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THE
PRIME MINISTER OF GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No.
177/2004/QD-TTg
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Hanoi,
October 5, 2004
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DECISION
APPROVING THE PLANNING ON DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY TILL 2010, WITH A VISION TO 2020
THE PRIME MINISTER
Pursuant to the December 25,
2001 Law on Organization of the Government;
At the proposals of the Ministry of Industry in Official Dispatches No.
2042/CV-CLH of April 26, 2004; No. 2441/CV-CLH of May 19, 2004 and No.
3721/CV-CLH of July 26, 2004; and opinions of the Ministries of Planning and
Investment, Science and Technology, Trade, Transport, Finance, Agriculture and
Rural Development, and Defense, the State Bank of Vietnam and the Development
Assistance Fund at the May 6, 2004 meeting at the Government Office,
DECIDES:
Article 1.-
To approve the planning on development of Vietnam’s automobile industry till
2010, with a vision to 2020, with the following principal contents:
1.
Development viewpoints
a/ The automobile industry is a
very important industry which should be prioritized for development in order to
contribute to efficiently serving the process of industrialization and
modernization and building up national security and defense potentials.
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c/ The development of automobile
industry must be linked to the approved master planning on national industrial
development and strategies on development of relevant industries in order to
mobilize and bring into the fullest play resources of all economic sectors,
with State enterprises playing the pivotal role.
d/ To develop the automobile
industry on the basis of absorbing the world’ advanced technologies, together
with stepping up research-development activities in the country and efficiently
making full use of the existing material foundations and equipment in order to
rapidly meet the domestic demand for common-use automobiles with competitive
prices, create a motive force for the domestic supporting industries to develop
so as to speed up the process of domestic manufacture of components and spare
parts.
e/ The development of automobile
industry must be in line with the national consumption policy and ensure its
synchronism with the development of traffic infrastructure system as well as
the requirements of environmental protection and improvement.
2. The
planning’s objectives
a/ Overall objectives:
To build and develop Vietnam’s
automobile industry to make it by 2020 an important industry of the country,
which can satisfy to the utmost the domestic market demand and join the
regional and world markets.
b/ Specific objectives:
- Regarding common-use
automobiles (trucks, passenger cars, cars):
To meet around 40-50% of the
domestic market demand in terms of quantity and reach the localization rate
(domestic manufacture content) of up to 40% by 2005; to meet over 80% of the
domestic market in terms of quantity and reach the localization rate of 60% by
2010 (particularly for engines, to strive for the localization rate of 50%, and
90% for gearboxes).
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To meet 30% of the domestic
market demand in terms of quantity and reach the localization rate of 40% by
2005; proceed to meet 60% of the domestic market demand in terms of quantity
and reach the localization rate of 60% by 2010.
- Regarding high-class
automobiles:
For high-class tourist cars, to
strive for the localization rate of 20-25% by 2005 and 40-45% by 2010, and
substantially meet the domestic market demand;
For high-class trucks and
passenger cars, to reach the localization rate of 20% by 2005 and 35-40% by
2010, and meet 80% of the domestic market demand.
- Regarding engines, gearboxes
and spare parts:
To concentrate efforts on
selective development of some types of engines, gear boxes, transmission
details and spare parts with large quantities in service of domestic assembly
and export.
- Regarding output and product
structure orientations:
Table 1. Projected output of
assorted automobiles till 2020
Unit: automobile
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2005
2010
2020
1
Total number of automobiles
120,000
239,000
398,000
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Cars of up to 5 seats
32,000
60,000
116,000
3
Cars of 6-9 seats
3,000
10,000
28,000
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Passenger cars
15,000
36,000
79,900
+ 10-16 seats
9,000
21,000
44,000
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+ 17-25 seats
2,000
5,000
11,200
+ 26-46 seats
2,400
6,000
15,180
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+ Over 46 seats
1,600
4,000
9,520
5
Trucks
68,000
127,000
159,800
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+ Up to 2 tons
40,000*
57,000*
50,000
+ Over 2 tons - 7 tons
14,000
35,000
53,700
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+ Over 7 tons - 20 tons
13,600
34,000
52,900
+ Over 20 tons
400
1,000
3,200
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Special-use vehicles
2,000
6,000
14,400
* Including the replacement of
55,000 rural transport vehicles (rudimentary trucks) in the period from now
till the end of 2007.
