Protocol creates catalyst for auto cooperation

09:58 | 13/04/2016 Industry

(VEN) - A protocol on support in the production of motorized vehicles in Vietnam was recently concluded between Vietnam, Russia and Belarus not only paving the way for the adoption of the Free Trade Agreement between Vietnam and the Eurasian Economic Union (EEU) but also creating a legal corridor for cooperation in automobile manufacturing between developed countries.

Protocol creates catalyst for auto cooperation

Photo: Can Dung

Vietnamese Minister of Industry and Trade Vu Huy Hoang and Russian Minister of Industry and Trade Denis Valentinovich Manturov recently inked a protocol between the governments of Vietnam and Russia on the support in manufacture of motorized vehicles in Vietnam.

According to the protocol, Russian automobile makers like GAZ, Kamaz and Sollers will get together with their Vietnamese partners to establish several joint ventures for the manufacture and assembly of trucks, ten-seater or more buses, UAZ automobiles and several kinds of specialist vehicles in Vietnam.
Manturov said that the protocol is the first project under bilateral cooperation signed to implement the EEU-Vietnam FTA.

Specifically, the joint ventures will be free from Vietnamese import tariffs on automobiles and auto parts.
According to the Russian Embassy in Vietnam, the protocol has adopted quotas for import of 2,550 automobiles into Vietnam within three years and 13,500 auto part sets within five years.

According to the Russian Embassy, the provision will contribute to increasing assembled automobiles, while creating a new market for Russian technical devices and opening up prospects for Russian companies to access the markets in ASEAN.

The implementation of the protocol will make it possible for Russian companies to save 3.5 billion rubles when exporting their vehicles to Vietnam in the first three years.

As for Vietnam, the protocol will help create new jobs, increase budget revenues, access new production technology and create auto and auto part industrial production models.

After this protocol, Vietnam will conclude a similar protocol with Belarus.

Both protocols regulate that licenses will be withdrawn for any joint venture of this kind which does not reach the committed level of localization.

The Ministry of Industry and Trade also said that auto joint ventures between Vietnam and Russia and between Vietnam and Belarus must follow Prime Ministerial Decision 1211/QD-TTg dated July 24, 2014 which adopts the Vietnamese Automobile Industry Development Plan until 2020, with a Vision to 2030.

Apart from the domestic market, the joint ventures will intend to make automobiles for export to third countries, first of which are Southeast Asian countries, in order to enjoy their import tariff exemptions on automobiles with Vietnam’s 40 percent localization rate.

The two protocols are scheduled to take effect in mid-2016 requiring foreign partners to transfer their technology, thus contributing to developing the Vietnamese auto part industry, support industries and the auto servicing and repairing, and training Vietnamese technical workers.


Diem Phuong