Noncommittal reply may kill auto industry

Noncommittal reply may kill auto industry

The plan by the Ministry of Transport (MOT) to collect fees to reduce the number of personal vehicles in circulation has not been legalized yet. However, automobile joint ventures have suffered from the plan.

The Vietnam Automobile Manufacturers’ Association (VAMA) finally has received the answer from MOT after it many times shouted for help, asking to cancel the plan to collect fees to reduce personal vehicles and reduce the car ownership registration tax to 10 percent.

In the Dispatch No. 5299, MOT said the Prime Minister has instructed the ministry to join forces with relevant ministries and local authorities to work out thoroughly on the fee collection plan.

MOT still needs to consult with relevant ministries and consider the opinions from the public about the plan, so as to suggest reasonable and feasible steps for the implementation of the plan.

It would take MOT and relevant ministries time, possibly several years, to follow the above said steps before MOT can suggest a reasonable roadmap for the implementation.

MOT has emphad that the fee collection plan would be feasible only if it is advocated by the public.

The MOT’s document has made people excited. They believe that this should be seen as a positive factor for the automobile market, and that MOT would reconsider the intention to collect fees.

With the positive sign, VAMA has put a high hope that the automobile market would warm up again in the time to come. Though being skeptical, the association has predicted that the total car sales in 2012 may be higher than 100,000.

Prior to that, in April and May 2012, VAMA predicted that only 80,000 cars would be sold this year.

However, some analysts have warned that it’s too early to rejoice, saying that the document is “ambiguous” with no committal answer about whether to cancel the fee collection plan.

The document says that MOT would still have to consult with relevant ministries and branches about the plan, which may take several more years. Meanwhile, it does not give the direct answer to the question about whether to impose these kinds of fees.

As such, paying the fees to restrict personal vehicles remains a risk hung over car owners. In other words, the above said document by MOT has just helped reassure automobile manufacturers with the statement that the fee collection would not be carried out in the immediate time.

Meanwhile, a concrete answer about whether to collect fees and when to collect fee is very necessary for automobile manufacturers to draw up their business plans.

In the document No. 3212 sent to the Ministry of Transport, VAMA asked for a working session with Minister of Transport Dinh La Thang to discuss the fee policy – the one that is believed to lead to the sharp falls of the car sales recently and the gloomy market.

However, instead of a meeting, VAMA has received a document which can be interpreted in different ways.

Unclear policies have hindered the development of the automobile industry. Meanwhile, automobile manufacturing is the end of the enterprises in support industries.

Truong Chi Binh from the Industry Policy Institute under the Ministry of Industry and Trade said that just after two weeks since the day the MOT suggested collecting fees, the production line making Kia cars at Truong Hai Auto Corporation had to stop operation.

The total car sales in the first half of 2012 reduced by 41 percent in comparison with the same period of the last year

vietnamet