The Ministry of Industry and Trade (MOIT) is collecting opinions for the draft PM’s Decision that guides the implementation of the Protocol between Vietnam and Russia on supporting the production of engine vehicles made in Vietnam.
Under the draft decision, the quotas for all joint ventures will be higher. As for CBU imports, Vietnam may permit import of 800 products with tax exemption in 2018 instead of 900 as stipulated in the current decision. However, the figure has been lifted to 850 in 2019 and 900 in 2020.
Regarding automobile joint ventures, car part imports will enjoy preferential tariffs until 2022, instead of 2021 as initially planned.
Vietnam will offer tax exemption for 13,500 sets of car parts in 2018-2022, instead of 11,000 for 2018-2021 as initially planned.
The move aims to create favorable conditions for the enterprises of the two countries to cooperate to manufacture buses and trucks in Vietnam, using the technologies of experienced Russian manufacturers such as KAMAZ, UAZ and GAZ.
The Russian manufacturers would team up with Vietnamese partners to establish joint ventures to make and assemble trucks, vehicles with 10 seats and more, and off-road and some specialized vehicles as mentioned in the protocol signed by the two countries.
The amendment will give Russian manufacturers more time to learn and penetrate the Vietnamese market.
The amended protocol was signed in December 2017 between Vietnamese MOIT Minister Tran Tuan Anh and Russian Ambassador to Vietnam Konstantin Vasilievich Vnukov.
Though the protocol on cooperation between Vietnam and Russia in the automobile industry took effect on October 5, 2015, enterprises still cannot enjoy preferences stipulated in the protocol because it takes time to set up management policies.
Russian UAZ products are available in Vietnam, but the distributor for the manufacturer still cannot enjoy preferential tariffs.
The tardiness has affected consumers’ decisions to buy Russian vehicles
Lada is also planning to penetrate the Vietnamese market by mid-2019. Vietnamese consumers are looking forward to seeing Lada Vesta, which is cheap with selling prices from VND166 million in Russia, which is half of Chevrolet Spark, the cheapest car model in Vietnam, priced at VND290 million.
However, an analyst said Lada Vesta in Vietnam may sell at VND457 million for the standard version – 1.8 AT, while the price of VND360 million may be applied to the low-cost version 1.6 MT.
However, the price levels would still be attractive as they are much cheaper than other products in the same market segments.
In mid-2018, GAZ brought five truck models to Vietnam to explore the market before deciding to set up joint ventures in Vietnam.