Vietnam looking to protect local motorbike makers from global giants
Vietnam has raised the stakes in its tussle with foreign motorcycle manufacturers by saying it will increase tariffs
on imported bikes to protect local firms from heavier competition when import quotas are lifted.
The finance ministry last week proposed levying a 100 percent import tax on motorcycles assembled overseas from
January 1, 2003 to compensate for the simultaneous removal of import restrictions on them.
Currently, companies importing pre-assembled bikes into
Vietnam require a special license from the Ministry of Trade
and each unit is taxed at 60 percent. As a result, most are
assembled from a combination of parts imported from
overseas and those manufactured by local companies.
Deputy Finance Minister Truong Chi Trung told Friday's Tuoi
Tre (Youth) newspaper that the tax adjustment was necessary
to ensure imports would not hurt the operations of the
Southeast Asian nation's more than 60 foreign-invested and
local assemblers.
The ministry's proposed tax hike still requires final approval
from Prime Minister Phan Van Khai, the Lao Dong (Labour)
daily reported on Saturday.
Earlier this month, the government slashed the number of sets of parts that motorbike assemblers could import
during 2002 from 2.5 million to 1.5 million.
The move was publicly justified to cut Vietnam's high traffic accident rate. According to government statistics,
10,548 people were killed on the roads last year, the majority of the accidents involving motorcycles.
Analysts, however, believe the import restrictions were designed to foster struggling local auto parts makers by
protecting them from massive imports.
Of the reduced quotas, 600,000 sets -- with each set equating to one motorbike -- are reserved for the seven
foreign-invested producers, with the balance of 900,000 divided up among Vietnam's 55 domestic assemblers.
The decision has prompted a storm of protest from at least two foreign joint venture manufacturers, complaining of
parts shortages.
On Saturday, the Singapore-based Federation of Asian Motorcycle Industries said the revised quotas would cost its
members about 270 million dollars and the loss of 21,000 jobs in Vietnam alone and many more in other countries.
Agence France Presse - September 22, 2002.
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