AsemconnectVietnam - The Draft Strategy for the Development of the Automobile Industry of the Ministry of Industry and Trade clearly states that the supporting industry is an important factor in promoting the automobile industry.

In 2021, the Government issued Decree No. 101/2021/ND-CP amending and supplementing a number of articles of Decree No. 122/2016/ND-CP dated September 1, 2016 of the Government and Decree No. 57/2020/ND-CP dated May 25, 2020 on the Export Tariff Schedule, Preferential Import Tariff Schedule, List of Goods and Absolute Tax Rates, Mixed Tax, and Import Tax Outside the Tariff Quota.
Specifically, the Government decided to extend the implementation period of the Tax Incentive Program for domestically manufactured and assembled automobiles until December 31, 2027. This is intended to encourage businesses to invest and promote the development of the domestic automobile support industry.
However, in the draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP on Export Tariff Schedule; Preferential Import Tariff Schedule; List of goods and absolute tax rates, mixed tax, import tax outside the tariff quota, the Ministry of Finance has proposed not to add more spare parts and components to the List of Group 98.49 to apply the preferential import tax rate of 0%. Meanwhile, data from the Ministry of Industry and Trade shows that the Vietnamese automobile industry is importing up to 80% of production components.
Currently, there are still not many enterprises supporting the automobile industry in Vietnam, only about 300 enterprises of all business sectors. Of which, there are about 40 enterprises manufacturing and assembling automobiles; 45 enterprises manufacturing chassis, car bodies, and car bodies; 214 enterprises producing auto components and spare parts, enterprises in Vietnam have also produced and processed less than 300 parts while a whole car has about 30,000 parts. In addition, the technology content and value of these parts and spare parts are not high.
In Decision 1168/QD-TTg dated July 16, 2014, the Government set the goal of building the Vietnamese automobile industry into an important industry, meeting the domestic market demand for vehicles with competitive advantages, participating in exports, and improving competitiveness to participate in the global supply chain.
In terms of market capacity, the Government set a target that by 2025, the total output of domestically produced and assembled vehicles will reach 466,400 units, accounting for nearly 70% of the domestic demand.
Notably, regarding the development of supporting industries, the Government has identified this as an important industry, playing a supporting role with many other industries, including automobiles.
The Government sets a target that in the 2021-2025 period, Vietnam will begin to produce some important parts in the transmission, gearbox, and engine; the domestic production and manufacturing value ratio for vehicles with up to 9 seats will reach 40-45%, and trucks will reach 45-55%. So far, only two manufacturers, THACO and VinFast, have basically achieved these criteria.
Solutions to promote supporting industries for the automobile industry
Recently, in the Draft Strategy for the Development of the Vietnamese Automobile Industry to 2030, with a vision to 2045, the Ministry of Industry and Trade has also pointed out the problems of the automobile industry. The draft states that to promote the development of the automobile industry, it is necessary to build and develop supporting industries to supply components and spare parts for the production and assembly of electric vehicles, hybrid vehicles, vehicles using solar energy, bio-fuels and other new green fuels, etc.
According to this Draft, the formation of a number of concentrated automobile industry centers/clusters is based on the organization and rearrangement of production. We will promote cooperation and linkage between automobile manufacturing and assembling enterprises, supporting industrial enterprises, research and development establishments and training establishments of all economic sectors to improve investment efficiency and enhance specialization.
At the same time, we will also promote large-scale projects on materials industry, especially projects on hot-rolled steel production, fabricated steel, etc. of domestic investors to ensure input material sources for the automobile industry's supporting industry; Attract investment in basic manufacturing sub-sectors (blank making, pressure machining, precision machining, heat treatment, surface treatment and mold manufacturing for the production of components and spare parts for the automobile industry). Promote cooperation with input material industries for the production of components and spare parts for the automobile industry.
Therefore, promoting the development of the supporting industry is extremely necessary, but Vietnamese enterprises are still not developing commensurate with the market potential. The reasons are that the mechanisms and policies are not strong enough, spread out and lack focus; limitations in human resources and competitiveness of enterprises.
To achieve the above goals, the Strategy has given specific directions such as identifying and establishing strategic partners, encouraging investment in projects large enough to create a market for supporting industries; encouraging the production of environmentally friendly vehicles (fuel-efficient vehicles, hybrid vehicles, bio-fuel vehicles, electric vehicles, etc.), meeting the requirements of emission standards according to the roadmap approved by the Prime Minister.
The Ministry of Industry and Trade believes that in the coming time, the supporting industry will approach and apply technology to manufacture important parts and components such as transmissions, gearboxes, engines, car bodies, etc. for several types of vehicles; strengthen cooperation with major automobile manufacturers to select types of spare parts and components that Vietnam can produce to take on the role of a link in the global production and supply chain, on that basis investing in advanced technology and manufacturing for export.
CK
Source: VITIC/congthuong.vn