Hanoi (VNS/VNA) - The Ministry ofFinance has promised to study and report to the Government recommendations bythe Vietnam Association of Mechanical Industry (VAMI) on policies to promotedomestic automobile production.

The promise was the ministry’s first action inresponse to the association’s series of proposals including a cut in specialconsumption tax on locally-produced parts, a reduction or exemption of importduties on materials used to produce parts and components as well as an extensionto the duration of tax payment guarantees.

The change in the special consumption tax onlocally-produced parts could violate the World Trade Organisation commitment,according to experts from the finance ministry. Thus, it is necessary to reviewand evaluate the implementation of tax laws including special consumption taxand value-added tax. It will submit to the National Assembly amendments andsupplements to the laws.

A representative of Hyundai Thanh Cong Companywas quoted by online newspaper plo.vn saying exemptions from specialconsumption tax for locally-produced auto parts have been applied in SoutheastAsian countries such as Malaysia and Indonesia for a long time.

This is to encourage their domestic autoindustries to invest in parts and components production and to increase locallyproduced products.

Chairman of the Truong Hai Automobile JointStock Company Tran Ba Duong said the exemption would not only facilitatelocalisation but also create more advantages to offer competitive prices andbenefit customers.

Related to the petition to reduce the importtax on materials for parts and component manufacturers, the ministry asked VAMIto provide details of materials that are not domestically available and must beimported. The ministry would co-ordinate with the relevant agencies to studythe handling plan and report to the Government for consideration.

Currently, the auto producers andmanufacturers in Vietnam have to pay material import tariffs of 15-25 percent,which is one the reasons why auto production costs in the country are higherthan those in Thailand and Indonesia, online newspaper plo.vn reported.

As for the VAMI’s proposal to extend theduration of tax payment guarantee, which is a maximum 30 days from the date ofcustoms declaration, the ministry said it will consider amending the Law onExport and Import Duties.

According to the latest statistics from theGeneral Department of Customs, Vietnam spent 78.5 million USD on importing autoparts and components last week from April 13 to April 19.

The imports from Japan were worth 20.9 millionUSD, from the Republic of Korea 15.7 million USD, from China 14.6 million USD,from Thailand 11.2 million USD and from Germany 6.5 million USD, respectively.

The import of auto parts andcomponents from the five markets occupied 88 percent of the country’s totalauto parts and components imports.-VNA