VietNamNet Bridge – The Ministry of Finance (MoF) has summoned 11 members of the Vietnam Automobile Manufacturers’ Association (VAMA) to ask why they have not lowered the selling prices of cars though the government launched a campaign to cool down the price fever two weeks ago.
Local manufacturers not joining car price decrease movement
The meeting between 11 VAMA members and policy makers yesterday afternoon was described as ‘full of tension’. Management authorities raised a lot of questions about why local automobile manufacturers still insisted on not reducing car selling prices. In response, the VAMA members said that while the import tax on car parts and luxury tax remained high it was impossible to think of reducing car prices.
The VAMA members said that they had been facing a lot of difficulties due to increased input material, electricity, petrol and water prices, which have made their profit lower, and made the plan to lower selling prices impossible.
VAMA stated at yesterday’s meeting that the tax reduction on imported cars would affect the price of imports, while not bringing any support to local production.
In these circumstances, VAMA said MoF should recognise VAMA’s members’ efforts to keep prices stable. VAMA said that its members would not lower selling prices unless MoF considered lowering the tax on car parts and luxury tax.
“Lower tax, lower production costs would help automobile manufacturers reduce selling prices; then the market would cool down,” a representative of an automobile joint venture said.
Meanwhile, MoF stressed that the import tax had been lowered already from 25% to 20-22% since the new method of taxation was applied (taxing individual car parts instead of sets of car parts). Regarding the luxury tax, MoF said that the ministry could not adjust the tax rates itself. As Vietnam has joined the WTO, the tax reduction roadmap must come in line with WTO commitments and international treaties of which Vietnam is a member.
MOF officials yesterday stressed that while the government was doing its utmost to curb price increases and fulfill economic goals, automobile joint ventures should share the task with the government.
“If VAMA’s members insist on not lowering selling prices, we will apply forceful measures to cool the market. These may be tax policies. In any case, prices will go down, no matter whether or not automobile manufacturers agree,” an official from MoF said.
