Decision No. 1168/QD-TTg dated July 16, 2014, approval for strategy to develop automotive industry in VietNam by 2025, orientation towards 2035

DECISION

APPROVAL FOR STRATEGY TO DEVELOP AUTOMOTIVE INDUSTRY IN VIETNAM BY 2025, ORIENTATION TOWARDS 2035

THE PRIME MINISTER

Pursuant to the Law on Government organization dated December 25, 2001;

At the request of The Ministry of Industry and Trade

DECIDE:

Article 1. The approved strategy to develop the automotive industry in Vietnam by 2025, the orientation towards 2035 includes:

1. Viewpoints

a) The automotive industry plays an important role in the enhancement of industrialization and modernization. It needs developing by stable, consistent and long-term policies.

b) The automotive industry is developed based on the development of the potential of the enterprises in all economic sectors in order to satisfy the domestic needs and ensure national security.

c) By 2035: The domestic automotive industry shall ensure the overall socio-economic effectiveness as well as requirements for the environment and trend in economizing on the energy, which satisfies the domestic needs and takes part in the world car production chain and take part in the production chain of vehicles in the world whose export value is high.

2. Strategy

Enhance the potential of all economic sectors; focus on the cooperation with large automotive manufacturers in the world to develop the automotive industry as well as the traffic infrastructural development, satisfy the domestic needs for the types of automotives that have competitive advantage, suits the consumer policy and requirements for the environment protection and energy-saving; enhance the competitiveness to become a supplier of components and spare parts in the production chain of the automotive industry in the world; enhance the economic structural change towards the modernity.

Groups of priority products:

a) With regard to trucks and passenger cars with 10 seats or more

Focus on developing multi-use pickup trucks facilitating the agricultural production, medium and short-distance passenger cars providing local and intercity transportation that suit the domestic ground conditions and traffic infrastructure with reasonable prices, security and convenience.

b) With regard to cars with 9 seats or fewer.

Focus on the personal small cars which are economical and suitable to the traffic infrastructure and incomes of the citizens.

c) With regard to specialized vehicles

Produce and assemble some types of vehicles in huge demand (concrete mixers, tanker trucks, vehicles serving national security and defense); encourage the manufacture of small multi-task agricultural vehicles (combining goods transfer with one or more than one feature such as soil cultivation, pumping, generation of electricity, pesticide spray…) to satisfy the needs of the rural and mountainous people.

d) With regard to the ancillary industry

Approach and apply the technology to the production of important components and spare parts such as actuators, gear-boxes, engines, bodies … for some types of vehicles; cooperate with the large automobile manufacturers in choosing the components and spare parts that can be produced in Vietnam to play the key role in the global production-supply chain, which serves as a basis to invest in the modern technology and produce imported goods.

3. Objectives

b) General objectives

Develop the automotive industry in Vietnam so that it can become an important industry, satisfy the domestic needs for the types of vehicles that have competitive advantage, take part in the export, encourage the development of other industries and competitiveness to become a supplier of components and spare parts in the production chain of vehicles in the world.

b) Specific objectives

- Number of vehicles produced in Vietnam

+ By 2020, the expected total number of vehicles is 227,500 vehicles, among which approximate 114,000 cars with 9 seats or fewer, 14,200 cars with 10 seats or more, 97,960 trucks, 1,340 specialized vehicles.

+ By 2025, the expected total number of vehicles is 466,400 vehicles, among which approximate 237,900 cars with 9 seats or fewer, 29,100 cars with 10 seats or more, 197,000 trucks, 2,400 specialized vehicles.

+ By 2035, the expected total number of vehicles is 1,531,400 vehicles, among which approximate 852,600 cars with 9 seats or fewer, 84,400 cars with 10 seats or more, 587,900 trucks, 6,500 specialized vehicles.

- Ratio of number of produced and assembled vehicles to domestic needs:

+ By 2020, domestically produced and assembled vehicles are expected to account for 67%, among which cars with 9 seats or fewer account for 60%, cars with 10 seats or more account for 90%, trucks account for 78% and specialized vehicles account for 15%.

+ By 2025, domestically produced and assembled vehicles are expected to account for 70%, among which cars with 9 seats or fewer account for 65%, cars with 10 seats or more account for 92%, trucks account for 78% and specialized vehicles account for 18%.

+ By 2035, domestically produced and assembled vehicles are estimated to account for 78%, among which cars with 9 seats or fewer account for 75%, cars with 10 seats or more cars account for 94%, trucks account for 82% and specialized vehicles account for 23%.

- Development of the ancillary industry:

+ By 2020: basically establish the auto ancillary industry. Provide 35% of the components and spare parts (calculated in value) for the domestic production and assembly of the vehicles.

+ From 2021- 2025: Produce some important components of the actuators, gear-boxes, engines (especially for passenger cars and light duty trucks), take part in the supply system of the ancillary products in the global value chain of the automotive industry in the world.

+ From 2026 to 2035: Continue to develop the auto ancillary industry, become a major supplier of components and spare parts to the international and regional automotive industry. Provide more than 65% of the components and spare parts (calculated in value) for the domestic production and assembly of the vehicles.

