Mr. Yoshihisa Maruta, President of Toyota Motor Vietnam, spoke with VET about the nature of support schemes for the local automobile industry to cope with tax changes post-2018.
■ Toyota Motor Vietnam (TMV) has submitted a proposal to the Ministry of Industry and Trade (MoIT) on support policies for the development of the automobile industry after 2018. Can you tell us more about the proposal?
Our discussions with MoIT and the government are ongoing so I would prefer to not go into the details. But let me explain our thinking. Import taxes will become 0 per cent in 2018 so now is a very important time for us and other car makers to prepare and compose plans on how to survive and further strengthen our cost competitiveness compared to completely-built-up units (CBUs) from ASEAN after 2018.
We wish to maintain and develop our production in Vietnam and contribute even more to the development of the country’s automobile industry.
This is why we are in discussions with MoIT and the government; to identify the best solution for developing the automobile industry here in Vietnam. We expect the government will finalize detailed policies in the approved Automobile Master Plan.
■ It’s been reported that TMV is seeking support of 10 per cent of each motor car’s price, which would be around $2 billion. Is this correct?
This information is incorrect. We have not proposed support of 10 per cent of a motor car’s value or price. When the import tax becomes 0 per cent in 2018, the cost gap between completely-knocked-down (CKD) and CBU units will affect local production. We have therefore proposed the government provide partial support to offset this gap, by revising the tax regime in the transition period until the market becomes larger.
As you know, the automobile industry is one of Vietnam’s key industries. When it develops it influences many other indicators, such as economic growth, employment, the trade balance, and the development of support industries. Following on from the Master Plan approved by the Prime Minister last July, we expect the government will work with and support car makers to maintain and develop local production.
■ If the government agrees to support car makers, will car prices fall?
We don’t know what the price of cars will be in the future, because the elements of the support scheme are not clear as yet and the market price is also determined by many other factors, such as exchange rates and material costs.
■ What is needed to maintain and develop production after 2018?
In the long term, we believe that the Vietnam market will continue to grow and the auto industry has the potential to develop into the future. The issue now is that the Common Effective Preferential Tariff (CEPT) will become 0 per cent before the market is able to grow sufficiently. Developing the automobile industry involves two important points. The first is introducing a support scheme for the auto industry until the market is large enough, and the second is to apply a stable tax policy to ensure steady and continued market growth.
- Toyota Motor Vietnam
- local automobile industry