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Automobile manufacturers hesitant about investment plans
Domestic automobile manufacturers have been wavering between pushing up investment or stopping investment amid unclear market prospects and policies.
Toyota Vietnam, which always leads the market in car sales, has had to lower its business goals in 2009 by 20-50% compared to 2008.
At the meeting with the Ministry of Industry and Trade last week, General Director of Toyota Vietnam Murakami, once again, proposed joining forces with the government to build an automobile industry with sustainable development, while suggesting that tax policies be stable to encourage investment plans.
In the first eight months of 2008, member companies of the Vietnam Automobile Manufacturers’ Association (VAMA) sold 10,000 cars a month. However, in the period from September to November 2008, they only sold some 5,000 cars a month.
“The decrease should be attributed not only to the economic recession, but also to the government’s policies,” he said, implying the ownership registration tax increase from 2% to 10%.
Moreover, other new tax policies effective as of early 2009, including the VAT increase from 5% to 10%, ownership registration tax increase from 10% to 12% (in Hanoi), all will have negative impacts on automobile production and sales, due to which enterprises cannot be optimistic about their business plans in 2009.
Toyota Vietnam, which always leads the market in car sales, has had to lower its business goals in 2009 by 20-50% compared to 2008.
Tran Ba Duong, Chairman of Truong Hai Automobile Joint-stock Corporation, said that the government’s long-term policies will decide whether manufacturers should keep investing or stop.
Duong complained that the sales of the company in July-December 2008 decreased sharply from 1,679 vehicles a month to 1,008, and sometimes to 566, which means that nearly one trillion VND has been buried in products.
“The state encourages enterprises to localise automobile production, which has prompted us to make investment in localisation. The amount of capital invested in the localisation plan now accounts for 15% of our total investment. However, if our products remain unsalable, which means our money is buried, we will suffer,” said Bui Ngoc Huyen, General Director of Vinaxuki.
Because of the unpredictable situation, enterprises are cautious about planning for 2009.
Under the CEPT/AFTA (Common Effective Preferential Tariff Scheme), from 2008-2018, Vietnam will have to slash tax rates from 83% to 0%, which means that automobile manufacturers will have to gear up to become stronger. Meanwhile, the economic recession has been putting big difficulties on Vietnamese enterprises.
Automobile manufacturers have asked for a delay of the implementation of the plan to raise the VAT to July 2009, and other taxes, including the luxury tax, ownership registration tax, and personal income tax.
The automobile industry will be twice burdened if the government still raises taxes in the context of the economic recession, said Mr Murakami
VietNamNet, Dau tu
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