Carmakers: HCM City’s quota proposal against auto strategy
Carmakers: HCM City’s quota proposal against auto strategy
Automobile manufacturers said a new proposal by the HCMC Department of Transport to restrict private car ownership goes against the Government’s strategy to develop the automobile industry into a strong one.
In July, the Government approved the automobile sector development strategy until 2025 with a vision toward 2035, with cars of no more than nine seats prioritized. Accordingly, new policies and zoning plans of ministries, departments and local authorities should be consistent with this strategy.
Article 3 of the Prime Minister’s decision on the strategy states new policies should not run counter to the Government’s policy to develop the country’s auto industry.
The Ministry of Industry and Trade was assigned to review and adjust relevant regulations and policies, especially taxes, to ensure the effective execution of the strategy and facilitate the country’s integration into regional and global economies.
Policies should be kept stable for at least 10 years to create confidence among investors and consumers and help attract more investments.
Auto manufacturers, especially those foreign-invested, then hailed the strategy and the Government’s commitment to refraining from making ad hoc policy changes for the industry, saying these are decisive factors for them to implement long-term investment plans.
But less than six months after the strategy was approved, the HCMC Department of Transport asked the city government to seek the central Government’s approval to adopt measures to limit private cars on the city’s increasingly crowded roads. The proposed measures include raising special consumption tax, and registration fee and imposing an environmental protection fee.
Automobile firms said such measures, if approved, would effectively put the brakes on development of the huge car market in the city, which accounts for 30% of the autos in circulation nationwide. Therefore, the proposed measures would dampen automobile industry growth and make it difficult for the city to realize its tax collection target.
In 2013, HCMC applied a registration fee of 15% for car registration while neighboring provinces lowered the fee to 10% as allowed by the Government. As a result, many residents registered their new cars in other provinces before making the second registration in HCMC only to pay an additional fee of 2%. This led to huge losses for the city’s budget collections.
Experts said the department’s proposed car registration quota system, if approved, would not work because new cars would be registered outside the city before they were brought to the city for use.
