Vietnam mulls tax incentives for locally-made auto parts

The policy would apply for 5-10 years, covering cars with 9 seats or under, Phan Van Chinh, deputy head of the Export-Import Department under the Ministry of Industry and Trade, said at a meeting on car imports in Hanoi Tuesday.

The department is also considering tax incentives for electric cars to promote the production and consumption of such vehicles, he said.

The proposed policy would support large projects on manufacturing and assembling cars in the country, Chinh  added.

The ministry has made this suggestion several times in the past, but it has never become an actual policy yet.

Vietnam last year issued a decree to limit car imports, seeking to promote local auto manufacturing. As a result, the number of imported cars fell 20 percent, while VinFast, a unit of conglomerate Vingroup, became the country’s first fully fledged automaker in October by introducing its first two car models.

The local supporting industry for car manufacturing remains weak compared to other countries in the region. There are only 358 such businesses in the country's auto industry compared to 2,500 in Thailand, according to the trade ministry. Vietnam imports over 90 percent of its auto parts, it said.

In the first seven months of this year, Vietnam imported 88,000 cars, a year-on-year surge of 366 percent in volume and 319 in value.