On the basis of balancing the
existing capacity and forecast demand, the projected additional output of
automobiles till 2010 is in Table 2.
Table 2. Capacity of, demand
for, and additional output of, automobiles till 2010
Unit: automobile
Ordinal
number
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2003
existing capacity
Required
output for2010 (forecast)
Additional
output in 2010
Notes
1
Cars of up to 5 seats
Over
100,000
60,000
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2
Cars of 6 - 9 seats
4,000
(by 2010)
10,000
6,000
With additional investment
3
Passenger cars
8,000
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28,000
+ 10-16 seats
21,000
21,000
With additional investment
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5,000
5,000
With additional investment
+ 26-46 seats
7,000
(by 2010)
6,000
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+ Over 46 seats
2,000
4,000
2,000
With additional investment
4
Trucks
14,000
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113,000
+ Up to 2 tons
10,000
57,000
47,000
With additional investment
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4,000
35,000
31,000
With additional investment
+ Over 7 tons-20 tons
34,000
34,000
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+ Over 20 tons
1,000
1,000
With additional investment
5
Special-use cars
300
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6,000
With additional investment
- Regarding export:
To strive for the automobile and
spare part export value of 5-10% of the industry’s total output value by 2010
and gradually increase the export turnover in the subsequent periods.
3. Planning
orientations till 2010
a/ Regarding common-use
automobiles, including trucks (mainly small- and medium-sized trucks),
passenger cars and cars of between 4 and 9 seats
- Passenger cars:
To serve mass transit, including
cars of 10 seats or more. Projected output:
+ By 2005: 15,000 cars, meeting
over 50% of the market demand;
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The localization rate to reach
40% by 2005 and 60% by 2010. Particularly for engines, the localization rate to
reach 15-20% by 2005 and 50% by 2010.
- Trucks:
To serve cargo transport, mining,
industry-construction etc, including mainly small- and medium-sized trucks,
partly large-sized trucks (with a tonnage of up to 20 tons).
Projected truck output:
+ By 2005: 68,000 trucks,
meeting over 50% of the market demand;
+ By 2010: 127,000 trucks,
meeting around 80% of the market demand.
The localization rate to reach
over 40% by 2005 and around over 60% by 2010.
- Cars of 4 - 9 seats:
Are cars with structures similar
to those being manufactured by foreign-invested enterprises (minibuses,
coaches, etc.) but with simpler forms and facilities, and prices suitable to
the domestic purchasing power.
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+ By 2005: 3,000 cars, meeting
around 10% of the market demand;
+ By 2010: 10,000 cars, meeting
around 15% of the market demand.
(If the output of up-to-9 seat
cars manufactured or assembled by foreign-invested enterprises is included, the
domestic market demand shall be substantially met).
The localization rate of
common-use cars to reach 30% by 2005 and over 50% by 2010.
b/ For special-use vehicles:
On the basis of imported or
home-made automobile chassis, to organize the manufacture of special-use
vehicles, including refrigerator cars, fire-engines, road-sweepers,
mud-dredgers, concrete-mixers, crane trucks, electric-repair vehicles,
ambulances, drillers, excavators, etc., to meet the domestic demand.
Projected output:
+ By 2005: 2,000 vehicles,
meeting around 30% of the market demand;
+ By 2010: 6,000 vehicles,
meeting over 60% of the market demand.
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c/ For high-class cars:
Projected output of assorted
cars (including cars of between 6 and 9 seats of foreign-invested enterprises)
is as follows:
+ By 2005: 32,000 cars;
+ By 2010: 60,000 cars.
To strive for the localization
rate of 20-25% by 2005 and 40-45% by 2010.
d/ Manufacture of automobile
engines, gear boxes and transmission details:
- Automobile engines (mainly
assorted diesel engines of a capacity of 80-400 horse power):
The total output of the
engine-manufacturing plants to be around 100,000 engines/year by 2010 and
around 200,000 engines/year by 2020, of which engines of a capacity of 100-300
horse power represent 70%. To strive for the localization rate of 15-20% by
2005 and 50% by 2010.
To encourage foreign-invested
sector to manufacture assorted engines for various types of car.
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The output to reach 100,000
sets/year by 2010 and around 200,000 sets/year by 2020, the localization rate
to reach 90% by 2010.
- Transmission details:
The output to reach 100,000
sets/year by 2010 and around 200,000 sets/year by 2020. The localization rate
to reach 90% by 2010.
