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Certainty needed for automobile industry

Released at: 09:02, 30/10/2015

Certainty needed for automobile industry

Mr. Yoshihisa Maruta, Chairman of the Vietnam Automobile Manufacturers' Association (VAMA) and President of Toyota Motor Vietnam (TMV), spoke with VET on the sidelines of the 11th Vietnam Motor Show in HCMC.

by Ngo Hai - Hoang Anh

As the end of the year approaches how would you assess the development of Vietnam’s automobile market?

In the first nine months of 2015 total market sales reached approximately 164,000, for an increase of 53 per cent compared to the same period last year. The number of completely-knocked-down (CKD) vehicles accounted for 75 per cent.

With the market’s continuous growth and support from the government, we expect total sales for the year as a whole to reach nearly 210,000. With a clearer and more stable tax policy and economic growth looking positive, the automotive market will continue to see growth in 2016.

There are also challenges to face, however, with a number of markets in the region witnessing oversupply and slowing consumption. There are drawbacks for domestic production in the long term, as Thailand and Indonesia will boost their exports to Vietnam, especially when tariffs are cut to 0 per cent in 2018. Therefore, apart from the efforts of automobile manufacturers in improving their competitiveness, government support in maintaining production is essential.

Draft amendments and supplements to certain articles of the Law on Value Added Tax, the Law on Special Consumption Tax (SCT), and the Tax Administration Law are being discussed by the National Assembly, in particular emphasizing adjustments to the SCT imposed on motor vehicles. What is your view and VAMA’s view on the drafts?

Regarding the draft from the Ministry of Finance (MoF) concerning SCT, we understand that the government wants to promote small capacity motor cars with low emissions, to protect the environment. With tariffs on completely-built-up (CBU) motor cars in Southeast Asia to be cut to 0 per cent in 2018 and with a sharp reduction in SCT, the price of a small capacity motor car would fall significantly. This would trigger a range of difficulties for automakers in maintaining production. Therefore, we hope that the government will carefully consider creating a lasting tax policy that will not fluctuate significantly over a short period of time.

When tax policies fluctuate it is difficult for us to prepare future business plans. Any changes should be gradual. The MoF should carefully consider reducing SCT levels and apply a clear roadmap to harmonize interests between automobile manufacturers, to maintain domestic production, and consumers and importers.

What recommendations would you make to minimize the negative impacts from the SCT on the automotive market in general and the automotive business in particular?

We think the MoF should firstly offer support policies to domestic automobile manufacturers so they can maintain production after 2018 when import tariffs come down to 0 per cent. It might also consider reducing SCT for certain projects in producing combat vehicles, approved by the Prime Minister under the Automobile Industry Development Plan.

This year the Motor Show was held again in Ho Chi Minh City. Why doesn’t VAMA hold it in Hanoi? How is this year’s Motor Show different to other years?

We would like to alternate the Motor Show between Ho Chi Minh City and Hanoi to give customers in both cities the opportunity to come and see new models. Due to venue limitations in Hanoi, however, we must continue to hold it in Ho Chi Minh City. We hope that after Hanoi completes a new exhibition venue we can organize exhibitions for our northern customers.

With 18 well-known motor vehicle brands, the Vietnam Motor Show 2015, held from October 28 to November 1, will be the largest exhibition to date, including VAMA members’ 16 brands and two new brands: MAN and Kamaz. This year there are two new members compared to previous years: Truong Hai Auto Corporation, with three brands - Mazda, Kia and Peugeot, and the Do Thanh Auto Company, with Hyundai.

We believe this is not only a chance to display the 18 brands but also an opportunity for customers to experience and understand more about new models. Each booth showcases one or two new models, so 30 new models will be launched and more than 150 vehicles will be on display at this year’s exhibition. Toyota’s design this year was based on the idea of a future society where people, vehicles, and the environment are bound together. Toyota will introduce the FCV model, which uses the most advanced hydrogen fuel cell system, and the completely new Prius, which is Toyota’s symbol of success in hybrid technology.

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