Auto development strategy stalls after latest disappointment
Auto development strategy stalls after latest disappointment
The last hope for the automobile development strategy is gone: the Chu Lai – Truong Hai automobile engine project has had its license revoked.
In late December 2014, the Chu Lai Open Economic Zone Management Board in Quang Nam province officially revoked the investment certificate it had granted to the Chu Lai – Truong Hai engine manufacturing factory.
The information remains unknown to many, though it happened two months ago. Insiders did not want to make it public.
The decision was described as a strong blow on those who still cherish the hope of developing an automobile industry.
The Chu Lai – Truong Hai engine manufacturing project opened in June 2012 to give a start to the development of support industries which would help increase locally made content in automobile products.
The project was expected to help Vietnam’s strategy to join the global automobile manufacturing value chain, which would help sales both domestically and regionally.
THACO, the investor of the project, and local authorities of Quang Nam province, where the factory was set up, put high hopes on the engine manufacturing factory.
The South Korean partner of the $185.5 million project – Hyundai – committed to transfer technology to develop the project.
However, the project did not go as smoothly as planned. Hyundai unexpectedly withdrew from the project in January 2014, saying that the slow project implementation had affected the group’s production plan.
Nguyen Mot, the public relations director of Truong Hai, said THACO and the South Korean partner would conduct negotiations on technology transfer in 2016, and the outcome of the negotiations would decide whether to resume the project.
Analysts said they doubt that the project could be resumed in the future. Vietnam does not have more time to negotiate and wait for foreign partners to transfer technology.
In fact, not many things have been done since June 2012, when the project kicked off, except a groundbreaking ceremony and a number of investment incentives Truong Hai had asked for.
THACO has received what it wanted. The project can enjoy investment incentives designed for key mechanical engineering projects. The government has allowed the factory to manufacture 100,000 diesel engines until the end of 2018 to help the investor gradually adapt to new emission standards.
The government also allowed the investor to delay tax payments of VND1.2 billion, thus helping it have more capital for the project.
Just some months ago, eight businesses including Veam, Vinamotor, Samco, Truong Hai Auto, Vinaxuki, Z179, the Defense Industry General Department and MDC center, agreed to establish the "Automobile Department" under VAMI, the Vietnam Association of Mechanical Enterprises.
