Hanoi (VNS/VNA) - The European Chamber of Commerce in Vietnam (EuroCham) proposedthe Government to apply a 50 percent registration fee reduction to allautomotive assembly firms, importers and dealers of new vehicles.

Theproposal was part of recommendations at the EuroCham’s 12th White Bookpublication, which was announced last week. It was issued after the VietnameseGovernment recently decided to apply the 50 percent fee reduction for buyers oflocally-manufactured and -assembled vehicles until the end of this year.

Thecut aims to stimulate domestic consumption and remove difficulties for localproduction and business due to the impacts of the COVID-19 pandemic.

Currently,buyers of cars with less than nine seats in Vietnam are subject to a 10 percentregistration fee, or 12 percent for residents of Hanoi.

“Withthe Prime Minister’s decision to reduce the registration fee, buyers ofdomestically-manufactured and -assembled vehicles will only have to pay a feeof 5-6 percent. Those who buy cars imported from abroad still have to payregistration fees of 10-12 percent depending on the locality,” EuroCham said inthe book.

Fordomestic car joint ventures, only two European brands – Mercedes and Peugeot –out of 19 imported in Vietnam will benefit for their locally assembled models.

EuroChamsaid stimulating consumption in the automotive market is necessary as customersstruggle to maintain their activities. Furthermore, it will take time forsupply chain disruption to be resolved. 

“Suchdiscrimination in favour of locally assembled vehicles is not casting theintended positive light for Vietnam with the European Union when the EVFTA isexpected to enter into force soon,” EuroCham said.

EuroChamalso recommended a 50 percent reduction of Value Added Tax and of excisetax.

Dueto the impact of COVID-19, 2020 is now proving to be an extremely challengingyear for the whole automotive industry worldwide. The full supplychain for new vehicles and spare parts is disrupted.

Automakersin the EU, the US and Vietnam have had to suspend operations – manufacturing,distribution and retail – for about a month in April to comply with socialdistancing regulations of the Government.

Despitesocial distancing being revoked in May, the sales in 2020 were still far belowexpectation. On April 28, Fitch Rating’s forecast a 21.8 percent drop innew cars sales in Vietnam for the full year 2020.

Accordingto Vietnam Automobile Manufacturers' Association, sales hit a five-year low,dropping 36 percent year-on-year to about 61,000 vehicles in the first fourmonths of 2020. After-sales service has, so far, decreased by 30-40 percent.

EuroChamsaid that bonded warehouses are not allowed to import complete-built-up (CBU)vehicles cars for sale in Vietnam. CBU importers must pay all taxes, includingimport tax, special consumption tax and value-added tax at customs clearanceimmediately. Car sales in Vietnam are now very low.

“Themarket will take time to recover as customers need to ensure their ownfinancial safety. Still, costs such as real estate rental and labour did notfall. Cash is scarce both at importers and dealers and will remain so until aglobal recovery in the supply chain and the market,” EuroCham noted.

Forthe automotive industry to maintain jobs and operations until post-COVID-19recovery, EuroCham recommended the Ministry of Finance exceptionally re-allowspartial clearance at customs by re-authorising bonded warehouses for new CBUimported vehicles until December 2020.

“Sucha customs clearance extension should provide the necessary time for importersto recover financially to pay taxes gradually as they sell their stock and asthe economy recovers.”

Vietnam’sautomobile market exceeded a record 400,000 new vehicles – 302,000 passengercars and 80,000 commercial vehicles – in 2019. Of these, 70 percent werelocally assembled units and 30 percent imported cars./.