by the Ministry of Transport.

On March 13, 2012, the government promulgated Decree No. 18/2012 stipulating the establishment of the road maintenance fund. The government assigned the Ministry of Finance to set fees for using the roads that would be imposed annually on every vehicle.

The Ministry of Transport has suggested fees of between VND180,000 ($8.6) and VND1.44 million ($70) a month for seven different car groups.

It is expected that the circular would be released in April, so that the vehicle owners would begin paying fees starting June 1.

Prior to that, the Ministry of Transport proposed a vehicle circulation fee – estimated at $20-50 million ($960 – $2,400) - on every vehicle per annum.

In addition, cars entering the central areas of big cities (Ha Noi, HCM City, Da Nang, Can Tho and Hai Phong) in peak hours would be subject to another kind of fee.

If all three new fees are applied, every car, whether it is in circulation or in a garage, would bear eight kinds of fees and surcharges in total. The cars entering the central areas of big cities would have to bear nine kinds of fees.

In its written proposal, VAMA said that before applying those fees, the government should build a policy to develop and diversify the transportation network to meet the people's demand.

VAMA argued that there should be synchronised and long-term policies to improve the transportation sector overall, while avoiding the negative impacts of development.

VAMA said car consumption is fundamental to the development of the auto industry and a car circulation limit should only be applied in big and crowded cities, and even there on only a small scale.

The fees should vary depending on the frequency of use and should differ in rural and urban areas.

On the other hand, if the proposed fees were applied, it would be impossible to achieve the government's auto development plan toward 2020, which considers the auto industry to be a pillar of the country's economy.

In addition, if the auto industry failed to develop, Viet Nam would have to spend approximately US$12 billion per year on car imports, which would negatively effect the trade balance.

The recession of local auto industry would also dim the annual contribution of the sector to State budget, which is estimated to reach $2 billion annually.

It would also result in unemployment for hundreds of thousands of employees working in auto sectors, VAMA added.