Decree on production and trading of imported cars: Who meet difficulties, how is difficult?

Automobile production and import activities must comply with many new regulations in Decree No. 116/2017/ND-CP.

There are opinions that some new regulations in Decree 116 will make enterprises difficult, costly etc. Also, businesses think that Decree 116 will contribute to restoring order in business activities, production, import to facilitate the investment of enterprises, and more importantly the interests of consumers are guaranteed.

Who meet difficulties?

After a few days of promulgation of Decree 116, the Vietnam Automobile Manufacturers Association (VAMA) issued a document No. 102501/2017/VAMA dated 25th October to the Prime Minister and relevant authorities to mention that "The business activities of VAMA members will be severely affected by the new regulations."

Specifically related to the regulation that importing companies must provide a copy of quality certificates, type of automobile import, issued by competent agencies or organizations of foreign countries, VAMA said that this request is a big question for all VAMA members because the imported type car quality certificate does not exist in many countries. Some countries apply self-certification manufacturers policies. Some countries, competent authorities can grant this certificate, but the system of standards and registry is not the same as the system in Vietnam. Therefore, Vietnam Register may not accept due to differences. For example, differences in driving positions, emission standards, or other technical specifications, between vehicles sold in different markets.

Moreover, VAMA also said that this regulation does not mean much because the Vietnam Register has strictly implemented an inspection and testing procedures in order to strictly control quality.

As a result, VAMA has asked the government to allow the importer to select and carry out testing procedures by the Vietnam Register, instead of just accepting the imported-type quality certificate, by the competent agency and authority of the foreign country.

New regulations to ensure the quality of cars in Vietnam market

Representatives of VAMA also commented on automobile import regulations which must be inspected and tested by each agency for each batch; Each car will have to take samples to test, test the quality of technical safety and environmental protection. According to VAMA, vehicles of the same type will be forced to retest, just because they are in different shipments. This provision does not mean quality, only extends clearance time and wastes social costs.

Testing of a car can last up to 2 months and costs up to 10,000 USD for Euro 4 emissions testing. In addition, during this time other vehicles in the same lot will have to be stored at the port and VAMA is concerned of the capacity of seaports, whether they meet the requirements of this regulation. This provision will cost businesses unnecessary expenses for the preparation of storage location.

Not only "difficult" in the import, both in assembling and producing of automobiles, according to VAMA, regulations require a road test run of at least 800m, which makes many companies face difficulties finding the land to invest in the new trial road or extend the old one. Therefore, VAMA requested the Government to adopt an alternative testing method for landless and non-retrofitted producers with investors already operating in Vietnam before Decree 116 effective.

Being cautious and not "drastic" as mentioned above, on November 1st, responding to the question asked by the correspondent of the Customs Newspaper about having difficulties in car production and trading activities when implementing the Decree 116 or not? Mr. Toru Kinoshita, General Director of Toyota Vietnam, also the President of VAMA said: In the short term, there will be a certain impact, however, enterprises are waiting for documents to guide the implementation of the ministries to know how much influence.

Not difficult

Not all members of VAMA agreed with VAMA's view, Mr. Bui Kim Kha, Deputy General Director of Thaco car business, and Vice Chairman of VAMA spoke in support of the regulations in Decree 116.

Disagreeing with VAMA's proposal (in document 102501/2017/VAMA), arguing that the contents of Decree 116 are reasonable, Mr. Bui Kim Kha analyzes:

All imported vehicles to Vietnam must meet the technical requirements are applied in Vietnam. Importers of imported vehicles must inspect and compare with the current technical regulations, so it is impossible to happen in the case of imported cars, there are differences in driving position, driving emission standards, or other technical specifications, between vehicles sold in different markets.

Enterprises that want to produce and assemble automobiles need to make investment

Mr. Kha also said that the regulation requires enterprises to provide "Copy of imported-type automobile quality certificates issued by foreign competent agencies and organizations". This regulation is to ensure the quality of imported cars, to limit the quality of cars from foreign countries, to protect consumers and at the same time to create equality with cars manufactured and assembled in the country. Since the provision of a copy of the Type Approval Certificate is a clear proof of the quality of the imported car, it is one of the bases for quality inspection and certification by the quality inspection agency for technical and environmental protection in accordance with the current regulations, and also to ensure equality with domestic production.

Talking to reporters of Customs Newspaper, Mr. Bui Kim Kha also confirmed, Thaco is currently importing cars Mazda 2, Mazda BT 50, Kia, Peugeot, and no problems, difficulties as well as no problems of congestion at the border. Even though Decree 116 entered into force on 17 October, 1974, but import activities were carried out in accordance with current regulations until 31st December, 2017. This time is enough for businesses to comply with the new regulations in Decree 116.

Talking with the reporter of Customs Newspaper, a representative of a large luxury car company in Vietnam also concurred that Decree 116 will ensure fair competition, equality between import enterprises, ensuring rights Benefit of customers.

Confirming the company can fully meet the requirements of Decree 116, although the representative is worried, from 17th October to 31st December, 2017, whether the company has prepared the papers, the documents of the new regulations to import goods or not.

Why is the difficulty?

VAMA currently has 17 members, most of which are joint ventures such as Toyota Vietnam, Honda Vietnam, GM Vietnam, Ford Vietnam etc. These are the joint ventures that have invested many years in manufacturing and assembling automobiles in Viet Nam

The question is why are these joint ventures "reacting" to a policy that is supposed to create a productive, entrepreneurial and equitable business environment, encourage businesses to invest in, and tighten regulations to protect consumers' rights?

In fact, after many years of investment in manufacturing and assembling automobiles in Vietnam, according to the Ministry of Industry and Trade, Vietnam's automobile industry has just stopped assembling, with the rate of low (less than 10%). Before the trend of reducing import tax on cars in the area, many companies have no intention to invest, expanding production in Vietnam, even many companies have diverted products assembled in the country, switch to import completed unit.

Therefore, it is easy for enterprises to find "difficulty" when the policy of "tightening" the import regulations to ensure the quality of products.

On the other hand, the regulations that businesses have to invest in production is also a point that many companies do not want. For example, VAMA's complaints about the length of the test track with a minimum length of 800 m and a minimum of 400 m of straight lines as stipulated in Decree 116 show that these companies do not want to invest in production.

The government encourages businesses to invest in production, increase production and improve localization

In fact, according to a specialist in this field, the line test standard in accordance with international practice. Obviously, businesses need to invest in professional before but do not have to wait until the "hard" time to find difficult and "complaint". It is important to test drive the vehicle after production and assembly, to ensure that the vehicle is of good quality before shipment, if the test road does not meet the standards, the test site cannot be located. The regulations will affect the quality of the factory vehicles.

It can be said that after a long period of investment and development has not met the target, the current policy of the Government clearly shows a point of view is to support enterprises invest in production, increase production, increase the localization rate and bring the automobile industry, a commodity affecting the lives of consumers, into the conditional business with tight regulations to ensure the product quality.

And if businesses want to operate in this field, forced to accept the "game".