Vietnam makes pacts with Russia, Belarus

A protocol on automobile production co-operation was initialled by the officials from the negotiating teams of the two countries in Minsk, Belarus, on January 20.

On January 15, Vietnam also initialled the protocol with Russia in Moscow.

The ministry said the protocols would be negotiated and signed based on the priority clauses of investment projects under the free trade agreement between Vietnam and the Eurasia Economic Union (VN-EEU FTA).

After initialling the above-mentioned protocols, Russia and Belarus have both informed that they would immediately conduct procedures to pass the VN-EEU FTA and put the protocols on automobile co-operation into effect at the same time.

The protocols include co-operation between Russian and Belarusian automakers and their Vietnamese partners in establishing several joint ventures for manufacturing and assembling of trucks, and vehicles with ten seats and more, pick-ups and some special-use vehicles, in Vietnam.

The vehicles assembled in Vietnam will be suitable for the Vietnam Automobile Industry Development Plan by 2020 and in the vision for 2030, which requires a localisation rate of 25% for special-use vehicles, 30% for trucks and pick-ups, and 35% for vehicles with 10 seats and more, by 2020.

By 2025, the localisation rate will be 40% for special-use vehicles and pick-ups, 45% for trucks and vehicles with ten seats and more.

Besides the domestic market, the joint ventures have been oriented to export cars to a third country, which are Southeast Asian nations where the cars with 40% localisation rate from Vietnam will enjoy import tax exemption.

To reach the above target, Vietnam will allow the joint ventures to import free-of-duty a number of completely built up units for exploratory selling in the Vietnamese market. They will also enjoy a concrete tax exemption quota for the import of auto components and parts for domestic assembling in five years, which is the period before the import tax on auto components and parts is cut to zero% under the VN-EEU FTA agreement.

The protocols are expected to officially be signed by the end of January or early March this year.