Tải bản đầy đủ

ROLE OF STATE IN THE DEVELOPMENT OF VIETNAM’S AUTOMOBILE INDUSTRY FOR THE PERIOD 2011 - 2020

SOLVAY-BRUSSELS SCHOOL OF
ECONOMICS AND MANAGEMENT

NATIONAL ECONOMICS UNIVERSITY

Vietnam – Belgium Master Programs
MASTERS IN PUBLIC MANAGEMENT AND ECONOMICS

FINAL PROJECT
ROLE OF STATE IN THE DEVELOPMENT OF VIETNAM’S AUTOMOBILE
INDUSTRY FOR THE PERIOD 2011 - 2020

Prepared by: Hoa Ngoc Tu
Supervisor: Do Thi Hai Ha PhD

Hanoi 2011

TABLE OF CONTENTS
ACKNOWLEDGEMENT.................................................................................................2
TABLE OF CONTENTS...................................................................................................3
LIST OF ABBREVIATIONS............................................................................................5

LIST OF TABLES & FIGURES.......................................................................................6
Chapter 1. INTRODUCTION..........................................................................................7
1.1.

RATIONALE.......................................................................................................7

1.2.

RESEARCH OBJECTIVES................................................................................8

1.3.

RESEARCH METHODOLOGY.........................................................................8

1.3.1.

Research methods...............................................................................................8


1.3.1.2.

Main factors influencing Vietnamese automobile industry:.............................10

1.3.1.3

Assessment of role of the government:.............................................................12

1.3.1.4

Recommendations to improve the current situation:........................................12

1.3.2.

Data collection..................................................................................................13

1.4.

SCOPE OF RESEARCH...................................................................................13

1.6.



PROJECT STRUCTURE................................................................................13

Chapter 2. OVERVIEW OF VIETNAM’S AUTOMOBILE INDUSTRY.................14
2.1

THE

FORMATION

AND

DEVELOPMENT

OF

VIETNAM’S

AUTOMOBILE INDUSTRY.............................................................................14

2.1.1

Development of car assembly joint venture enterprises...................................14

2.1.2

Development of domestic automobile manufacture/assembly enterprises
16

2.1.3

Vietnam’s domestic automobile market............................................................17

2.2.

CONTRIBUTION OF VIETNAM’S AUTOMOBILE INDUSTRY....................19

2.2.1.

Contribution to economic development through investment............................19

2.2.2.

Contribution to state budget..............................................................................19

2.2.3

Creating jobs.....................................................................................................20

2.2.4

Technology transfer...........................................................................................21

2.3

FACTORS AFFECTING THE DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY.............................................................................21

2.3.1

Internal factors..................................................................................................21

2.3.2

External factors.................................................................................................23

Chapter 3: ROLE OF STATE IN THE DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY.........................................................................26
3.1

STATE’S ORIENTATION ON THE DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY.............................................................................26

3.3.

INCENTIVE POLICIES...................................................................................28

3.4.

SUPERVISION ON REGISTRATION AND QUALITY CONTROL................29

3.4.1

Government apparatus......................................................................................29

3.4.2.

Assessment of coordination among government apparatus..............................31

3.5

OVERALL ASSESSMENT OF STATE’S REGULATIONS ON THE
DEVELOPMENT OF VIETNAM’S AUTOMOBILE INDUSTRY....................32

3.5.1

Achievement.....................................................................................................32

3.5.2

Shortcomings....................................................................................................33
2

8


3.5.3

Reasons for shortcomings.................................................................................34

3.5.3.1.

Internal factors..................................................................................................34

3.5.3.2.

