Industry Ministry admits failure in developing auto industry. So what’s next?

Last update 12:00 | 05/06/2017
VietNamNet Bridge – The Ministry of Industry and Trade (MOIT) has admitted that the plan to develop an automobile industry of Vietnam has failed, but it still insists on protecting domestic assembling enterprises which work for foreign invested enterprises.vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, auto industry, car price, AFTA

MOIT said the car selling price is twice as much as the price in other regional countries, while the locally made content ratio is still lower than the targeted level.

The localization ratio, according to Nguyen Khac Trai from the Hanoi University of Technology, is just 5-7 percent.

Tran Huu Nhan from the HCMC University of Technology believes the reason behind the failure of the automobile industry development was inconsistent policy.

When developing automobile industry, state agencies needed to calculate the output and foresee market consumption. Meanwhile, the Vietnamese market is small with many product lines.

“Our policies cannot settle the problems to the every root,” he said. “Vietnam needs to have new thinking in developing the automobile industry.”

The Ministry of Industry and Trade has admitted that the plan to develop an automobile industry of Vietnam has failed, but it still insists on protecting domestic assembling enterprises which work for foreign invested enterprises.

Vietnam should not try to undertake all steps of the automobile manufacturing process. It would be better to focus on certain links in the process.

“Instead of trying to create a product bearing Vietnamese brand, Vietnam should only get involved in some links of the value chain,” he said. “If Vietnam still insists on making cars from A to Z, it will never catch up with developed countries.”

While many analysts criticize foreign-invested automobile enterprises for breaking commitments on gradually increasing the localization ratios and helping develop the Vietnam’s automobile industry, MOIT still intends to continue giving investment incentives to enterprises.

At a meeting with automobile enterprises in February 2017, MOIT put forward three solutions to develop the automobile industry in the time to come.

First, creating a market for domestic automobile manufacturers and protecting the market in a reasonable way. Second, supporting manufacturers to cut production costs and improve competitiveness. Third, developing supporting industries.

Nhan commented that protecting and giving incentives to domestic automobile manufacturers is not a good choice for now.

Elaborating on this, he said though the policies may benefit enterprises, no breakthrough would be made in the automobile industry if the products are not welcomed.

“The policies on local production protection and enterprise support are not likely to bring high efficiency to the industry,” he said.

Meanwhile, Trai from the Hanoi University of Technology, said only when the economy develops with better human resources will the automobile industry develop.

“In the current conditions of Vietnam, we cannot have an automobile industry. I think it will only form in 20 years,” he said.

 
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This entry was posted in Economics - Kinh tế and tagged , by Trần Đình Hoành. Bookmark the permalink.

About Trần Đình Hoành

I am an attorney in the Washington DC area, with a Doctor of Law in the US, attended the master program at the National School of Administration of Việt Nam, and graduated from Sài Gòn University Law School. I aso studied philosophy at the School of Letters in Sài Gòn. I have worked as an anti-trust attorney for Federal Trade Commission and a litigator for a fortune-100 telecom company in Washington DC. I have taught law courses for legal professionals in Việt Nam and still counsel VN government agencies on legal matters. I have founded and managed businesses for me and my family, both law and non-law. I have published many articles on national newspapers and radio stations in Việt Nam. In 1989 I was one of the founding members of US-VN Trade Council, working to re-establish US-VN relationship. Since the early 90's, I have established and managed VNFORUM and VNBIZ forum on VN-related matters; these forums are the subject of a PhD thesis by Dr. Caroline Valverde at UC-Berkeley and her book Transnationalizing Viet Nam. I translate poetry and my translation of "A Request at Đồng Lộc Cemetery" is now engraved on a stone memorial at Đồng Lộc National Shrine in VN. I study and teach the Bible and Buddhism. In 2009 I founded and still manage dotchuoinon.com on positive thinking and two other blogs on Buddhism. In 2015 a group of friends and I founded website CVD - Conversations on Vietnam Development (cvdvn.net). I study the art of leadership with many friends who are religious, business and government leaders from many countries. In October 2011 Phu Nu Publishing House in Hanoi published my book "Positive Thinking to Change Your Life", in Vietnamese (TƯ DUY TÍCH CỰC Thay Đổi Cuộc Sống). In December 2013 Phu Nu Publishing House published my book "10 Core Values for Success". I practice Jiu Jitsu and Tai Chi for health, and play guitar as a hobby, usually accompanying my wife Trần Lê Túy Phượng, aka singer Linh Phượng.

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