VietNamNet Bridge – The domestic automobile market has got
frozen amid the rapid-fire bad news. Automobile manufacturers feel discouraged
because the policies have changed time and again.
2012: ownership registration tax raised again
The automobile market began its
hibernation in January 2012, with the car sales dropping dramatically by 40
percent in comparison with the same period of the last year.
In 2011, automobile manufacturers
sold 170,000 cars, while they have sold 48,910 cars so far this year, a
decrease of 32 percent over the same period of the last year. The total car
sales in 2012 have been forecast to be no more than 95,000. Experts have their reasons when giving the prediction
about the low car sales this year. The economic downturn has forced people to
delay their car purchase plans. However, more importantly, they have heard that
the Ministry of Transport is going to charge a lot of additional kinds of fees,
which would cost them much more money to possess cars.
The road toll would be collected
from car owners from 2013. Meanwhile, the Ministry of Transport has proposed to
impose high taxes and fees on private vehicles, to grant quotas for the number
of cars to be registered.
Changeable policies spoil investment plans
The regularly changeable policies
have made the automobile market unstable over the last nine years, with the
market sometimes getting extremely hot and then extremely cold.
This is not by chance that the
white book published by the EuroCham in 2011 gave warning about the Vietnamese
policies on the automobile industry development.
EuroCham pointed out that the
taxes should be stabilize, so as to help manufacturers anticipate their
problems and draw up their business plans in the most optimal way. Meanwhile,
the regular changes would interrupt production lines, distribution chains and
retail activities.
Once policies change, they would
create the virtual changes in the demand in the market, which would damage the
production plan. Manufacturers would not be able to make cars immediately to
satisfy the demand on peak days. Meanwhile, they would have cars unsold when
the demand unforeseeably decreases.
Automobile manufacturers have
said they want a transparent and stable policy for 20 years, so that they can
draw up their long term production plans and turn the plans realistic.
Bui Ngoc Kien, General Director
of Vinaxuki, a Vietnamese automobile manufacturer, also said the changeable
policies have become well known to many foreigners.
He recalled that one day, when he
suggested the cooperation with Taiwanese car part manufacturers, the foreign
partners said “no.” “They know that Vietnamese policies change regularly and
suddenly, while the management agencies do not follow any plans or roadmaps in
making changes,” Kien said.
“Therefore, the foreign investors
said they could not make long term business plans in a fluctuating market,” he
added.
The hesitancy of foreign
investors when considering making investment in Vietnam can explain why the
total foreign investment capital in the automobile industry since 1991, when
the first foreign auto manufacturers entered Vietnam, has reached one billion
dollars only.
The sum of money is just equal to
the investment capital Ford has poured into its third automobile factory in
Thailand in 2010.
Meanwhile, GM Vietnam and Honda
Vietnam have not made any further investments in Vietnam over the last 10
years.
Toyota Vietnam, which once
planned to develop the global model Innova in Vietnam when the luxury tax was
fixed at 30 percent (seven seater) and the output was high (14,000 cars in
2008). However, the manufacturer then had to give up the game, because the
luxury tax increased in 2009 and the output dropped to 7500 cars per annum.
Tran Thuy
Business & Investment Opportunities
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