Pham Van Tai, CEO of the Truong Hai Auto Corporation (Thaco), said at the Vietnam Private Sector Economic Forum Thursday that the government must inspect whether cars imported from ASEAN and subject to zero percent tariffs meet the requirement of having a local content of at least 40 percent.

Under Vietnam’s taxation commitments with ASEAN, from 2018, cars imported from other ASEAN countries enjoy zero percent tariffs if at least 40 percent of their value is produced within ASEAN.

"This will help avoid trade fraud and tax losses [to the state]. The point is that to meet the 40 percent localization rate is very difficult, especially for high-end passenger cars," Tai said.

He cited statistics showing that cars imported from ASEAN into Vietnam in the first three months of the year went up to 39,000 units, or half of the 2018 total of 78,200.

"This is in the context of Vietnam’s domestically-made cars competing fiercely with Thailand and Indonesia, which have domestic consumption markets many times bigger than Vietnam."

These countries have been issuing policies to support car manufacturing for years, while this has only happened recently in Vietnam, Tai noted.

He added that Vietnam should remove special consumption tax on car parts produced in the country to strengthen the local supporting industry and reduce the prices of made-in-Vietnam cars.

Vietnam’s car imports last year fell nearly 20 percent from 2017 because of a government decree which set tough conditions for car imports, requiring traders to provide valid vehicle registration certificates issued by authorities from the countries of origin.

Vietnam’s supporting industry for car manufacturing remains weak compared to other countries in the region. There are only 358 such businesses in the auto industry in Vietnam compared to 2,500 in Thailand, according to the Ministry of Industry and Trade. The ministry has also said that Vietnam imports over 90 percent of its auto parts.

The Vietnam Private Sector Economic Forum, the largest of its kind in the country this year, is jointly organized by the government and the Central Economic Commission, in collaboration with VnExpress and the IEC Group.