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Heated meeting casts cloud over new car import regulations

Released at: 09:26, 27/02/2018

Heated meeting casts cloud over new car import regulations

Photo from tapchitaichinh.vn

Local and foreign automakers at odds during meeting with government to thrash out differences over new car import regulations.

by Duy Anh

The fate of Vietnam’s new car import regulations will be known next week at the latest as a meeting on February 26 revealed differing opinions among leaders of domestic and foreign manufacturers over what a fair policy that ensures a level playing field looks like.

Chaired by Minister and Chairman of the Office of the Government Mai Tien Dung, the meeting came at a time when Japanese auto manufacturers have decided to suspend exports to Vietnam and Indonesia has voiced concerns following the issue of Decree No. 116 and the Ministry of Transport’s Circular No. 3 on car manufacturing, assembly, importation, and warranties; a move that tightened car imports from January 1.

“Vietnam’s new car import regulations do not follow international practice,” CEO of Toyota Motor Vietnam Mr. Toru Kinoshita told the meeting, which gathered together representatives from business associations, enterprises, and embassies such as the US, Japan, South Korea, and the EU.

The new regulation stipulates that traders are only permitted to import automobiles if they can provide valid vehicle registration certificates issued by authorities from the countries of origin.

Original quality control certificates for each vehicle and letters of authorization regarding recalls of defective vehicles from the manufacturers are also required, along with copies of quality assurance certificates provided by the countries of origin.

According to Mr. Kinoshita, the new regulation also requires importers have one car from each batch shipped to Vietnam go through emissions and safety tests, adding costs and difficulties to auto enterprises. Under the previous regulation, only one certificate was required for each model of car, regardless of how many batches were imported.

Mr. Kinoshita, who is also the Chairman of the Vietnam Automobile Manufacturers’ Association (VAMA), pointed to these new regulations as the cause of disruption and the discontinuation of Vietnam’s motor car imports, “leading to no car being imported into Vietnam since the beginning of 2018,” he said.

“While VAMA supports the government’s development orientation for the automobile industry and the support industry, good policy must ensure the continuation of market openness and competitiveness and must be attractive to foreign investment,” Mr. Kiroshita said.

Under the new decree, completely-knocked-down (CKD) makers need to have a test road of 800 meters in length, with a 400-meter straight, by April 17, 2019. “While this is a mandatory requirement for automakers, none have immediately put such a test road in place, meaning that each automaker needs to seek more land and make more investment or lease a test road,” said Ford Vietnam CEO Mr. Pham Van Dung.

Regarding the requirement on completely-built-unit (CBU) importers to submit vehicle type approval (VTA) certificates issued by overseas authorities, “most auto enterprises are unable to find any suitable overseas VTA matching Vietnam’s specifications on imported vehicles, as each country’s government tests and certifies under local regulations on domestic-use vehicles only, while export vehicles are out of their scope,” Mr. Dung added.

“Our shipment of 100 cars from the US is remaining at port due to our fear of them being re-exported for not meeting Vietnam’s new regulations,” Mr. Dung went on. “The whole shipment costs $1,000 a day for storage, while a complete inspection that may take two months will cost from $5,000 to $10,000.”

But a proposal to delay the implementation of Decree No. 116 made by representatives from the American Chamber of Commerce and the European Chamber of Commerce immediately met with a chaotic response from Vietnamese automakers, who said the new decree “does not act in favor of or shield local car production and the domestic automotive assembly industry.”

“We also have one car from each batch shipped to Vietnam going through emissions and safety tests,” Chairman of the Truong Hai Auto Corp. (Thaco) Mr. Tran Ba Duong argued. “At a time when customer knowledge about motor cars is low, and verifying the quality of motor cars is not available in Vietnam, being fully aware of the car’s history is a legitimate requirement of consumers. Since 2006, domestic producers have strictly complied with these regulations and have not encountered any difficulties in applying for these papers.”

“The minimum 800-meter test road is not an overly difficult condition as this is the last checking stage for faultiness before a car is brought into the market,” CEO of the Thanh Cong Group, Mr. Le Ngoc Duc, told the meeting. “Land funds cannot be used as an excuse for an inability to build a test road. If foreign automakers cannot do this, it means they lack the commitment to do long-term business in Vietnam.”

Minister Dung wrapped up the meeting by announcing a deadline for relevant ministries and sectors to review each aspect of the issue this weekend or early next week. “We will then propose to the Prime Minister a reasonable amendment and adjustment for the decree,” he said.

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