Implementation of Decree 116: How difficult is it?

VCN- Effective from October 2017, until now, after 10 months of implementation, Decree 116 on the conditions of automobile production and assembly in Vietnam still has mixed opinions. It is a condition, of course, it requires strict regulations. The problem is that there are a number of baffling conditions stipulated in this Decree, is it really for making it so difficult for enterprises that they cannot be implemented?
implementation of decree 116 how difficult is it
Many automakers are trying to meet regulations in Decree 116. Photo: Nguyen Ha

VAMA continues to ask for taking off difficulties

Recently (August 10), the Vietnam Automobile Manufacturers Association (VAMA) has continued to send documents to the Ministry of Industry and Trade (MOIT), the Ministry of Transportation (MOT) and the Government Office, making suggestions on some issues that are stipulated in Decree 116/2017 / ND-CP (Decree 116) for domestically-made cars (CKD). VAMA still has some problems and there is no solution for CKD.

Regarding the procedures for issuing certificates of eligibility for production, many businesses have not been able to start constructing new test tracks yet, so it is unclear whether the evaluation procedure will be carried out and whether concurrent or not.

As a result, VAMA recommends that the Ministry of Information and Communication provide detailed guidelines: 1, to ensure the progress of applying for certificates of eligibility for production and assembly before April 17, avoiding the situation of interruption of production activities of enterprises. 2, to guide the upgrading, construction or extension of the progress of the test road construction in accordance with Decree 116.

Regarding the CKD test road (minimum test length of 800 meters before April 17, 2019), VAMA said that many enterprises cannot meet this requirement because there is not enough land for them to the construct or expand the test track. In addition, hiring is also difficult because of the huge costs of hiring test equipment and transportation costs from the factory to the road test area and vice versa.

Accordingly, VAMA recommends that the Government and MOIT do not retroactively apply this requirement to existing invested and operating manufacturers.

As far as regulations on parts and assemblies must be checked, VAMA is of the opinion that if it meets ECE standards, it is not necessary to re-test in Vietnam to avoid wasting time and cutting down unnecessary procedures that affect production.

VAMA recommends relevant authorities to amend this regulation in the direction of accepting foreign inspection reports, approval of type for components, component assemblies and the certificate of COPs that have been applied in accordance with Circular 30 and Circular 54 issued by the Ministry of Transport.

VAMA also proposed the Ministry of Transport to develop Decree 116 on the conditions of automobile assembly and manufacture, approving one of the two types of manufacturers' quality control system assessment (COP) or ECECOP certificates issued by competent foreign agencies or organizations or COP issued by the Vietnam Register.

implementation of decree 116 how difficult is it
Some domestic enterprises have invested in the most modern automobile plant in the region

Not completely "hand in hand"

Previously, VAMA also made many recommendations relating to this content. However, many enterprises have been implemented; Locality as well as government are also on "hand" to support enterprises.

For example, as for Toyota Vietnam (TMV), this joint venture has decided to extend the land area to meet the requirements of the test road given in Decree 116, while upgrading and expanding production lines to increase capacity to 90,000 vehicles per year (expected in 2023). TMV would like to lease land to expand the project with an area of about 9.1 hectares (Phuc Thang and Hung Vuong, Phuc Yen - Vinh Phuc).

On June 12 at the Government Office, a meeting was held on the expansion of the Toyota plant in Phuc Yen (Vinh Phuc province). Previously, the Vinh Phuc People's Committee sent a letter to the Prime Minister reporting on the settlement of problems in the land lease of TMV.

According to the People's Committee of Vinh Phuc province, the province is facing difficulties in implementing land procedures for the area to apply for plant expansion in accordance with the Law on Land in 2013. Therefore, Vinh Phuc People's Committee has reported and consulted with the Prime Minister to allow the locality to organize land acquisition in accordance with the approved land use planning and plan for industrial development and land allocation to investors who rent land for expansion. The court did not approve the auction of land use rights.

Speaking to the correspondent of the Customs Newspaper, Mercedes-Benz Vietnam (MBV) said that the joint venture also encountered difficulties in meeting the requirements of the test road by the current MBV plant located in the city. VEP-HCMC), the land area makes it difficult for expansion. However, the joint venture has also found a solution to meet the requirements of the road test in Decree 116.

As the case with Isuzu Vietnam Automobile Co., Ltd. In the recent document sent to the Ministry of CT, the company said, with the current factory area it cannot meet this requirement. Therefore, Isuzu Vietnam must conduct a survey, looking to rent land in Tan Phu Trung Industrial Park.

Due to the soil structure in this area of land, it is necessary to improve the quality of the plot with an expected re-structuring time of about 6 months. Along with the design approval procedures, construction permit, equipment installation, completion ... so the completion of the project is expected to take about 1 year for Isuzu.

As such, it is possible to see businesses with the support of localities expanding their plants to meet the requirements. However, due to complicated procedures, it is unlikely that enterprises will meet the prescribed schedule (completed before April 17, 2016).

implementation of decree 116 how difficult is it
Car import activities of many enterprises have also been smooth

Imports are no longer difficult

Another regulation is also considered difficult by businesses, which is the type certificate for cars imported vehicles (VTA).

However, in a document sent to the Government in June, the Ministry of Transport confirmed that the major car manufacturers such as Honda, General Motors, Toyota, Mitsubishi, BMW, Mercedes ... have met the requirements in the VTA paper, in accordance with current regulations for imported cars to Vietnam market.

Up to the middle of May, the Vietnam Register has received and handled nearly 120 sets of automobile registration dossiers from enterprises with nearly 60 different types of automobiles and granted safety, technical and environmental protection certificates for imported motor vehicles. Approximately 4,400 vehicles have been granted certificates for enterprises to complete the procedures for carriage to the market.

According to the Ministry of Transport, the figures mentioned above show that imported vehicles to Vietnam do not face any barriers or problems related to VTA type-quality certificates for enterprises.

At a recent meeting, the Government with other ministries have discussed this issue, the Government agreed: In October a circular must be issued guiding regulations on quality management of assembled automobiles. In this direction, the Ministry of Finance, the Ministry of Industry and Trade, and the Ministry of Transport are responsible for explaining the contents of Decree 116; At the same time, it creates favorable conditions for enterprises to understand and comply with the current regulations.

It is noteworthy that the Ministry of Transport should continue to maintain the inter-branch delegation to work with enterprises, especially enterprises manufacturing and assembling cars, to grasp and guide enterprises for handling problems. At the same time, the Ministry is to urgently issue the Circular guiding Clause 1, Article 6 of Decree 116 on quality management of automobiles manufactured and assembled, to ensure the promulgation in October 2018 for enterprises to have enough time to implement automobile production in accordance with new regulations.

It can be said over the past 10 months, Decree 116 has always been hot with controversy, complaints of importers, joint ventures and manufacturers, on the conditions they consider too strict and not close to reality. Difficulties in the process of implementing this Decree are causing big changes in the automobile market.

This fact suggests that it is very early to have a circular which guides regulations on quality management of automobiles manufactured and assembled. At the same time, relevant ministries and branches need to quickly guide and solve specific difficulties for each enterprise.

On the other hand, businesses also need to determine whether the implementation of regulations is necessary to actively and promptly implement them instead of complaining, proposing changes or failing to do so.

By Nguyễn Hà/Bui Diep

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