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Vietnam Today

Wheels in motion for Thai collaboration

Released at: 09:44, 06/04/2015

Wheels in motion for Thai collaboration

Expert predicts a bright future for car production Vietnam, with a little bit of foreign help.

by Luong Nhi

Both Vietnam and Thailand would benefit from collaboration in the automobile industry, the Chairman of the Thailand Automobile Institution Mr Vichai Jirathiyut has said.

The automobile industry in Vietnam has had strong recent growth, Mr Vichai beieves. Domestic automobile assembly and manufacture last year increased 29 per cent in number and a further 35 per cent in revenue compared to 2013.

He added that the number of car owners in Vietnam was still small, hence it would rapidly develop in the near future.

Compared with 67 million Thai people who despite an older demographic are purchasing about 880,000 cars per year, Vietnam has 90 million people with a spread that skews much younger. Thus Mr Vichai forecast a higher Vietnamese demand.

"With supporting policies from the government, the automobile industry of Vietnam is expected to manufacture 220,000 vehicles by 2020 and increase to 1.5 million vehicles by 2035," Mr Vichai said. It could become a major player in the ASEAN economic community, he added.

New policies and cheap fees for the workforce are favorable conditions to develop the fledgling industry in Vietnam. However, the it still has weaknesses in developing suppliers in supporting industries. Thailand is known for having helped spur on the industry throughout ASEAN countries with its implementation of modern technology. For this reason, Mr Vichai concluded that the Thai and Vietnamese automobile industries would support each other.

Despite Mr Vichai's predictions, other experts have foreseen that Vietnam would soon become known for its foreign automobile consumption due to tax removal in accordance with the ASEAN free trade agreement. 

It has been pointed out that the localization rate of the industry in Vietnam is quite low, hovering around 10 to 30 per cent. Import tax on cars will be zero in 2018. The cost to import accessories to manufacture automobiles in Vietnam would be more expensive than importing whole cars from Thailand or Indonesia. 

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