Decision No. 1168/QD-TTg dated July 16, 2014 of the Prime Minister approving the Strategy for development of Vietnam’s automobile industry through 2025, with a vision toward 2035

DECISION

Approving the Strategy for development of Vietnam’s automobile industry through 2025, with a vision toward 2035

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

At the proposal of the Ministry of Industry and Trade,

DECIDES:

Article 1.To approve the Strategy for development of Vietnam’s automobile industry through 2025, with a vision toward 2035, with the following principal contents:

1. Viewpoints

a/ The automobile industry is an industry that creates an important motive force for promoting industrialization and modernization and should be encouraged through stable, consistent and long-term development policies.

b/ To develop the automobile industry on the basis of drawing upon the potential of enterprises of all economic sectors in order to step by step meet the country’s domestic demand and defense and security requirements.

c/ By 2035, the automobile industry will ensure overall socio-economic efficiency, meet environmental requirements, follow the trend of energy conservation, satisfy domestic demand and participate in the world’s automobile manufacturing chain, and achieve high export value.

2. Strategy

To bring into play the internal resources of all economic sectors in the country while attaching importance to association and cooperation with the world’s large automobile manufacturing groups for developing the automobile industry in synchrony with developing transport infrastructure to basically meet the domestic demand for types of vehicles with competitive edge in conformity with consumption policy and environmental protection and energy conservation requirements; to raise competitiveness to become a supplier of components and parts in the world’s automobile manufacturing chain; and to create a motive force for promoting the restructuring of the national economy toward modernity.

Groups of priority products:

a/ For trucks and passenger cars of 10 seats or more

To attach importance to developing multi-utility small trucks to serve agricultural production and rural areas and medium- and short-distance passenger cars running on inter-provincial and -district routes and in inner urban areas, etc., which are suitable to local terrain conditions and transport infrastructure, ensuring reasonable cost, safety and comfort.

b/ For passenger cars of up to 9 seats

To focus on energy-efficient small-sized personal cars suitable to transport infrastructure and people’s incomes.

c/ For special-use vehicles

To manufacture and assemble a number of types of vehicles with great demand (concrete transport trucks, tank trucks, and vehicles serving national defense and security, etc.); to encourage the manufacture of multi-utility small agricultural vehicles (for cargo transportation in combination with soil preparation, water pumping, power generation, pesticide spraying, etc.) to meet the demands of rural and mountainous inhabitants.

d/ For the supporting industry

To access and apply technologies to manufacturing important details and components, such as transmission systems, gearboxes, engines, body shells, etc., for a number of types of vehicles; to increase cooperation with large automobile firms in selecting types of parts and components which Vietnam can manufacture and assume the role of a link in the global manufacturing-supply chain and on that basis, to invest in advanced technologies to manufacture these parts and components for export.

3. Objectives

a/ Overall objective

To build Vietnam’s automobile industry into an important industry meeting the domestic market demands for types of vehicles with competitive edge and participating in export, thus creating a motive force to promote the development of other industries and raise competitiveness to become a supplier of components and parts in the world’s automobile manufacturing chain.

b/ Specific targets

- Number of domestically manufactured vehicles:

+ By 2020, the total number of vehicles will reach approximately 227,500, including around 114,000 cars of up to 9 seats, around 14,200 cars of 10 or more seats, around 97,960 trucks, and around 1,340 special-use vehicles.

+ By 2025, the total number of vehicles will reach approximately 466,400, including around 237,900 cars of up to 9 seats, around 29,100 cars of 10 or more seats, around 197,000 trucks, and around 2,400 special-use vehicles.

+ By 2035, the total number of vehicles will reach approximately 1,531,400, including around 852,600 cars of up to 9 seats, around 84,400 cars of 10 or more seats, around 587,900 trucks, and around 6,500 special-use vehicles.

- Rates of domestically manufactured and assembled vehicles to domestic demand:

+ By 2020, the number of domestically manufactured and assembled vehicles will meet around 67% of domestic demand; specifically, cars of up to 9 seats will meet 60%, cars of 10 or more seats, around 90%, trucks, around 78%, and special-use vehicles, around 15%.

+ By 2025, the number of domestically manufactured and assembled vehicles will meet around 70% of domestic demand; specifically, cars of up to 9 seats will meet around 65%, cars of 10 or more seats, around 92%, trucks, around 78%, and special-use vehicles, around 18%.

+ By 2035, the number of domestically manufactured and assembled vehicles will meet around 78% of domestic demand; specifically, cars of up to 9 seats will meet around 75%, cars of 10 or more seats, around 94%, trucks, around 82%, and special-use vehicles, around 23%.

- Development of the supporting industry:

+ By 2020, to basically form a supporting industry for automobile manufacture, striving to meet around 35% (calculated in value) of the demand for components and parts for the domestic manufacture and assembly of automobiles.

+ During 2021-2025, to commence manufacturing a number of important details in transmission systems, gearboxes and engines (especially for passenger cars and light trucks), and step by step participate in the system of supply of supporting products in the global value chain of the world automobile industry.

+ During 2026-2035, to further develop the supporting industry for automobile manufacture, striving to become an important supplier of different types of components and parts for the regional and world automobile industries and meet over 65% (calculated in value) of the demand for components and parts for the domestic manufacture and assembly of automobiles.

