Auto firms await Gov't decision on import regulations

The problem related to the Ministry of Industry and Trade Circular 20 that requires importers of complete built up units (CBUs) with less than nine seats to show proof that they are authorised dealers for foreign automakers, with a certification of qualified auto maintenance centre granted by the Ministry of Transport.

The circular, which came into effect in June 2011 and was to become invalid on July 1 this year, was aimed at tightening the import of CBU cars and compelling businesses to ensure that after-sales services such as warranty and maintenance matched the manufacturers' standards.

The circular was invalid but its contents were retained in the draft decree by the industry and trade ministry, which has been sent to the Government for approval and to relevant agencies for their ideas.

While waiting for the Government's decision, a huge argument erupted between auto businesses about retaining or dropping the circular's contents.

One side includes businesses who have qualified conditions to import automobiles, such as members of the Vietnam Automobile Manufacturers' Association (VAMA) and Vietnam Car Importers' Association (VIVA). They want to keep the circular's contents after clarifying that it was needed to be extended to protect the customers' right and interests about quality and maintenance service, limiting the unofficially imported auto market.

The opposite side, which consists of many small and medium enterprises, said the circular's regulations had created barriers for them, giving rise to an unfair business environment. They did not have the chance to join the imported automobile market. This circular created a monopoly for auto businesses which imported cars from official suppliers.

Nguyen Tuan, director of Thien An Phuc Company Ltd, said his business and about 200 auto importers of vehicles such as Toyota, Kia, Hyundai, and Daewoo began business in 2006. By 2011, after five years, these businesses had developed the market, marketing and advertising, but the Circular 20 was issued, stopping them from importing automobiles.

"Now, only the automobile firms who are qualified as per the circular's requirement, have placed their agents in Viet Nam and sold imported cars without any cost on the developing market," Tuan said.

"We understand that at a certain economic stage, the circular is suitable, but every circular should be in use for a certain period and should be changed when the economy becomes stable. The Government should return to the market economy which has competition from price, and customers' service to guarantee in order to help customers choose the most suitable products," Tuan said.

The reaction became drastic when representatives of many businesses recently hung banners in front of the Ministry of Industry and Trade headquarters in Ha Noi with content supporting the abrogation of the Circular 20's regulations.

The maintenance of the circular's content did not receive support from Deputy Minister of Planning and Investment Dang Huy Dong.

In a talk with dautuchungkhoan.vn, the deputy minister said that if new businesses' joining the market were limited, it would end the market's competitiveness.

He said buying a specific car or from a firm of choice was the option of the customers and the market as well, and the State should not intervene in this issue. As for the quality of imported cars, it was the duty of the Registrar Vietnam. In addition, each automaker would have the right to choose its import agents.

Chairman of Viet Nam Chamber of Commerce and Industry Vu Tien Loc said it needed to remove the circular's regulations to ensure that all businesses could join the market in an open and fair manner, especially the small and medium enterprises

Loc said that if the regulations were dropped, it would push up competition and customers could enjoy a lower price.

In an interview with the Vietnam Economic Times, he said the Government was considering proposals on auto imports from the industry and trade ministry before giving its final decision.

"We believe the Government will consider and make a decision which will ensure general benefits and healthy competition and business environment not only for the business community but also for the interests of the customers," Loc said.

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