External factors.................................................................................................34

Chapter 4:

RECOMMENDATIONS

FOR

IMPROVING

STATE’S

REGULATION ON THE DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY FOR THE PERIOD 2011 – 2020.................36
4.1

FORECASTING THE TREND OF DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY IN THE PERIOD 2011-2020................................36

4.1.1

Three main trend for global automobile industry:............................................36

4.1.2

Development orientation by government in other countries for
development of automobile industry.................................................................37

4.2

Development orientation for Vietnam’s automobile industry...........................38

4.3

RECOMMENDATIONS FOR IMPROVING STATE’S REGULATION ON
THE DEVELOPMENT OF VIETNAM’S AUTOMOBILE INDUSTRY
FOR THE PERIOD 2011 – 2020........................................................................39

REFERENCES.................................................................................................................47

8
3


LIST OF ABBREVIATIONS

ASEAN:

The Association of Southeast Asian Nations

CP: Government
GDP: Gross Domestic Product
R&D: Research and Development
SUV: Sport Utility Vehicle
VAMA:

Vietnam Automobile Manufacturer Association

WTO: World Trade Organization
2.5: Engine capacity of 2.5 liter

8
4


LIST OF TABLES & FIGURES
Table 2.2

The sale of cars of VAMA’s members in 2010............................................17

Table 2.3.

Comparing prices between domestic cars and foreign cars(brand new cars)
.....................................................................................................................18

Table 2.4.

Investment capital of some VAMA’s members..........................................19

Table 2.5.

Contribution to state budget from car manufacture joint venture enterprises
.....................................................................................................................20

Table 2.6.

Number of employees working in car manufacture joint venture
enterprises....................................................................................................20

Table 2.7

Comparing income of employees in Vietnam and in other countries.........22

Table 2.8

Number of annual exported cars.................................................................23

8
5


Chapter 1. INTRODUCTION
1.1. RATIONALE
According to Decision No. 177/2004/QD-TTg dated October 05th, 2004, promulgated
by The Prime Minister, approving the planning on development of Vietnam’s
automobile industry till 2010, with a vision to 2020, Vietnam has to achieve the goal of
developing Vietnam’s automobile industry by acquiring and applying world’s advanced
technologies. By exploiting and gradually improving existing technologies and
equipment, Vietnam’s automobile industry, at first, has to meet most of the requirements
of domestic automobile market, and then, moving toward exporting automobile and
accessory. Specific goals need to be achieved:
- Popular automobiles: meet 40-50% of the domestic demand in terms of quantity
and get a localization rate of 40% by 2005; meet above 80% of the domestic demand in
terms of quantity and get a localization rate of 60% by 2010 (For engines, the
localization rate shall reach 50% by 2010, and for gearbox, it shall reach 90% by 2010).
- For special-use automobiles: meet 30% of the domestic demand in terms of
quantity and get a localization rate of 40% by 2005; meet 60% of the domestic demand
in terms of quantity and get a localization rate of 60% by 2010.
- For high-class automobiles: Tourist cars manufactured by joint ventures must
reach the localization rate of 20-25% by 2005, and 40-45% by 2010. For high-class
buses, the localization rate shall reach 20% by 2005 and 35- 40% by 2010, meeting 80%
of the domestic requirement.
Although specific goals were set, almost all of the goals have not been met till now. For
instance localization rate just reaches 12% and the prices are too high compared to the
income of Vietnamese. It could probably be caused by many different reasons, among of
which the main reason is we did not foresee the difficulties and complexity of
automobile industry. For example, Thailand, a leading country in East Asia in
automobile manufacture with production of 1.2 million vehicles/year, does not have its
own brand name cars. It does not mean that Thailand automobile industry is
underdeveloped because it has 700 car components manufactures and 1000 auxiliary
manufacturers, turning Thailand into a reliable supplier to most of car manufacturers in
the world.
In China, automobile industry has been developed for 30 years and protected by the
government. Till now, there are just few so-called “big manufacturers” out of 2500 car
manufacturers and car components manufacturers in China. Annual turnover of China’s
Automobile Industry is lower than car sales of a medium-sized car manufacturer in
Japan, USA or Europe.
In India, the first car appeared in 1898. Since then, India has attached special
importance to development of automobile industry. However, due to its economic
characteristics, cars manufactured in India serve middle class or lower classes only.
India automobile industry is more and more developing and becomes a “power” in
automobile industry worldwide. India is now the second biggest motorcycle
manufacturer in the world; ranks 11 th in manufacturing tourist cars and ranks 13 th in
manufacturing commercial cars. India is now an ideal destination for many big
manufacturers in the world and realizes its ambitions to be a leading center for
automobile manufacturing in 2016 with “Action Plan of Motors”. Its goal is to reach

