Government responds to the Decree 116 on harnessing automobile import

Answering questions regarding Decree No. 116/2017/ND-CP regulating the conditions for manufacturing, assembly and import of automobiles and trade in automobile warranty and maintenance services at the Government's regular press conference held on February 02, 2018, Minister, Chairman of the Government Office Mai Tien Dung said that since the Decree took effect, the total value of imported cars into Vietnam has decreased by 38 per cent.

Recently, a number of embassies and organizations have proposed the Vietnam’s Prime Minister direct ministries to review the Decree. The Vietnam Automobile Manufacturers’ Association (VAMA) has four times submitted letters of recommendation to the Government to remove the difficulties, saying that the provisions in the Decree are unreasonable.

Some associations such as the Japan Business Association in Vietnam and FDI automobile joint ventures have repeatedly asked to delay the implementation of the Decree for at least six months.

The Mobility Sector Committee under Eurocham also expressed its expectation about the issuance of a circular guiding the implementation of the Decree.

There are now three major issues related to the Decree in which enterprises, as well as organizations, are interested.

Firstly, regarding the class certificate of imported automobiles granted by foreign competent authority and association, the Minister stated that this certificate is not issued by the foreign government’s bodies but specialised associations and societies. This aims to ensure the origin, quality and value of automobiles.

At the same time, the associations and societies who grant the certificate shall take the responsibility of recalling automobiles in case of defects incurred in the production process in order to ensure the interests of auto-makers and customers.

Minister Dung also acknowledged the late issuance of the circular guiding the implementation of the Decree has caused lots of difficulties to automobile importers.

Secondly, in the past, only the first shipment of each model would be inspected or tested; however, it now is conducted on every batch of automobiles to be imported.

Automobile importer will have to bear additional costs and spend more time on automobile test and inspection. Obviously, it is customers who shall cover these costs because the enterprises always want to ensure their profit.

This issue is under consideration, Minister Dung said.

Lastly, the Decree also requires auto-makers to set up an 800-meter testing road of which the flat road has the minimum length of 400 meters.

Manufacturers complained that they have to bear more costs including inspection charge, land fee for testing road due to these issues.

Minister Dung said that the Prime Minister has assigned the competent bodies to review such issues to ensure both the domestic production and the compliance with the international treaty.

The provisions of the Decree are considered as a barrier to automobile importers. However, Minister Dung said that all countries now apply the necessary measures to ensure the quality of imported automobiles and protect customers.

In response, the Minister exemplified that Vietnam had imported two batches of BMW cars from Germany. However, in fact, these are used cars which have been restored as new ones to trick customers. Without thorough inspection, consumers will be the most disadvantaged.