Auto industry hindered by foreign capitalists

“We made a mistake when we decided to rely on capitalists to build our automobile industry. For capitalists, profit is the most important goal. Don’t think that they come here to help us learn how to manufacture cars,” asserted Dr Duong Quoc Thinh, Secretary of the Vietnam Society of Automotive Engineers.

In a Tien Phong interview, Thinh complained that Vietnam should strive to build up its automobile industry first and consider a strategic car line later, but the country is doing just the opposite.

Foreign automobile manufacturers committed to a localization ratio they must achieve after a certain period once they received an investment license. Now government agencies have discovered that found out that the manufacturers have not implemented the commitments. Do you think that we should revoke their investment licenses?

Enterprises only invest when they foresee that they can make a profit. Don’t dream that capitalists will help Vietnam build up its automobile industry. The most important thing for capitalists is profit. They only committed to localization ratios in order to get investment licenses. Meanwhile, we only asked them to make promises. We do not have regulations to punish them when they break their promises.

License revocations are not easy because car manufacturers are multi-national groups that have close relations to and influence on their governments.

Dr Duong Quoc Thinh, Secretary of the Vietnam Society of Automotive Engineers

Several years ago, some foreign electronics groups withdrew from Vietnam, moves that had an impact on the industry. I should remind you that automobile manufacturers pay billions of dollars to the state budget.

All six of the automobile enterprises inspected by government agencies have failed to meet the required localization ratio. Do you think that loopholes exist in the policies?

I don’t think there are loopholes. Many years ago, if we had not invited them to Vietnam, they would not have come, while Vietnam still needs to develop its industry.

What is the problem here, if domestic manufacturers have high localization ratios, while foreign manufacturers do not?

Automobile joint ventures mainly produce cars that require higher technologies and more expensive production lines than other popular kinds of vehicles.

I think that it requires patience to develop our car industry. We should expect gradual growth, but we should think that we need to obtain success immediately. Thailand, Malaysia and China, for example, have spent billions of dollars to form joint ventures. In many cases, they hold controlling stakes in their joint ventures. In contrast, Vietnamese enterprises simply contribute capital to joint ventures and only hold land use rights.

The Ministry of Industry and Trade is now consulting the public about the strategic car line. Do you think that it is a reasonable proposal?

I myself don’t understand why they think of defining the strategic car line. I think that the concept should be put forward only when Vietnam has a self-controlled automobile industry. In principle, Vietnam should strive to build up its automobile industry first.