6

8


production of 32 million vehicles in period of 2015-2016 with total investment of 35-40
billion US dollars.
Above analyses help to produce the judgment that it takes many years to develop our
automobile industry, depending on the development of our economy and on related
industries. Therefore, it is necessary to analyze development ability of Vietnam’s
automobile industry based on its current status, requirements and ability to satisfy the
requirements.
1.2. RESEARCH PROBLEMS

To get the goals set for the period of 2011-2020, some research problems to
be implemented are as follows:
1. Current status of Vietnam Automobile Industry;
2. Requirements for developing automobile industry; and
3. Ability to satisfy the requirements.
1.3 RESEARCH OBJECTIVES
Proposing comprehensive solution to develop Vietnam Automobile
Industry for the period of 2011-2020.
1.4. RESEARCH METHODOLOGY
1.4.1. Research methods
In order to analyse the existing problems of Vietnamese automobile
industry and the current role of Vietnamese government in supporting the
industry, as well as to make recommendation for a better government role
in supporting the industry, the following approaches are undertaken: (i)
SWOT anlysis where strengths, weaknesses, opportunities and threats to
Vietnamese automobile industry are analysed; and (ii) knowledge and
approaches learnt from the classes on Role of State in a Market Economy
which was lectured by Prof Daniel Van Houte;Throughout this thesis, the
roles played by the following actors and the interactivity of these actors
will be analysed carefully.
GOVERNMENT
Minitry of Industry & Trade;
Ministry of Finance;
The approaches undertakenMinistry
have helped
identify the following findings:
of Transport;
Ministry
of Publicautomobile
Security
1.4.2 Actors involving in the
Vietnamese
industry

Government: The government has played a significant role in Vietnamese
automobile industry. Through the tax policies, protectionism policies,
environment rules, liberalisation of automobile sector (under its FTA
negotiations) and infrastructure development, the ministries and agencies of
Vietnamese government has created substantial influence on the industry.
CONSUMERS
7

CAR MAKERS
Domestic assemling
jointventures;
Cars importers;
Association(VAMA)
Accessory industry

8


Domestic car makers: The domestic car makers comprises mainly two
groups. They are joint venture companies between a Vietnamese partner
and a FDI enterprise. These joint ventures companies in fact mainly
assembled cars based on the supplies of car parts imported into Vietnam.
Cars importers: They include two main groups as follows: importers of
Completely Built Units (CBU vehicles - - brand new cars), and importers
of used cars. Currently, the car importers operating in Vietnam are mainly
Vietnamese trading companies, but there is a tendency showing that some
domestic car makers are expanding their business to importing CBU.
Association: The Vietnam Automobile Manufacturing Association
(VAMA) is the only one association represeting the car makers and car
importers. By the end of 2010, VAMA had eighteen members. This
association is having a stronger voice influencing the government’s
policies. Nonetheless, its recommendations about policies to the
government are mainly encouraging protectionism because the VAMA
members, most of them are car makers, enjoy lots of benefits from
protectionist policies.
Accessories industry: Vietnam has a very premature accessories industry
which lack capital, advanced technologies, and skilled workers. Most
importantly, the accessories industry of Vietnam fails to create a strong link
with car makers, and at the same time does not have a development
strategy for itself.
Consumers: The role of Vietnamese consumers in this respect are evolving
rather quickly. They are moving from preference for cheap used cars to the
choice of medium priced vehicles as their income get improved in the
recent years. However, besides the improving purchase power, Vietnamese
consumers have not yet had an influential voice to protect themselves
because of the limited role played by the Vietnamese Consumers Protection
Association.
1.4.3 Main factors influencing Vietnamese automobile industry:
SWOT analysis, as described briefly in the table below, will go closely with
all details of this thesis. In particular, the factors reflecting the environment
in which the automobile industry operates are more clearly seen through
SWOT analysis.
STRENGTHS

