Foreign cars set to flood Vietnam
For long, many local households have found owning a car a vain hope. Car prices in Vietnam are among the highest in South East Asia, while the annual per capita income is among the lowest. It costs approximately US$14,075 for a brand new Ford Focus in Thailand. That price for the same car in Vietnam jumps up to over $55,000 after import levies, luxury and value added taxes, which correspondingly stand at 100 percent, 80 percent and 10 percent.
This new decision from the government allows the import of used cars from other countries, bringing hope to middle-class families. The decree, which will be put into full effect from May 1, states that all second-hand automobiles under 16 seats, within the usage limitation of five years from production to import time, could wheel into the domestic market.
The automobile market in Vietnam has been warmed up by the news with almost all manufacturers announcing discounts on their brands.
Some economic experts view the decision as a necessary step in Vietnam's full integration into the world economy, as well as new thinking from the government. But there are still worrisome concerns that Vietnam might be a dumping place for other nations.
However, optimism from local consumers outweighs negative forecasts. "It's good news for my family. We are still waiting for the date May 1st to see how the automobile market changes, and then we will make a decision. We live far from city centre, so it's necessary to buy a car to weather windy and rainy days," said Nguyen Vinh Thang, who lives with his wife and two children in the outskirts of Hanoi.
Most potential markets, as pointed out by marketers, are the U.S., Australia and China. Chinese second-hand cars are speculated to have captured the market in Vietnam, due to their low price, but many raise concerns about safety standards.
Seven years ago, the government banned the import of used cars from other nations for a number of reasons, citing poor transport infrastructures and the environment. Some domestic car manufacturers also hailed the ban as a necessary tool to protect the fledgling automobile industry.
Overpass bridges are not very visible in the Vietnam skyline, while the roads are quite narrow, creating chronic congestion in big cities during rush hours. The problem may deteriorate with more cars on the street as a result of the new decision.
It is predicted that the ratio of cars to people will be 1.4/1,000 in 2020. Now, it is 0.2/1,000.
By Nguyen Ngoc Trung - OhmyNews (.kr) - February 20, 2006.
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