Vietnam imports just six passenger cars in first two weeks of 2018

Vietnam imports just six passenger cars in first two weeks of 2018

Dealerships have been unable to meet new import rules implemented following a trade pact that started this year.

Vietnam imported just six cars with less than nine seats in the first 15 days of 2018, down 616.8 times from the same period last year.

In total, the country imported 60 completely built units (CBUs) in the first fortnight of the year, compared to 5,000 units in the same period last year, according to the General Department of Vietnam Customs.

This year’s imported automobiles have been valued at $5.6 million, falling from $116 million last year.

This drop in imports has been blamed on a new decree that was put in place on January 1, which car dealerships say is nigh-on impossible for them to adhere to.

The decree stipulates that traders should only be permitted to import automobiles if they can provide valid vehicle registration certificates issued by authorities from the countries of origin.

Original quality control certificates for each vehicle and letters of authorization regarding recalls of defective vehicles from the manufacturers are also required, along with copies of quality assurance certificates provided by the countries of origin.

Japanese auto manufacturers have decided to suspend exports to Vietnam following the stringent quality regulations.

Toyota has halted all production for export to the Vietnamese market, Nikkei said in a recent report.

The firm manufactures auto components in Vietnam, but imports of CBUs from Thailand, Indonesia and Japan account for around one-fifth of what it sells in the market, said the report.

Fellow Japanese giant Honda had previously planned to consolidate all production of its SUVs in Thailand to take advantage of a new tariff rule that also took effect this year to cut import tariffs for autos built and sold within the Association of Southeast Asian Nations (ASEAN) from 30 percent to zero.

The company has since abandoned that plan, and production of vehicles intended for the Vietnamese market has been suspended since early January.

In a similar move, Mitsubishi Motors has suspended production in Thailand of its Pajero Sports SUV designed for the Vietnamese market, according to Nikkei.

Vietnam’s ministry back on track with proposal to raise VAT

Its suggestion to raise the tax came out last year and faced strong opposition.
Vietnam’s Minisitry of Finance is once again looking to raise value added tax (VAT) to 11 percent from 2019 and then to 12 percent by 2020 from the current 10 percent.

In August last year, the ministry proposed raising the tax from 10 to 12 percent, starting from 2019.

This time, the reason for the tax increase is just the same: Vietnam’s public debt is rising while raising VAT is in accordance with international norms, the ministry said in a draft proposal.

The average tax rate in European Union countries was 19 percent in 2000 and 21.5 percent in 2014.

It was 18 percent in 2000, 19 percent in 2014 and 2016 in Organization for Economic Co-operation and Development (OECD) countries, the ministry said.

But if the proposal is approved, Vietnam will have the second highest VAT rate in Southeast Asia, only after the Philippines, where goods and services are levied at 18 percent.

VAT rate in Southeast Asian countries

The ministry also pointed out several countries that have the same or lower annual incomes per capita compared to Vietnam but are imposing higher VAT, such as Pakistan with 17 percent, Sri Lanka and Bangladesh 15 percent and Nepal 13 percent.

Last year, the ministry asked to increase a number of different taxes and fees, including the VAT, and its proposed 2-percent VAT hike triggered a heated debate among economists, policymakers and businesses.

The ministry said the raised tax will make up for government revenue losses when Vietnam fulfils its commitment to cut import tariffs under free trade agreements, and help tackle rising public debt, insisting that Vietnam’s VAT is still low.

The World Bank previously forecast that Vietnam’s public debt would climb to 64.4 percent in 2017 and 64.7 percent in 2018.

The final official result showed the debt at VND3,100 trillion ($136.5 billion), a rise of VND300 trillion against last year, or 62.6 percent of the country’s gross domestic product (GDP), down 1 percentage point against 2016 and lower than the target by 2.2 points.

Vietnam’s thirst for beer has global giants eager for a taste of the market

Vietnam is the biggest beer market in Southeast Asia, consuming nearly 4 billion liters last year.

Every evening, large groups of workers and friends gather for lager and snacks at a beer garden along Quang Trung Street in Hanoi.

“Drinking beer is part of our culture,” said Le Tuan Linh, 32, a PR manager at a property business. He and his friends often start the evening with “1-2-3-Zo” before each downing a glass of the amber nectar.

“When we drink beer we can relax, so we often go for a drink after we leave the office,” he said, hoisting a mug of draft beer.

Vietnamese people also have a habit of discussing business over a beer, and the more lager downed, the closer they move to a deal.

Vietnam’s beer-friendly culture stands out compared with other emerging Asian countries like India and Indonesia. In Hanoi, streetside draught beer is as common as coffee.

This market for beer is becoming ever more attractive to global giants that have been racing for stakes in local brewer Habeco and its bigger rival Sabeco, both of which the Vietnamese government plans to privatize.

Recently, Thai Beverage bought a majority stake worth $4.84 billion in Sabeco.

Thai Bev’s local unit, Vietnam Beverage Co Ltd, won the 54 percent Sabeco stake on offer at an auction last month.

The Sabeco deal is expected to help Thai Bev tap into Vietnam’s beer market, worth about $6.48 billion last year, where a young population and booming economy counter the drawbacks of political resistance, a high minimum bid price and a cap on foreign ownership.

The Thai owner of Sabeco plans to increase the brewer’s annual output to 1.9-2 billion liters of beer in 2018 from 1.75 billion liters in 2017, said company execs.

The domestic market share held by Sabeco is also expected to increase to 50 percent from 40 percent on the strength of Thai Beverage’s retail network.

Many international brewers, including Australia’s leading beer company Carlton & United Breweries and Denmark’s Carlsberg, have expressed interest in acquiring shares in Habeco, Vietnam’s third-largest beer company by sales.

Carlsberg has already edged closer to reaching an agreement with the Vietnamese government to increase its stake in Habeco. The brewer, which already owns 17.3 percent of Habeco, has been discussing its priority purchase rights with the Vietnamese government for years.

“Carlsberg, the Vietnamese government and Habeco have reached a common understanding on a number of issues during the negotiations, and we expect this will accelerate the process,” Reuters quoted a Carlsberg spokesman as saying.

The government said last month it expects a stake sale in Habeco to be completed in the first quarter of 2018.