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Leverage for the auto industry

Date posted: 17/ 07/ 2019 - The poster: admin

Toyota Vietnam has just re-produced Fotuner model, Vinfast has also fixed the official launch of Vietnamese brand car model – VinFast Fadil, in June. That shows that the growth potential of the market Domestic cars are very big, motivating enterprises to manufacture and assemble automobiles.

According to the Department of Industry (Ministry of Industry and Trade), by 2018, the domestic automobile industry has about 40 enterprises operating in the production and assembly of automobiles including: cars, trucks, passenger cars, specialized cars. used and car chassis. Most businesses are small and medium sized. Some domestic enterprises have participated deeply in the global automobile production chain. Total assembly capacity is about 800 thousand vehicles / year, of which foreign invested sector accounts for about 35%, domestic enterprises account for about 65%. There are many big firms with domestic production and assembly activities, meeting about 70% of domestic car demand, with a total output of passenger car market of over 200 thousand vehicles / year.

The limitations for the development of the automobile industry have been mentioned a lot, that is, the market capacity is not large enough, the supporting industry has not been developed, the localization rate is not high …, causing the price of cars produced in water is higher than some countries in the region. To solve this problem, the Ministry of Industry and Trade has proposed a number of solutions to promote the development of domestic automobile industry with the goal of first priority in the immediate period is to try to participate in the chain. Global automobile production, brands of existing global corporations. Focus on supporting enterprises with large production volume in Vietnam, while attracting investment and supporting production oriented to the “niche” market, car companies and cars without production facilities. big in ASEAN market to create competitive advantage compared to other countries in the region.

Three groups of solutions proposed by the Ministry of Industry and Trade include: Creating a market large enough for domestic automobile manufacturers (encouraging the use of domestically produced cars); focus on targeted support, improve production capacity and competitiveness of domestic automobile assembly and production enterprises with a number of key automobile products, with good market capacity and capability compete with products of other countries in the region; attract foreign direct investment.

One of the policies to support the automobile industry mentioned by economic experts is to apply special consumption tax (SCT) to locally produced and assembled cars and reported to the Prime Minister by the Ministry of Finance. covered in the first quarter of 2019.

From the perspective of management, the Ministry of Industry and Trade said that this tax policy is necessary and can be considered a positive leverage for the development of the automobile industry. If there are no incentives for calculating excise tax compared to completely imported cars, Vietnam’s automobile industry, especially the automobile manufacturing and assembly industry, will be difficult to maintain due to being unable to compete. with imported cars. In addition, this policy not only creates a spillover effect for the industry, develops domestic supporting industries as well as the satellite supply and service system of the automobile industry but also creates more jobs. and increased revenue in the long term.

According to the Department of Industry, in the short term, it is possible that the new policy will create budget revenue losses because the new SCT calculation method will temporarily reduce the tax. However, the budget deficit due to tax reduction will be offset by the increase in the number of cars to be taxed, because if the market is protected to develop domestic production and assembly of cars, the market demand for the industry Domestic automobile industry in the next 3 – 5 years will increase strongly.

Along with tax support policies, promoting supporting industries, Vietnam automobile industry is expected to have positive changes in the next 3-5 years.

Source: Internet


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