4.
Investment orientations and requirements for investment projects
- To encourage the location of projects
on manufacturing and assembling automobiles as well as manufacturing spare
parts in the 3 key economic regions and their vicinities in order to make full
use of existing advantages, including:
+ In Northern Vietnam: The
provinces and cities lying within and adjacent to the Hanoi-Hai Phong-Quang
Ninh economic growth triangle.
+ In Central Vietnam: The
provinces from Thanh Hoa to Khanh Hoa.
+ In Southern Vietnam: The
provinces and cities lying within and adjacent to the Ho Chi Minh city-Ba Ria
Vung Tau-Dong Nai-Binh Duong economic growth quadrangle; and Can Tho city (in
service of the Mekong river delta region).
- To assign the following State
enterprises: Vietnam Automobile Corporation, the Motors and Agricultural
Machine Corporation, Vietnam Coal Corporation and Sai Gon Transport Mechanical
Engineering Corporation to play the core role in Vietnam’s automobile industry,
formulate and execute investment projects on manufacturing and assembling
automobiles and spare parts along the following direction:
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+ The Motors and Agricultural
Machine Corporation: To concentrate on manufacturing and assembling medium- and
small-sized passenger cars and trucks, engines, gear boxes and transmission
details.
+ Vietnam Coal Corporation: To
concentrate on manufacturing and assembling medium- and heavy-trucks,
special-use vehicles and working accessories.
+ Sai Gon Transport Mechanical
Engineering Corporation: To concentrate on manufacturing and assembling
passenger cars, special-use vehicles and a number of automobile spare parts.
- To assign the Ministry of
Defense and the Ministry of Public Security to participate in organizing the
manufacture and assembly of vehicles of technical-strategic properties, meeting
the security and defense requirements.
- For the above-said core State
enterprises and the automobile-manufacturing and –assembling enterprises under
the Ministry of Defense and the Ministry of Public Security:
+ Investment projects must meet
the “criteria of automobile-manufacturing and –assembling enterprises”;
+ New investment projects must
satisfy the high specialization assignment-cooperation requirements in
conformity with the production assignment orientations mentioned in Clause 4;
have advanced technologies transferred from the world’s big automobile
manufacturers; the localization rate must be higher than the general oriented level;
+ Investment projects must be
verified and approved according to current regulations on investment and
construction management.
- For foreign-invested
enterprises: The investment in manufacture development shall comply with
investment licenses. To encourage the investment in manufacture of engines and
spare parts on the basis of transfer of advanced technologies from the world’s
famous firms.
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+ Projects must be in line with
the strategy and planning on development of Vietnam’s automobile industry till
2010, with a vision to 2020;
+ Meeting the “criteria of the
automobile-manufacturing and –assembling enterprises”;
+ To encourage projects with
export products, projects on manufacturing automobile engines, gear boxes, transmission
details, and projects of big investment scale;
+ For enterprises which have
manufactured or assembled automobiles and manufactured spare parts for definite
periods of time, the investment in expansion of manufacture and assembly
capacity must be associated with technology upgrading and equipment
modernization in order to raise the localization rates according to the
orientations mentioned in Clause 3;
+ For new investment projects,
they must also fully meet the following conditions: having advanced
manufacturing technologies transferred from the world’s automobile
manufacturers; having specific plans, roadmaps and measures to achieve the
localization rate targets (according to the orientations mentioned at Points a,
b, c and d, Clause 3); having production technological processes as well as
specific and feasible solutions to ensure that the turned-out products are up
to the State-prescribed standards on technique, quality, safety, registry and
environment; fully complying with regulations on copyright and industrial
property.
5.
Investment capital source orientations
The projected total investment
capital required for implementation of the planning is as follows:
+ The 2001-2010 period: Around
VND 16,000-18,000 billion. Capital sources include:
- Capital mobilized by
enterprises themselves;
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- Foreign investment capital;
- The State’s development
investment credit capital (reserved only for key projects decided by the Prime Minister
and projects eligible for the State’s development investment credit capital
under current regulations).
+ The 2010-2020 period:
Estimated at around VND 35,000-40,000 billion. Capital sources include mainly
capital mobilized by enterprises themselves, commercial loans and foreign
capital.
