What is your response to the IMF report that stated “auto-assembly plants [in Vietnam] need to undertake significant reforms to remain viable”?
In my opinion, this comment not only refers to Vietnam’s automotive manufacturers but also to other businesses in other industries. With Vietnam joining the WTO there will certainly be many challenges as well as opportunities for local companies. To attract more customers, all companies must try to introduce new high quality products, a variety of models, competitive prices, and all the necessary services.
VAMA is the same; we always think of our customers’ rights and have tried our best to introduce products, services and prices that satisfy the needs and expectations of customers. Regarding how to reform, this is down to each VAMA member. VAMA is willing to cooperate with relevant parties to develop Vietnam’s automobile industry.
Industry analysts have said that the development of Vietnam’s car industry is lagging behind. Do you agree?
Everybody can see that Vietnam is in the process of development and has just joined the WTO, so its automotive industry can’t be considered a leader compared with other countries and it is also the youngest industry in the country, beginning in only 1991 or 1992. However, Vietnam has the human resources required to quickly catch up with development levels in other countries if government assistance is forthcoming in transparent and stable policies and a clear tax road map. Of course, we will also study the experience of other countries.
IMF’s survey also stated that “Vietnam’s automobile joint ventures are far below international levels of optimal plant size.” How do you respond?
Vietnam’s automotive market is still small and the government does not have any macro policy for expanding the market. For further automotive development, I think the government should have a tax reduction policy for lowering prices in order to boost demand, then Vietnam will attract more automotive investors as well as parts suppliers. Automobile industry development is often in parallel with parts supply industry development. Therefore, a policy supporting the parts supply industry is very important.
Based on your company’s business performance, what are your thoughts on the local auto market in the first months of this year and how do you see it for the rest of the year?
Compared to the first two months of last year, the total CKD (completely-knocked-down [i.e. assembled in Vietnam]) market in the first two months of 2007 was 105 per cent higher (7,714 units against 3,757). It’s a good start to a promising year. In addition, with Vietnam’s membership of the WTO and the development of its stock exchange, the market is expected to continue at high levels if there are no major policy changes.
The Ministry of Finance has recently reduced tax rates on imported cars. Do you think this will affect local auto manufacturers?
This will affect local automotive manufacturers to varying degrees. From a positive perspective, the price reductions will be good for competition and, hence, for customers. But tax reductions on CBU cars, while rates remain the same for CKD cars, will create unfair competition. Reducing the competitiveness of cars assembled in Vietnam may create problems for the development of the local automotive industry.
