Auto Industry Development: Needing Synchronous Policies

 

Desiring to have an actual automobile industry, the Government has made numerous preferential offers, even protection, for auto joint ventures for more than a decade, which promised to raise the localisation content in its automobile products to 30-40 per cent after 10 years of operation in Vietnam. However, until now, the promise remains a promise. Just a few enterprises are trying to keep their promise but the localisation rate hasn’t reached 20 per cent. According to car joint ventures, Vietnam cannot manufacture components and spare parts for passenger cars. 

 

At the same time, many joint ventures discourage domestic enterprises to manufacture car parts for them because they fear of losing independence, technology, business, profits and capacity.

 

As for commercial car, truck and bus segments, with the participation of Vietnamese enterprises, the localisation rate higher, at over 40 per cent. However, the localisation only lies in painting, bending, wielding, assembling or production of minor parts like seats and glass.

 

Hardly any enterprises can raise their localisation ratio in their products because the parts production network of the supporting industry has not been developed.

 

According to Mr. Nguyen Xuan Chuan, Chairman of the Vietnam Society of Automotive Engineers (VSAE), the supporting industry is a decisive factor to develop the auto industry but we are very weak at this field. For example, production of cylinders, pistons and crankshafts needs premium steel but Vietnam is now able to make construction steel. The production of aluminium, hard steel and igniting lame is out of reach. We also have to import electrostatic lines.

 

Chuan said: “The most important point to overcome these deficiencies is that domestic auto assembling enterprises and parts suppliers should join hands more firmly to mutually develop.” He said, we could start from auto assembly.

 

The Vietnamese auto industry has no advantages in localisation but has conditions to carry out localisation in certain extents. Mr. Nguyen Tien Dung, director of Saigon Transport Mechanical Corp. (Samco), said, the idea of making a 100 per cent Vietnamese car should be abandoned. The Vietnamese auto industry should gradually become a link of the regional or global automotive industry. Step by step, it can make simple parts and more complicated ones.

 

According to Dr Tran Du Lich of the Ho Chi Minh City Economic Institute, Vietnam should not try to manufacture automobiles with all its own parts when the world automotive industry is increasingly developed and modernised. In fact, the auto industry has taken shape in Vietnam. We only assemble automobiles and this is not an industry. Not many enterprises invest thoroughly in assembly. Hence, production and research remain distant.

 

In the auto industry, research should be done before production. And this is on the contrary in Vietnam. The research activities take up a lot of time in developing the auto industry. Dr Lich said, to some extent, we should not reluctantly pursue the automotive industry.

 

In another angle, according to scientists, petroleum energy will only exist for an additional 50 years. Currently, hydrogen-fuelled cars have made appearance. Or in other words, when Vietnam develops the traditional auto industry, the world will have used another kind of vehicle.

 

Mr. Nguyen Tien Dung said: “Auto groups import parts and accessories from global suppliers. So, why didn’t we think of another better way to develop the Vietnamese auto industry? Why didn’t we reconsider the world auto trend to start a new long-termed strategy?”

 

We should only assemble and take part into the world into auto industry. We can make tyres, batteries, canopies, or other parts instead of making all parts of an automobile.
P.V