WEAKNESSES

- Hardworking and cheap
labour;

- lack of capital;
- backward technology;

Strongly commited government;

- inadequate management
skills;
8

8


- under-developped accesory
industry;
OPPORTUNITIES

THREATS

- Improving incomes of people;

- Inadequately coordinated/
even conflicting government
policies;

- Huge market of 86 million
people;

- Substantial tariff cuts for CBU
and car parts under Vietnam’s
international trade
liberalisation commitments
(WTO, CEPT, BTA, VJEPA)

Potential exports of CBU and car
parts under existing and future
FTAs;

Government direct policies: The policies enacted by the government of
Vietnam create the strongest direct and indirect influence on the situation of
the automobile industry. Strong protectionist policies on tariffs, mostly seen
before 2007, the year when Vietnam officially joined the World Trade
Organisation, and particularly before 2000 induced the establishment of
many domestic car makers. Meanwhile, the trade liberalisation policy of
the government, which commenced with Vietnam’s WTO membership in
January 2007 and intensified with the signing of several FTAs (CEPT with
China and ASEAN, Vietnam-Japan FTA, FTA between Vietnam and
Australia-New Zealand…), has resulted in the growing number of trading
companies operating in cars importation.
Government indirect policies: The indirect policies of the government
such as stimulus measures applied by the government in 2009 and 2010
have shown significant increase in the purchase of cars. At the same time,
pending policy on environment tax (which is under the discussion of the
National Assembly in a draft Law on Environment) is believed to create
discouragement to car users. The government’s investment in construction
of roads a bridges are certainly influencing the consumers’ decision on
buying cars.
Technology and capital availability: This factor depends a lot on foreign
investors. In fact, most of the technologies currently used by domestic car
joint ventures are not advanced. Model of cars assembled in Vietnam are
often two years later than those made in foreign countries. Regarding
capital source, Vietnamese car assembling joint ventures depend a lot on
foreign partners with as much as 70% of the capital contributed by foreign
partners. The under-developed accessories industry of Vietnam, which
8
9


lacks both capital and technologies, is strong evidence for the weakness of
the automobile industry in this respect.
Consumers’ habits and income: Vietnamese consumers’ income is
improving quickly from a GDP per capita worth USD331 in 1996 to more
than USD1156 in 2009. As a result, more and more Vietnamese people can
afford a car. Importantly, because the number of people having cars in
Vietnam presently is relatively low, thus the potential of this market is
huge. The consumers’ habit has similar importance on business decisions
of car makers and importers.
To determine the appropriate role of the government in developing the
automobile industry of Vietnam, the above factors should be taken into full
consideration.
1.4.4 Assessment of role of government:
The government’s decision on supporting the development of Vietnam’s
automobile is legitimate and right given the important source of tax
collection, jobs creation, and the industrialisation and motorisation targets.
However, the policies taken by the government are not well-coordinated
and not visional. The policies are even conflicting and keep changing
during different periods of time which are demonstrated through the
changing import tariffs, special consumption taxes, and changing
orientation of priortised types of vehicles. Now time does not support the
government of Vietnam especially since Vietnam signed a number of FTAs
with foreign partners, in which bound rates for CBU cars of below 9
seaters are foreseen to be 60% in 2013 to 0% in 2018 under the CEPT.
The government is now facing a big question: (i) continuing its support to
domestic car makers, so that Vietnam may have a car brand Made in
Vietnam in future; (ii) and/or developing a strong accessories industry to
become part of the regional supply chain of car parts. It is crucially
important to have a secure and visional answer to this question sooner
rather than later. The analysis, as presented later in this thesis, has proved
that the policies taken by the government of Vietnam so far are inconsistent
and partially unsuccessful.
1.4.5 Recommendations:
The government of Vietnam should review the development strategy for
automobile industry in a practical manner and well-connected with its
macro development policies. Priorities should be given to development of
accessories industry where Vietnam can reap considerable benefits from its
participation in the regional supply chain of car parts. At the same time, the
government should maintain a consistent support to two types of vehicles
affordable to and mostly used by Vietnamese people. They are: (i) the first