Ratio of domestic production value to the automotive production: by 2020: cars with 9 seats or fewer accounts for 30- 40%, cars with 10 seats or more account for 35-45%, trucks account for 30-40%, specialized vehicles account for 25 -35% ; by 2025: cars with 9 seats or fewer account for 40- 45%, cars with 10 seats or more account for 50- 60%, trucks account for 45 -55%, specialized vehicles account for 40 -45%; by 2035: cars with 9 seats or fewer account for 55 - 60%, cars with 10 seats or more account for 75 - 80%; trucks account for 70 - 75%, specialized vehicles account for 60 - 70%.

- With regard to export:

+ By 2020, the expected total number of vehicles is 20,000 vehicles, among which approximate 5,000 cars with 9 seats or fewer, 5,000 cars with 10 seats or more and 10,000 trucks. The export value of components and spare parts shall approximate USD 4 billion.

+ By 2025, the expected total number of vehicles is 37,000 vehicles, among which approximate 15,000 cars with 9 seats or fewer, 7,000 cars with 10 seats or more and 15,000 trucks. The export value of components and spare parts shall approximate USD 5 billion.

+ By 2035, the expected total number of vehicles is 90,000 vehicles, among which approximate 50,000 cars with 9 seats or fewer, 15,000 cars with 10 seats or more, and 25,000 trucks. The export value of components and spare parts shall approximate USD 10 billion.

4. Orientation

- Identify and recruit the strategic partners, encourage the investment in large projects to develop the ancillary industry market. Encourage producing the eco-friendly vehicles (economical vehicles, hybrid vehicles, vehicles using biofuels, electric vehicles...) to meet exhaust standards following the roadmap approved by the Prime Minister.

- Improve the technology to enhance the product quality which is conformable with the international standard.

- Establish some automotive industrial centers/complexes by rearrangement of the production. Enhance the cooperation among vehicle manufacturers and assemblers, enterprises in the ancillary industry, research and deployment establishments and training institutions in all economic sectors to promote the investment effectiveness and specialization.

- Complete the law system and develop the traffic infrastructure to ensure the traffic safety; enhance the service quality to satisfy the market needs.

5. Some solutions and policies

a) Solutions

- Formulate the Planning of automotive industry development, specify some contents of this Strategy.

- Draw up the action Programme/Plan within the scope of the strategic partnership between Vietnam and countries having developed automotive industry.

- Choose some important automobile parts in the value chain to put them on the List of key mechanical engineering products.

- Consider providing necessary business conditions for imported vehicles as well as achieve minimum technical standards applied domestically produced vehicles to ensure the benefits of the consumers, in conformity with international practice.

b) Policies

- Review and consider reforming the policies on duties and fees (import duties on CBU vehicles, components and spare parts; special excise duty…) to ensure the feasibility and stability, which is conformable with the international commitments during the integration.

- Review and adjust the policies on long-term loans granted by the State at a interest rate suitable for each stage with regard to the projects on the production of components and spare parts of the vehicles.

- Complete and ensure the uniformity of the relevant mechanism and policies to achieve the development objectives of the automotive industry, especially the investment projects on the production of the eco-friendly vehicles.

- Ensure the consistent and stable policy system for at least 10 years which is conformable with the integration trends to earn the trust of customers and manufacturers, which serves as a basis for the investment activities.

Article 2. Implementation

1. The Ministry of Industry and Trade shall

- Take charge and cooperate with the Ministry of Finance and relevant Ministries and regulatory authorities in drawing up a draft of the Decision of the Prime Minister on the policies to implement the Strategy to develop the automotive industry in Vietnam.

- Design the Strategy to develop the automotive industry in Vietnam by 2030 and request the Prime Minister to consider approving.

- Announce and implement this Strategy.

- Identify the strategic partners in the development of the automotive industry and ancillary industry to take part in the value chain in order to satisfy the domestic needs and export.

2. The Ministry of Planning and Investment shall

Take charge and cooperate with The Ministry of Industry and Trade and relevant Ministries and regulatory authorities in building the policy system to attract the foreign investments to develop the automotive industry.

3. The Ministry of Finance shall

Cooperate with the Ministry of Industry and Trade and relevant Ministries and regulatory authorities in checking and introducing the policies on credit incentives, tax and suitable fees in order to encourage the development of the automotive industry and achieve the targets of the Strategy.

4. The Ministry of Science and Technology shall

Take charge and cooperate with the relevant Ministries and regulatory authorities in promulgating the technical standards of the vehicles manufactured in Vietnam conformable to the global standards; building the technical barrier to the imported vehicles.

Article 3. The Ministries, regulatory authorities and the People's Committees of central-affiliated cities and provinces shall ensure the uniformity between the Strategy to develop the automotive industry and the Strategies, Planning and socio-economic tasks of each Ministry, regulatory authority and local authority according to their functions and tasks during the implementation of this Strategy. The new policies that are issued must ensure the inheriting principles and comply with the approved policies on the development of the automotive industry.

Article 4. This Decision takes effect as of the signing date and replaces the Decision No. 175/2002/QD-TTg dated December 03, 202 of the Prime Minister on the approval for the Strategy to develop the automotive industry in Vietnam by 2010, the orientation towards 2020.

Article 5. Ministers, heads of ministerial-level agencies, government-attached agencies, presidents of People's Committees of provinces central-affiliated cities and provinces, heads of the relevant agencies are responsible for the implementation of this Decision./.