Decision No. 20/2003/QD-BKHCN dated July 31, 2003 of the Ministry of Science and Technology promulgating the regulation on automobile manufacture and assembly classification

DECISION

PROMULGATING THE REGULATION ON AUTOMOBILE MANUFACTURE AND ASSEMBLY CLASSIFICATION

THE MINISTER OF SCIENCE AND TECHNOLOGY

Pursuant to the 1999 Ordinance on Goods Quality;

Pursuant to the Government's Decree No. 54/2003/ND-CP dated May 19, 2003 defining the functions, tasks, powers and organizational structure of the Ministry of Science and Technology;

Pursuant to the Prime Minister's Decision No. 175/2002/QD-TTg dated December 3, 2002 approving the strategy on development of Vietnam's automobile industry till 2010, and the vision till 2020;

Pursuant to the Prime Minister's direction in Notice No. 82/TB-VPCP dated June 16, 2003;

At the proposal of the general director of the General Department of Standardization, Metrology and Quality Control,

DECIDES:

Article 1. To promulgate together with this Decision the Regulation on automobile manufacture and assembly classification.

Article 2. This Decision takes effect 15 days after its publication in the Official Gazette and replaces Decision No. 17/TDC-QD dated February 17, 1992, Decision No. 182/TDC-QD dated August 13, 1994 and Decision No. 176/TDC-QD dated July 18, 1995 of the General Department of Standardization, Metrology and Quality Control.

Article 3. The general director of the General Department of Standardization, Metrology and Quality Control and the concerned organizations and individuals shall have to implement this Decision.

REGULATION

ON AUTOMOBILE MANUFACTURE AND ASSEMBLY CLASSIFICATION
(Promulgated together with the Science and Technology Minister's Decision No. 20/2003/QD-BKHCN dated July 31, 2003)

1. General provisions:

1.1. This Regulation shall apply to enterprises which are approved and licensed by the competent State agencies for operation in the field of automobile manufacture and assembly in Vietnam.

1.2. Automobile assembly means the use of all brand-new parts to assemble assorted automobiles according to their designs which bear domestic or foreign brands, in compliance with the current regulations on quality control, industrial property, technology transfer and other relevant law provisions.

1.3. Interpretation of terms:

1.3.1. Automobiles mean land-road motorized vehicles with structures and technical specifications prescribed in the Vietnamese standard TCVN 6211: 1996 - Land-road transport means - type - terms and definitions (or TCVN amending and/or supplementing this standard).

1.3.2. Parts are construed as details, groups of details and parts to be assembled into complete automobiles.

1.3.3. Localized parts mean those manufactured or turned out at home as substitutes for import parts.

1.3.4. CKD assembly means the use of imported parts in complete sets for assembly into complete automobiles.

1.3.5. IKD assembly means the use of imported parts not in complete sets and localized parts for assembly into complete automobiles.

1.3.6. Automobile localization rate means the percentage of localized parts in complete automobiles.

1.3.7. Target localization rate means the localization rate which must be attained in each period, prescribed in the strategy on development of Vietnam's automobile industry till 2010 and the vision till 2020, approved by the Prime Minister in Decision No. 175/2002/QD-TTg dated December 3, 2002, concretely as follows:

- Regarding common-use vehicles: They must attain a localization rate of 40% by 2005 and 60% by 2010 (particularly, the localization rates of engines and gear boxes must be 50% and 90% respectively).

- Regarding special-use vehicles: They must attain a localization rate of 40% by 2005 and 60% by 2010.

- Regarding high-class vehicles: Tourist cars manufactured by joint-ventures must attain a localization rate of between 20 and 25% by 2005 and between 40 and 45% by 2010. High-class buses must attain a localization of 20% by 2005 and between 35 and 40% by 2010.

2. Requirements for the CKD automobile assembly:

2.1. The CKD automobile assembly must satisfy the following requirements:

- Automobile body: In knocked down pieces, not yet welded, riveted and coated with electrostatic paint. In special cases, the competent State agencies' consents are required.

- Automobile frame: Already assembled but not yet coated with electrostatic paint. Particularly, vehicle frames of a length of 3.7 meters or more shall be permitted to be coated with electrostatic paint before being imported.

- Engines: In complete units and may be assembled together with clutch sets and gear boxes.

- Transmission: Whether or not assembled together with the brake system.

- Electric, lamp and comforts systems: System of electric wire, panels, lamps and comforts in automobiles shall be left unassembled.

2.2. Appendices 1, 2, 3 and 4 contain examples of the structural separateness of parts in the CKD assembly type for assorted automobiles. Parts of different structures shall not be taken into account when determining automobile assembly mode.

3. Requirements for the IKD automobile assembly:

The IKD automobile assembly mode has the same separateness of parts as the CKD automobile assembly mode but involves a certain portion of localized parts.

Enterprises should strive to attain the target localization rate mentioned in Item 1.3.7 above. Appropriate promotion and management measures to push enterprises to achieve these targets shall be provided for and promulgated by the competent State management agencies.

4. Method for determining the localization rate:

The localization rate is determined according to the following formula:

N = Z - I

In which:

- N: is the localization rate of automobiles.

- Z = 100%, is the value percentage of complete automobiles.

- I is the percentage (%) of the total value of imported parts.

The Ministry of Science and Technology shall prescribe the percentage of value of parts in complete sets of each type of automobile in another legal document.

5. Organization of implementation:

The Ministry of Science and Technology shall assign the General Department of Standardization, Metrology and Quality Control to organize the guidance and inspection of the implementation of these provisions by automobile-manufacturing and/or assembling enterprises