HCMC – The Ministry of Finance has proposed halving the registration fee for locally assembled or manufactured cars from November 15 until mid-May next year.
The proposal was included in a draft decree that the ministry is discussing with the relevant agencies before submitting it to the Government.
However, if the Government approves the draft decree after November 11, the fee cut will be applied from December 1 to the end of May next year.
According to the Ministry of Finance, the fee cut will encourage domestic auto assemblers and manufacturers to resume their supply chains and expand investment. In addition, itimported will boost auto sales, thus raising the State budget revenue.
Last year, the registration fee cut sent the fee revenue plunging by over VND7.3 trillion but helped the State budget revenue rise by VND14.1 trillion.
In the first half of last year, when the registration was not halved, more than 102,900 locally assembled or manufactured cars were registered. The figure doubled in the second half of the year.
In the draft decree, the Ministry of Finance also pointed out challenges in the registration fee cut. Many countries that are members of the General Agreement on Tariffs and Trade and do not assemble or manufacture autos in Vietnam may ask the country to explain the policy.
However, the policy will be valid for six months as a short-term solution to support domestic auto firms hit by the Covid-19 pandemic. Moreover, most foreign auto firms, such as Toyota, Mazda, Hyundai, and Kia, have assembly or manufacturing plants in Vietnam, so the policy will benefit them.
Due to the pandemic, local auto assemblers and manufacturers have encountered heavy losses as their auto sales have plunged. More than 160,000 autos were registered in the first half of this year, down 24% over the second half of last year.
Last quarter, the number of registered cars reached an average of 16,200 units per month, equivalent to half of the average monthly number in the second quarter.
On October 25, the Vehicles Importers Vietnam Association, which groups importers of CBUs from Audi, Porsche, Aston Martin, Jeep, Volkswagen, Volvo, Jeep, Jaguar Land Rover, Ferrari, Subaru and Maserati, proposed the Government lower the registration fees for imported CBU cars.
They said it was unfair that the registration fee cut applies only to locally assembled or manufactured cars as the pandemic has hit all auto trading, assembly and importing firms.