Decision No. 229/QD-TTg dated February 04, 2016 of the Prime Minister on the mechanism and policies to implement the strategy and master plan on Vietnam’s automobile industry development

THE PRIME MINISTER

Decision No. 229/QD-TTg dated February 04, 2016 of the Prime Minister on the mechanism and policies to implement the strategy and master plan on Vietnam’s automobile industry development

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Investment dated November 26, 2014;

Pursuant to the Government’s Decree No. 111/2015/ND-CP dated November 03, 2015 on development of supporting industries;

Pursuant to the Prime Minister’s Decision No. 1168/QD-TTg dated July 16, 2014 on approval for the Strategy for development of Vietnam automobile industry towards 2025, with a vision towards 2035;

Pursuant to the Prime Minister’s Decision No. 1211/QD-TTg dated July 24, 2014 on approval for the Plan for development of Vietnam automobile industry towards 2020, with a vision towards 2030;

At the request of the Minister of Industry and Trade;

DECIDES:

Article 1. Scope of regulation

This Decision regulates the mechanism, policies to implement the Strategy on Vietnam’s automobile industry development through 2025, with a vision towards 2035 and the Plan for development of Vietnam automobile industry through 2020, with a vision towards 2030. Policies defined in this Decision shall be consistently implemented in a minimum period of 10 years on course for integration trends in order to develop the automobile industry of Vietnam.

Article 2. Subject of application

1. Agencies, organizations and individuals that invest, produce, purchase and use priority vehicle types as defined in the Prime Minister s Decision No. 1168/QD-TTg dated July 16, 2014 on approval for the Strategy for development of Vietnam automobile industry towards 2025, with a vision towards 2035. Such vehicle types include:

a) General-purpose light truck that is used in agriculture and rural areas and has maximum load capacity of 3 tons;

b) Medium-duty and light-duty passenger vehicle adapted for local terrains and traffic infrastructure for inter-provincial and urban routes, safety and convenience at reasonable cost price;

c) Small personal car with 9 or fewer seats, with maximum cylinder capacity of 1,500 cm³and fuel efficiency at reasonable price for consumers;

d) Special use vehicles: Concrete transport truck, tank truck, fire truck, ambulance, garbage truck and special use vehicles for national security and defense purpose;

dd) Small multifunctional vehicle (for transportation of goods with integrated feature(s) for ploughing, pumping water, generating electricity, spraying pesticide, etc) for consumer use in rural and mountainous areas.

2. Agencies, organizations and individuals that invest, manufacture and use products from automotive supporting industries.

Article 3. Support policy

1. Credit investment and exportation policy

a) Local enterprises can apply for loans from the Vietnam Development Bank for their investment projects concerning machinery and equipment to manufacture automotive parts and assemble automobiles and special use vehicles in accordance with regulations on the state s development investment credits.

b) Local enterprises that engage in global supply chains for production and exportation of parts and CBU (complete built up) vehicles are eligible for: Export credit policy as per current regulations.

2. Stimulus and market development supports policy

a) Enterprise produces priority vehicle shall receive trade promotion supports according to regulations of the National trade promotion program.

b) Agencies, organizations and individuals that purchase small multifunctional vans with maximum load capacity of 3 tons for use in agriculture and rural areas and small multifunctional farm vehicles will receive support under Decision No. 68/2013/QD-TTg dated November 14, 2013 of the Prime Minister on support policy for reduction of agricultural loss.

c) Governmental finances are available for procurement funded by state budget or development credits and business projects using priority vehicles that are purchased:

- Using national competitive bidding for priority vehicle types produced domestically.

- If priority domestically manufacturable vehicles are  purchased through international bidding or CBU imports, procurement cost and operating cost shall not be eligible for supports from the state budget.

3. Investment policy for research, development, application of science and technology and human resources training

a) Science and technology finances are available for research, development and application of science and technology concerning priority vehicle types as per regulations.

b) Financial support is available for part(s) of cost(s) for human resources training, hiring local and foreign technical consultants with regard to production of priority vehicle types.

