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The ministries of Industry and Trade (MoIT) and Finance (MoF) are reportedly considering loosening the conditions levied on import of under-nine seat brand-new cars regulated in MoIT’s Circular 20 dated May 12, 2011 through abolishing the requirement demanding importers to show authorised papers from genuine car manufacturers’ importers and distributors.
Circular 20, effective from June 26, 2011, stipulates additional procedures for imported cars from nine seats or less.
This means commercial auto importers, currently struggling to survive by shifting into used car trading or acting as agents for some Chinese car brands, will have a chance to turn back to their conventional auto import business.
The MoIT recently took action to ease car importers’ burdens. It has allowed firms to continue importing cars in volumes and types as stated in contracts in three months if they signed import contracts and already paid deposits before the date Circular 20 came into force.
Industry experts pointed out two reasons why the move should be taken.
The first point is to enrich car supply sources in the face of dwindling car assembling and manufacture in the domestic market against rising completely built unit (CBU) imports, and to tackle sharply declining state budget caused by falling auto and parts import with associated tax contributions.
A representative from an auto reporting the second largest under-nine seat brand-new car revenue in the domestic market which has got an authorised certificate from a South Korea auto firm said after Circular 20 took effect the company spent a big chunk of money into upgrading and expanding its agent network. Thereby, loosening car import regulations would disadvantage some firms due to costly investments compared to car salons and showrooms with lower investments.
“Firms could not set their minds at ease if state policies change constantly,” said the representative.
When issuing Circular 20, the MoIT said the move was to shield consumer interests, reduce trade gaps and ensure road traffic safety.
That was why the MoIT compelled Hung Long Company, which imported a total of 62 Lexus cars not having authorised paper from genuine car manufacturer, to re-export its second shipment of 16 car units and pay VND40 million ($1,900) administrative penalty.
Hung Long Company director Nguyen Ba Hoc said auto sector’s policy change explained why firms wanted to import instead of injecting into auto manufacture.
Imports of completely built car units came to nearly 16,000 units in the first seven months of 2012 valued at $335 million, shedding 58 in volume and 44 per cent in value on-year.
With current 78 per cent import duty levied on brand-new CBU cars with nine seats or less plus 45-55 per cent excide tax depending on car cylinder capacity declining auto import cast a big dent to state budget.