VietNamNet Bridge – The policies relating to the automobile
industry have changed tens of times in the last nine years, thus making the
automobile market unstable and eroding the manufacturers’ confidence.
2007: CBU import tariffs down three times
The Ministry of Finance cut the
tariffs on complete built unit (CBU) imports three times within one year in an
effort to slash the prices of domestically made cars, which were believed
overly high if compared with the prices in the world.
In January 2007, when Vietnam
admitted WTO, the import tariff on CBU import was eased from 90 percent to 80
percent. The import tariff was then slashed to 70 percent in August 2007, and
then to 60 percent in November 2007.
The Ministry of Finance (MOF)
believed that the lower tariffs would pave the way for more imports to flow
into Vietnam, which would force domestic manufacturers to ease the domestically
made car prices. However, MOF faced the strong opposition from enterprises
which said it abused the power to adjust the import tariffs, making it unable
for manufacturers to draw up their business plan.
2008: Import tariff raised twice, ownership registration tax up
After easing the CBU import
tariffs three times, MOF then believed that it was necessary to raise the
import tariff again.
In 2007, the ministry forced the
tariff down to make cars cheaper for Vietnamese. Meanwhile, in 2008, the
ministry raised the import tariffs because it had to obey the government’s
instructions to restrict private vehicles to ease the traffic congestion.
The import tariff was then raised
to 83 percent, thus pushing the car prices up. After that, the car prices
escalated further in the second quarter of the year when the increased
ownership registration tax of 10-15 percent.
The global economic crisis plus
the high sale price both led to the sharp fall of the car sales by 50 percent
in the four months of the year. A lot of enterprises had to halt production and
lay off workers.
2009: continuous tax adjustments made people confused
In early 2009, Hanoi imposed the
new ownership registration tax of 12 percent on cars. Meanwhile, the new high
luxury tax took effect on April 1, 2009.
The information then made the car
market seething with people rushing to buy cars to avoid the high tax, which
would make the cars more expensive by 6-10 percent.
However, they then might regret
their decision to buy cars, because the car prices dropped sharply later as the
result of the 50 percent car ownership registration tax and 50 percent VAT
reduction to stimulate the demand in the economic difficulties.
2011: ownership registration tax up, imports tightened
After a quiet 2010 year, a lot of
important policies were made in 2011, including the Circular No. 20 released on
May 12, 2011, which tightened the CBU imports. The legal document said that
importers must show the procurations granted by manufacturers or distributors,
which proved to be nearly impossible for private car dealers.
In June 2011, the government
decided to raise the car ownership registration tax frame from 10-15 percent to
10-20 percent, while giving the power to local authorities to define the tax
rates after considering the local conditions.
With the decision, Hanoi then
raised the tax to 20 percent, commencing since January 1, 2012, while HCM City
15 percent.
Also in 2011, the Ministry of
Transport proposed to collect the private vehicle restriction fee, about 20-50
million dong. The “bad news” then made people cancel their car purchase plans.
Tran Thuy
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.
No comments:
Post a Comment