To develop supporting industries, the Vietnamese Government must have consistent and long-term policies and incentives for domestic and foreign auto manufacturers, importers and distributors, said General Director of Toyota Vietnam (TMV), Yoshihisa Maruta, in an interview with Vietnam Business Forum on the sidelines of the a conference affiliated to Vietnam Motor Show 2012 recently held in Hanoi. Anh Phuong reports.
In addition to exhibition, introduction and display of new car models, the Vietnam Motor Show 2012 also featured sideline seminars tax and fee policy. Why were these matters raised at the conference?
In fact, automobile sales slowed down in 2012 due to global and domestic economic recession. The last months of the year are the most appropriate time for carmakers to set free their unique models to consumers and the market.
Toyota Vietnam’s sales declined 30 percent due to Vietnam’s economic slowdown and earthquake tsunamis in Japan last year. According to statistic figures released by the General Statistics Office (GSO), its manufacturing index of motorised vehicles fell 16.7 percent on year in the first eight months of 2012; consumption index even declined more steeply, with the growth being minus 23.3 percent while inventory index rose 11.1 percent. Based on the above developments, a tough time is ahead of automakers.
From the above analysis, the Vietnamese Government’s introduction of tax and fee policy to automobiles is rather sensitive. This policy directly affects selling prices of automobiles sold to consumers. Like previously when the Government applied a policy increase registration fees and license plate fees in Hanoi and Ho Chi Minh City, auto market declined. According to experts, this move aimed to reduce personal cars in the two major cities where vehicle density was too high. But, this solution could only deal with the surface because it destabilised automotive industry development policy of Vietnam.
What are your opinions about the gradual abolition of preferential tariff barriers to match the WTO entry roadmap as well as FTA and TPP negotiations Vietnam is pursuing?
It is certain that important changes in Vietnam’s external relations strategy as well as its changes in tariffs in the wake of further participation in WTO, FTA and TPP with its partner countries will cause huge impact on production and sales plans of not only Toyota but also other businesses engaged in the automotive industry. Therefore, Toyota also has worked out response plans for the year 2018 (when the ASEAN Common Effective Preferential Tariff Agreement signed by ASEAN countries took effect). Specifically, duty tariffs will fall to 50 percent in 2014 and 0-5 percent in 2018. Completely built units imported will have more advantages over vehicles assembled and manufactured by carmakers in the country like Toyota Vietnam and other foreign-led carmakers.
To lower production costs, carmakers necessarily increase the localisation ratio and help Vietnam develop supporting industries. How do you think about this?
Vietnam must have a big enough market to develop automotive supporting industries. It means that the consumer purchasing power must meet or exceed the minimum requirement for automobile manufacturers to transfer technologies or build parts production plants in Vietnam. But, so far, the answer to this issue is although the Vietnamese market is very potential, it is still not enough to further develop auxiliary industries. A solution that Toyota offers to develop supporting industries for Vietnam is to attract Japanese small and medium-sized enterprises (SMEs) to invest in Vietnam. But, according to our research, they remain hesitant because Vietnam’s automobile market scale fails to meet their requirements.
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