6. Policies
and solutions in support of Vietnam’s automobile industry
a/ Tax policies for automobiles
as well as automobile components and spare parts
In order to encourage the
development of the industry of manufacturing automobiles and spare parts in
service of the domestic demand and export, the State adopts a number of support
policies as follows:
- Not to impose import tax on
CKD and IKD component sets; to impose import tax on imported components and
spare parts according to the Tariffs along the direction of promoting the
domestic manufacture.
- To exempt enterprise income
tax on trial-manufactured products for one year after the products are sold on
the market.
b/ Market-related policies and
solutions
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+ To take measures to support
domestic manufacture in conformity with the international and regional economic
integration progress.
+ To promulgate technical
standards for automobiles and automobile spare parts in order to prevent the
circulation of inferior-quality, unsafe and environment-polluting commodities.
+ To strictly handle illegally
imported goods and trade-fraud goods brought into Vietnamese market.
- Market expansion:
+ To step up the investment in
upgrading the road networks nationwide;
+ To encourage the
automobile-manufacturing and –assembling enterprises to use home-made engines
and spare parts;
+ To create conditions for
enterprises in marketing and trade promotion activities in order to expand the
domestic market and stretch out to foreign markets.
c/ Investment policies and
solutions
- To encourage the cooperation
and manufacture assignment among domestic enterprises and between domestic
enterprises and foreign-invested enterprises in order to make full use of the
invested technologies and equipment, reduce new investment costs and prevent
overlapped investment.
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- Foreign projects for
investment in supporting industries, manufacturing automobile engines, spare
parts and components, especially investment projects with large capacity scale,
manufacturing high-quality products in service of programs on raising the localization
and export rates, shall enjoy all preferential policies prescribed by the Law
on Foreign Investment in Vietnam.
Science- and technology-related
policies and solutions
- To encourage the transfer of,
and investment in, advanced technologies in service of programs on
manufacturing automobiles and automobile spare parts, especially engines,
gearboxes and transmission details.
- The State shall provide
funding support for technology transfer to projects on manufacturing engines,
gearboxes and transmission details if technologies are transferred from the
world’s prestigious firms.
- The State shall provide
funding support for the investment in the automobile industry’s
research-development activities.
e/ Human resource-related
policies and solutions
To intensify investment in
training and re-training of managerial officials, design officials and skilled
workers in service of the automobile industry, even sending them abroad for
study with the State budget capital source.
f/ Capital mobilization policies
and solutions
- To encourage the equitization
of enterprises manufacturing and assembling automobiles and automobile spare
parts, even the sale of equities to foreigners for creation of new investment
capital and diversification of capital sources.
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- Enterprises which are
established under law and have projects fully meeting the requirements mentioned
in Clause 4 (The item “For other domestic projects”) may all invest in projects
on the principle of self-responsibility for the investment efficiency. When
formulating projects, investors shall base themselves on the above-said
planning orientations and investment orientations (especially the market
demand, the demand for additional output of each type of automobile in each
period, productive force distribution orientations, etc.) as well as
enterprises’ actual competitiveness to determine appropriate investment scales
and locations, and at the same time take self-responsibility for their own
decisions.
g/ Industry management policies
and solutions
- To attach importance to the
study and application of solutions to regulate supply and demand of Vietnam’s
automobile market in order to ensure fair competition and efficiency for the
whole industry.
- To build and perfect a legal
framework in order to create conditions for enterprises to reorganize
themselves or form large enterprises after the parent company-subsidiary
company model and satellite companies of large enterprises in the domain of
automobile manufacture and assembly; to well implement specialization and
cooperation.
Article
2.- Implementation organization
1. The Ministry of Industry:
- To elaborate and promulgate
immediately the “criteria of automobile-manufacturing and –assembling
enterprises”.
- To direct the implementation
of the program and solutions to the development of the automobile manufacture
till 2010.
- To assume the prime responsibility
for verifying new investment projects on automobile manufacture and assembly
using the State capital of the 4 key State enterprises, then submit them to the
Prime Minister for approval and implementation.
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- To approve the inspection work
according to the industry management functions, propose to the Government
measures to regulate the automobile market’s supply and demand in the course of
implementation of the planning; publicize them to enterprises for
implementation.
2. The Ministry of Science and
Technology:
- To elaborate and promulgate a
regulation on methods of calculating the localization rates of automobiles for
use as basis for determination of investment support encouragement levels for
enterprises manufacturing and assembling automobiles and manufacturing
automobile spare parts.
