Carmakers to Face Capacity Investigation

The seminar on implementing the Vietnam Automobile Production and Assembly Plan to 2010 ratified by the Prime Minister has seen an overwhelming consent to launch an interdisciplinary investigation into enterprises that have been recently approved of having sufficient conditions and capacities to assemble automobiles by provincial and municipal People’s Committee. The seminar is aimed to seek measures to rearrange recent unchecked investment in the automotive industry. The Ministries of Trade and Finance and several carmakers requested the Ministry of Industry to conduct the investigation.

The impending launch of the investigation is originated from requests of current influencing carmakers like Vietnam Motors Industry Corporation (Vinamotor), Truong Hai Auto Company and Vietnam Engine and Agricultural Machinery Corporation (VEAM). According to Mr. Nguyen Van Khoa, chairman of the Vinamotor Management Board, 12 enterprises have recently been approved by municipal authorities of having sufficient capacities and criteria to manufacture and assemble cars but in fact they failed to meet minimum technical and capability requirements provided in Decision No. 115/2004/QD-BCN in late 2004. Meanwhile, centrally run enterprises have met all requirements of the Decision, although they still encounter difficulties raised by local authorities, Khoa said.

According to Decision 115/2004/QD-BCN, cars made by enterprises without authoritative documents verifying their sufficient conditions and criteria to assemble and manufacture automobiles will not be allowed to register for circulation. As a result, a lot of cars made by such enterprises cannot be sold because they will have no registration papers. “This is unfair. This is caused by local governments and this impedes the Prime Minister’s approved auto development plan,” Khoa stressed.

According to Mr Do Huu Duc, deputy director of the Vietnam Register, each locality has its own criteria to consider the approval of car-making projects. Many “qualified” enterprises even have no static painting line, which is a prerequisite for making cars. Therefore, Duc said “An additional investigation is inevitable to secure equality for car production and assembly enterprises.”

The Deputy Minister of Industry Do Huu Hao shared this view but also stressed that the investigation must also cover giant enterprises like Vinamotor to reconfirm their capacities and conditions. Once receiving approvals from the Ministry of Industry, they don’t need to have confirmations from local authorities, i.e. the Department of Industry and People Committee of provinces and cites.

In addition, the seminar also debated measures to settle queries raised by enterprises that have invested in making cars but failed to meet the criteria and conditions. This issue will be submitted to the Prime Minister for final decision, according to the seminar. Mr Tran Ba Duong, director of Truong Hai Auto Co., said criteria for making cars in is quite low as compared with other countries in the region. So, any enterprise failing to meet the requirements should quit.

However, many others said at the conference that disqualified enterprises should still be allowed to sell their existing products before completely closing business, citing that they have had to pour considerable sums of money into their industry.

During the meeting, representatives from auto firms also proposed that the Government and ministries must regularly send them reports on amendments on tax polices like import tariffs and special consumption tax if Vietnam is to enter the WTO at the end of this year as expected. This will help enterprises take initiatives in mapping out production and business plans. However, all must wait for the final decision from the Prime Minister after the Ministry of Industry submit the report on results of the upcoming investigation.

Kim Phuong