The Minister of Trade Truong Dinh Tuyen in his interview with the press on the sideline of the National Trade Conference in early March 2006, said that the permission to import secondhand cars was in order to implement Vietnam’s commitments and to meet the local consumers’ demand. The decision to allow the import of cars with less than 16 seats will take place on May 1, 2006.
Why has the Government decided to permit the import of secondhand cars?
In Vietnam’s commitments, when the country joins the World Trade Organisation (WTO), Vietnam will remove a ban on the import of secondhand cars. This means that Vietnam will have to remove the discriminatory measures the country has refused to lift for more than ten years. Therefore, we have to accept the import of secondhand cars but with conditions, which include an imposition of absolute import tax rate regardless of prices of cars. Even though Vietnam’s accession to the WTO has not come about yet, the Vietnamese Government has decided to begin to allow the import of secondhand cars from May 1, 2006 and some management principles will be applied.
What are these principles?
The first measure is tax. This is the absolute tax rate. This means that a fixed amount of import and percentage tax will be paid for an imported secondhand car regardless of its price. This is the best measure as secondhand cars have various prices. Apart from a criterion that cars, which have been used for more than five years will not be allowed to be imported, other technical criteria will be built to ensure safety, and environmental protection.
What impact will the decision on allowing the import of secondhand cars produce on prices of locally-made cars?
It will have a significant impact on prices of locally-manufactured cars. So far, local manufacturing and assembly enterprises have taken advantage of a ban on importing secondhand cars to raise their prices. The Government will calculate a reasonable tax rate to protect local manufacturing and assembly enterprises and protect consumers from having to pay high prices.
Brand-new cars have an import tax rate of 300 per cent, but secondhand cars will be imposed percentage and absolute tax. I assume that an absolute tax of US$15,000 per car, a car, priced at US$5,000 will have it selling price of US$20,000 plus an amount calculated with a percentage tax rate of 150 per cent. As a result, the selling price of the car in Vietnam will reach tens of thousands of US dollars, not much cheaper than brand-new cars manufactured in Vietnam.
Will the Government’s decision to allow the import of secondhand cars lead to a sudden increase in the number of cars in Vietnam, causing further traffic jams?
The problem is not caused by the import of secondhand cars. In fact, we have to develop our infrastructure facilities better. We cannot allege that due to under-developed infrastructure facilities, we should ban the import of secondhand cars. Furthermore, the permission of the import of secondhand cars will create pressure on local manufacturing and assembly enterprises, forcing them to improve their products’ quality and cut their prices.
These enterprises are calling for the Government to extend the time on the ban on importing secondhand cars. What do you think about this?
Sooner a later Vietnam will join the WTO, so a lift on the ban on the import of secondhand cars some months before this happens would be meaningless. Enterprises should think that other countries with a developed automobile industry, including the EU, Japan and US, required Vietnam to lift its ban on importing secondhand cars during negotiations on Vietnam’s accession to the WTO. We are allowing the import of secondhand because of our commitments not our wishes.
Reported by Kim Phuong
Vietnamese