Specific rates of the value of domestic manufacturing in automobile manufacturing: by 2020, 30-40% for cars of up to 9 seats, 35-45% for cars of 10 or more seats, 30-40% for trucks, and 25-35% for special-use vehicles, By 2025, these rates will be 40-45%, 50-60%, 45-55%, and 40-45%, respectively; and by 2035, these rates will reach 55-60%, 75-80%, 70-75%, and 60-70%, respectively.

- Export:

+ By 2020, the total number of exported vehicles will be approximately 20,000, including around 5,000 cars of up to 9 seats, around 5,000 cars of 10 or more seats and around 10,000 trucks. The export value of components and parts will reach around USD 4 billion.

+ By 2025, the total number of exported vehicles will be approximately 37,000, including around 15,000 cars of up to 9 seats, around 7,000 cars of 10 or more seats and around 15,000 trucks. The export value of components and parts will reach around USD 5 billion.

+ By 2035, the total number of exported vehicles will be approximately 90,000, including around 50,000 cars of up to 9 seats, around 15,000 cars of 10 or more seats and around 25,000 trucks. The export value of components and parts will reach around USD 10 billion.

4. Orientations

- To identify and establish strategic partnerships and promote investment in projects which are large enough for creating markets for the supporting industry. To encourage the manufacture of environment-friendly vehicle lines (energy-efficient, hybrid, biofuel-powered and electric vehicles, etc.) to meet the requirements on emission standards according to the Prime Minister-approved roadmap.

- To concentrate investment on renovating and upgrading technologies for raising the quality of products to conform with international standards.

- To form a number of concentrated automobile industrial centers/clusters through  manufacture reorganization. To step up cooperation and association among automobile manufacture and assembly enterprises, supporting industry enterprises, research & development institutions and training institutions of all economic sectors for raising investment efficiency and increasing specialization.

- To improve the legal system and develop transport infrastructure to ensure traffic safety; to improve service quality to meet market requirements.

5. Solutions, mechanisms and policies

a/ Solutions

- To formulate a master plan on development of the automobile industry that concretizes a number of contents of this Strategy.

- To develop programs/plans of action within the framework of strategic partnership relations between Vietnam and countries with developed automobile industry.

- To select a number of important parts in the automobile value chain for inclusion in the list of key mechanical products.

- To study the introduction of necessary business conditions for imported automobiles and, at the same time, improve and supplement essential technical standards for domestically manufactured automobiles in order to protect consumer interests in conformity with international practices.

b/ Mechanisms and policies

- To study, review and reform tax and charge policies (import duty on vehicles in complete units, vehicle components and accessories; excise tax, etc.), ensuring their feasibility and long-term stability in conformity with international commitments in the process of integration.

- To review and adjust the policy on grant of the State’s development investment credit as long-term loans with appropriate interest rates in each period for projects on manufacture of automobile components and parts.

- To synchronously complete relevant mechanisms and policies to achieve the development targets of the automobile industry, especially for investment projects on manufacture of environment-friendly vehicles.

- To ensure consistency and stability of policies for at least 10 years in line with the integration trend in order to build confidence of consumers and manufacturers as a premise for investment activities.

Article 2.Organization of implementation

1. The Ministry of Industry and Trade shall:

- Assume the prime responsibility for, and coordinate with the Ministry of Finance and related ministries and sectors in, drafting a prime ministerial decision on policies for implementing the Strategy for development of Vietnam’s automobile industry.

- Formulate a master plan on development of Vietnam’s automobile industry through 2030 and submit it to the Prime Minister for approval.

- Publicize, and organize the implementation of, this Strategy.

- Identify strategic partners in the development of the automobile industry and supporting industry for participation in the value chain to meet domestic and export demands.

2. The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with the Ministry of Industry and Trade and related ministries and sectors in, devising policies to attract more foreign investment sources for development of the automobile industry.

3. The Ministry of Finance shall coordinate with the Ministry of Industry and Trade and related ministries and sectors in reviewing and proposing appropriate incentive credit, tax and charge policies to encourage development of the automobile industry to attain the objectives set out in this Strategy.

4. The Ministry of Science and Technology shall assume the prime responsibility for, and coordinate with related ministries and sectors in, promulgating technical standards for domestically manufactured automobiles to comply with global standards; and set up technical barriers to automobile import.

Article 3.In the course of directing the implementation of this Strategy, ministries, sectors and provincial-level People’s Committees shall, within their functions and tasks, ensure consistency and synchrony of this Strategy with the strategies, master plans and socio-economic tasks of each ministry, sector and locality, and, when promulgating new policies, adhere to the principles of inheritance of and compliance with the approved policy on development of the automobile industry.

Article 4.This Decision takes effect on the date of its signing and replaces the Prime Minister’s Decision No. 175/2002/QD-TTg of December 3, 2002, approving the Strategy for development of Vietnam’s automobile industry through 2010, with a vision toward 2020.

Article 5.Ministers, heads of ministerial-level agencies or government-attached agencies, chairpersons of provincial-level People’s Committees, and heads of related agencies shall implement this Decision.-

Prime Minister
NGUYEN TAN DUNG