Article 4. Incentive policy

1. Import tax

a) Import duty incentive shall be granted to imports that form fixed assets for projects of manufacture automotive parts or vehicles manufacture and assembly in industrial parks, economic zones or high-tech parks according to regulations on investment, import tax and export tax.

b) Parts of engine, gearbox, motion system and components produced domestically that meet the requirements of quality and quantity: Ceiling rate of import duties shall be imposed according to Vietnam’s tax-related commitments as per regulations.

Ceiling rate of MFN tariff shall be levied on priority vehicles and domestically manufacturable automobiles in accordance with the Strategy and Plan for the development of Vietnam automobile industry. Other FTAs shall be implemented as per commitments.

2. Corporate income tax

Large-scale investment projects that annually manufacture over 50,000 priority automobiles, or manufacture engine parts, gearboxes and motion system: Prime Minister shall determine incentive(s) for each project.

3. Land policy

a) Investment projects that produce automotive parts shall be eligible for land incentives according to legal regulations on supporting industry.

b) Large-scale investment projects that manufacture priority vehicle and parts of engine, gearbox and motion system on large scale: Prime Minister shall consider and determine land rent incentive (exemption or reduction) for each project.

Article 5. Other policies

1. Incentive and stimulus policy for investment projects for production of priority vehicle types.

Prime Minister shall consider and determine support and incentive, as per investment laws, for each project that produce or assemble priority vehicles on a grand scale.

2. Policy for development of supporting industries

Stimulus mechanism and policy for automotive parts manufacture and assembly shall adhere to legal regulations on supporting industry.

3. Inspection of declarations of customs value of CBU vehicles and components imported shall be stricter.

4. Market surveillance, management of the importation of engines and automobiles, activities against smuggling and commercial fraud shall be intensified.

5. High environmental fee shall impose on vehicles whose cylinder capacity exceeds 3,000 cm³.

Article 6. Implementation provisions

1. Ministry of Industry and Trade:

a) Summarize and inspect the implementation of the Strategy and Plan for Vietnam automobile industry development, cooperate and guide provincial authorities to implement investment projects for production and assembly of automobiles and automotive supporting industries in an effective manner.

b) Issue technical regulations on facilities of domestic automobile producers in conformity to global standards and on facilities of importers of CBU vehicles.

2. Ministry of Finance

a) Propose the special consumption tax on automobiles with 9 or fewer seats to the Government for its presentation of such tax to the National Assembly for promulgation, as follows: Establish smaller categories, reduce the special consumption tax rate on priority consumer cars (with low cylinder capacity, low fuel consumption and small size suitable for current traffic conditions and consumers finance),levy a high and extremely high special consumption tax rate on automobiles with 9 or fewer seats on which a high absolute duty is determined and vehicles that have cylinder capacity of over 3,000 cm³, consume much fuel, come in large size not fitted for current traffic conditions and consumers’ finance.Moreover, special consumption tax rates on other vehicle types shall be adjusted accordingly.

b) Study and revise import duty rates on vehicles within authority in accordance with the approved Strategy and Plan for development of Vietnam automobile industry.

c) Study and impose higher environmental fee on vehicles with cylinder capacity of over 3,000 cm³as per the Prime Minister’s Decision No. 1211/QD-TTg dated July 24, 2014 on approval for the Plan for development of Vietnam automobile industry.

3. Ministry of Transport

a) Cooperate with Ministries, agencies, provincial People s committees to study and propose solutions concerning traffic, infrastructure and environment in order to implement mechanisms and policies in consistent and effective manners to accomplish the approved Strategy and Plan for development of Vietnam automobile industry.

b) Cooperate with relevant ministries and agencies to issue regulations on quality inspection for imported vehicles upon customs clearance in conformity to current standards and regulations.

4. Ministry of Science and Technology

a) Cooperate with relevant organizations to implement Point a, Section 3, Article 3 of this Decision.

b) Cooperate with relevant ministries and agencies to promulgate technical regulations and standards on vehicles imported and produced domestically in conformity to international standards.

c) Study and establish national standards on fuel-saving vehicles.

Article 7.This Decision takes effect on the signing date.

Article 8.Ministers, Heads of ministerial-level agencies, Heads of governmental agencies, Chairpersons of provincial People s Committees shall be responsible for implementing this Decision./.

Deputy Prime Minister

Hoang Trung Hai