- To assume the prime
responsibility for, and coordinate with the concerned ministries and branches
in, formulating and promulgating technical standards and quality standards of
automobiles and spare parts for domestically circulated automobiles;
technical-barrier regulations for prevention of the manufacture, assembly and
circulation of inferior-quality and environment-polluting automobiles.
- To provide guidance on the
transfer and reception of technologies to enterprises manufacturing and
assembling automobiles and spare parts, ensuring that the transferred
technologies are truly advanced ones.
3. The Ministry of Finance:
- To promulgate immediately
import tariffs of automobile components and spare parts in replacement of tax
calculation according to CKD- and IKD-form component sets to suit the
international and regional economic integration progress.
- To study and submit to the
Prime Minister for promulgation mechanisms for encouraging projects on
manufacturing automobile engines, gearboxes and transmission details.
- To study and submit to the
Prime Minister for promulgation policies on financial support for
research-development and human resource training activities for the automobile
industry.
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- To strictly control the
collection of tax on imported automobiles, components and spare parts; to
coordinate with the Ministry of Trade in stepping up the combat against
smuggling and trade fraud.
4. The Ministry of Transport:
To review, perfect and
promulgate immediately new regulations on standards, technical conditions and
safety for automobiles delivered for sale and imported (regulations on registry
of motorized means) along the direction of raising the quality and safety of
automobiles, in replacement of inappropriate current regulations.
5. The Ministry of Trade:
- To assume the prime
responsibility for, and coordinate with the concerned ministries and branches
in, studying and taking measures to enhance the efficiency of market management
work, combat smuggling and trade fraud for automobiles and spare parts in order
to protect the domestic market.
- To propose solutions to
intensifying export promotion activities, create conditions for Vietnam’s
automobile industry to join the regional and world markets.
6. The Ministry of Planning and
Investment:
To actively call for and attract
foreign investment in the development of automobile industry according to the
approved strategy and planning, especially in the manufacture of spare parts
and components. To examine and assist foreign-invested enterprises
manufacturing and assembling automobiles and automobile spare parts strictly
according to the licenses and current law provisions.
7. The Ministry of Public
Security:
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8. The provincial/municipal
People’s Committees:
-To create favorable conditions
for execution of projects on manufacturing and assembling automobiles as well
as manufacturing automobile spare parts in their respective provinces or cities
(if any) and supervise the execution of the projects according to the
formulated and registered contents.
- To consult the ministries and
branches in examining and supervising the implementation of the planning in
order to ensure the synchronism and uniformity between the automobile industry
development planning and the master planning on socio-economic development as
well as the industrial development plannings in the localities.
- To direct the functional
provincial/municipal Services, departments and branches to coordinate with one
another in reviewing business registration work for enterprises engaged in
automobile manufacture or assembly, ensuring the strictness, lawfulness,
conformity with planning, and satisfaction of the “criteria of
automobile-manufacturing and –assembling enterprises”. To direct the
provincial/municipal Industry Services to periodically report to the Ministry
of Industry on the operation of the automobile-manufacturing and –assembling
projects.
9. Vietnam’s Association of
Mechanical Enterprises, Vietnam’s Association of Automobile Manufacturers and
Vietnam’s Association of Automobile Engineers:
- To study, propose and organize
the coordination among mechanical enterprises manufacturing and assembling automobiles
as well as manufacturing spare parts in order to raise cooperation-association
and specialization in the manufacture and assembly of automobiles and spare
parts.
- To study and propose to State
management agencies solutions, mechanisms and policies for encouraging and
promoting the development of the automobile industry strictly according to the
approved strategy and planning.
10. Enterprises which are
permitted by competent authorities to manufacture and assemble automobiles or
organize the manufacture of special-use automobiles on the basis of automobile
chassis may continue to conduct the importation and apply the tax policies
according to current regulations till the Finance Ministry-issued Import Tariff
of automobile components and spare parts takes effect. As from July 1, 2005, if
the above-said enterprises fully meet the conditions prescribed in this
Decision, they may continue to manufacture and assemble automobiles or organize
the manufacture of automobile chassis.
Article
3.- This Decision takes effect 15 days after its publication in the
Official Gazette.
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FOR THE PRIME
MINISTER
DEPUTY PRIME MINISTER
Nguyen Tan Dung