Carmakers use few local components: Finance ministry

A recent inspection by the Ministry of Finance has found the local content ratio in motor vehicles assembled by joint ventures in Vietnam to be far lower than earlier reported.

The ministry says only one of the six auto-assembly joint ventures in the country – Honda Vietnam – has reached a local content ratio of 10 percent, while the ratios at other companies are only 2-4 percent.

These joint ventures had earlier announced they had successfully increased the proportion of local content in their vehicles to 20-40 percent, as required by the government.

The Ministry of Industry, since merged to form the Ministry of Industry and Trade, had reported similar ratios.

For more than 15 years now, many policies have been formulated to protect the domestic industry from foreign competition.

However, industry analysts say local carmakers have failed to invest sufficiently in the production of car components and thus their local content ratios have improved little.

The finance ministry says the inconsistencies in these polices are the reason why the joint ventures have been able to ignore the local content requirement without penalty.

 SGGP

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