Vietnam auto imports plummet over Government’s Decree 116

Automobile imports in Việt Nam plummeted in the first month of 2018, also the time before Tết (Lunar New Year) holiday.

Only 337 cars of all kinds were shipped to the country, according to data of the General Department of Customs.

Of the imports, there were only 17 passenger cars with nine seats or less, amounting to US$567,000. Notably, no cars were imported from Indonesia and India.

In 2017, Indonesia was among the top countries after Thailand with the highest number of exported cars to Việt Nam. India too had a relatively large number of exported vehicles in 2016. However, in January this year, both the countries did not export any car to Việt Nam. Meanwhile, Thailand lost its recognition as the largest import car market in Việt Nam, with only 36 vehicles exported to the country since the beginning of the year.

Among the automobile export markets to Việt Nam in January 2018, Russia suddenly rose to the top, with 159 vehicles being exported, worth VNĐ274 billion (US$12.03 million), equivalent to VNĐ1.7 billion each. Under a deal on autos signed between Minister of Industry and Trade Trần Tuấn Anh and the Russian Ambassador to Việt Nam Konstantin V.Vnukov in Hà Nội  in December last year, Russia’s joint ventures in Việt Nam are allowed to import duty-free 2,550 complete built-up units and 13,500 sets of automobile parts from 2018 to 2022 as a way of exploring the capacity and tastes of the market.

China (65 cars) and the United States (42 cars) ranked second and third in exports, respectively.

According to The Jakarta Post, Indonesia’s four-wheel car manufacturers face a bleak future in exports following a new regulation of Việt Nam, which is poised to build its own automotive industry.

The Vietnamese Government in November issued Decree No. 116/2017/ND-CP on car manufacturing, assembly, importation and warranty offering, a move that came into effect from January 1, 2018, and tightened car imports. According to Vietnamese Ministry of Industry and Trade (MoIT), Decree 116 is a supportive measure for domestic companies as it sets up a number of technical barriers to limit the import of cars. The decree comes at a time when the import tax of automobiles from within the ASEAN bloc is zero per cent, which also became effective from January 1, 2018.

Under the decree, car importers in Việt Nam are required to obtain a Vehicle Type Approval (VTA) certification, which details the imported vehicles’ quality, safety and environmental protection. The VTA must be issued by authorities in exporting countries. In addition to this, one sample will be selected from every batch of imported cars for emission, quality and technical safety tests. The inspection will be repeated in the next shipment, even on the same car models.

“The new rule creates additional costs; a complete inspection may take one to two months, while other cars from the shipment will have to stay at the port and be charged daily for storage,” Kukuh Kumara, Indonesian Automotive Manufacturers Association (Gaikindo) secretary-general said.