VIETNAMLOCAL AUTO INDUSTRY FACES DILEMMA
September 5, 2007- Inconsistent policies, low sales and the lack of a supporting industry have caused sluggish growth in the automobile industry according to local manufacturers.
These issues were discussed by experts during the Vietnam International Automobile and Supporting Industries Exhibition and Conference.
Dinh Van Dinh, an official of Vietnam National Coal and Mineral Industries Group (Vinacomin), said his company assembled and exported Tatra heavy trucks to China.
It was, however, difficult to sell Tatra to Eastern European countries even though the brand name was previously well-known in these countries. It is now owned by a United States' company, he said.
Vinacomin was planned to be one of the four pillars to develop the domestic automobile industry in the country by focusing on producing trucks over 20 tonnes.
Over the last three years, most of the heavy trucks bought by local coal companies, were imported from better-known automobile companies around the world. According to the Ministry of Finance's statistics, Vinacomin only sold 500 trucks last year.
Dinh attributed the poor sales to high import taxes on accessories, which was three per cent before 2007 and is now between 6 and 11 per cent. In addition, these high import taxes have also confused Vinacomin about how best to develop its VND5 trillion project in Chu Lai industrial zone.
Sharing Dinh views, Trinh Minh Tuan, a representative of MAN Ferrostaal AG who manufacture car accessories said development of the Vietnamese auto industry is a top priority but it has not yet found the best method to grow.
Authorised agencies have also introduced technical barriers by requiring certificates to Euro 2 standard for cars while imported cars already have the Euro 4 standard.
Director of the Industry and Trade Ministry (MIT)'s Instituteof Policyand Strategy for Industry, Nguyen Dang Tuat, said "The country now has more than 130,000 cars for over 84 million people. It is difficult for Vietnamto have its own automobile industry with such low sales".
Tuat also cited the cumbersome administrative policy to develop automobile industry that involved five ministries including the ministries of Industry and Trade, Science and Technology, Transport, Finance and Environment and Natural Resources.
The Ministry of Industry and Trade devises the auto policy; Finance is in charge of tax policy; Transport is responsible for safety standards and the Ministry of Environment and Natural Resources are responsible for emission standards. Lax co-ordination between them have been blamed for the weakness of the automobile industry.
To better develop an automobile industry, an ad hoc agency should be established to create a consistent policy for the development of domestic automobile industry, Tuat said.
Ngo Van Tru head of MIT's Mechanics, Metallurgy and Chemical Department said that the development of manufacturing needs to have a strong supporting industry. It is very undeveloped with only 40 foreign-invested and 30 local enterprises producing automobile accessories like tyres, tubes, electrical wires, batteries and seats, etc.
In order to develop the supporting industry effectively, domestic auto manufacturers must have good sales volume every year, but with current sales below 100,000 units per year it is difficult to develop a thriving automobile industry.
Hoang Thi Lien deputy head of the MIT's Instituteof Policyand Strategy for Industry said, according to car experts, to avoid being an assembly workshop, local manufacturers need to have at least 20 accessories suppliers.
No domestic automobile manufacturers have enough accessories suppliers. Lien also blamed the poor supporting industry and low sales for the sluggish development of the local industry.