10

8


type of car recommended in this thesis is five-seaters sedan below 1 litre
engine. This type of cars is friendly to environment, cheap price, and not
subject to any commitment of FTAs liberalisation; (ii) the second type of
vehicles/ cars is bus of 30 seaters, which can be used more efficiently in
future given the demand of public means of transport.
1.5. SCOPE OF RESEARCH
Research objectives:
Research objectives of this thesis are problems related to Vietnam’s
automobile industry including manufacturing sector, supporting industries,
sale and import, supporting policies of the state.
The research focuses on the elements of Vietnam's automobile industry. On
the basis, appropriate and feasible solutions to develop are proposed.
Scope of research:
Time: from the establishment of the first automobile manufacturing joint
venture company (1991) to 2010.
Space: The research focuses mainly on development activities of VAMA’s
members and refers to activities of some other automobile enterprises.
In addition, the research will have study on success of the automobile
industries of Thailand, China and India. The research tries to give a more
comprehensive view of the automobile industry of Vietnam and
development orientations for the automobile industry in Vietnam.
1.6. PROJECT STRUCTURE
The thesis consists of 04 main chapters:
1. Chapter 1: INTRODUCTION
2. Chapter 2: OVERVIEW OF VIETNAM’S AUTOMOBILE
INDUSTRY
3. Chapter 3: ROLE OF STATE IN THE DEVELOPMENT OF
VIETNAM’S AUTOMOBILE INDUSTRY
4. Chapter 4: RECOMMENDATIONS FOR IMPROVING STATE’S
REGULATION ON THE DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY FOR THE PERIOD 2011 – 2020
5. Conclusions

8
11


Chapter 2. OVERVIEW OF VIETNAM’S AUTOMOBILE
INDUSTRY
2.1

THE FORMATION AND DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY

To properly assess the formation and development of Vietnam’s automobile
industry, we can start from beginning of the past 1990s.
Before 1990, there were about 38,212 registered cars in Vietnam, including
Gat, Lada, Zil, Volga, Zil, Uaz, Lada, Gat, Peugeot, Ford, Jeep, Paz, etc.
In 1991, many famous car manufacturers in the world such as Ford, Toyota
and Mercedes-Benz participated in automobile joint venture enterprises in
Vietnam. In 2003, there were 11 joint venture enterprises in Vietnam with
total investment capital of 543,429 million US dollars, total production of
148,900 cars/year and creating jobs for more than 3,000 employees.
Until now, there are 18 automobile enterprises nationwide joining in
Vietnam Automobile Manufacturer Association (VAMA), not including
some other automobile manufacturers such as 1/5 motor factory, JRD
motor factory, Cuu Long motor factory, etc.
It can be said that the formation of joint venture enterprises which
specialize in manufacturing, assembling cars in Vietnam recognizes
Vietnam as a potential automobile market.
2.1.1 Development of car assembly joint venture enterprises
Table 2.1
Vietnam

Establishment of car assembly joint venture companies in

No Car makers/ status of capital
1

Status of Operation

Mekong auto company:

- Operation started in
JV between Vietnam, Japan, 1992;
and South Korea;
Operation
continues;
- Type of Business:
car assembling and
CBU import;

2

Vietnam Motor Corporation - Operation started in
(VMC):
1992
- JV between Phillipines and Operation
Vietnam;
continues;
12

8


- Type of Business:
car assembling;
3

Vietnam - GM
(VIDAMCO):

Deawoo - Operation started in
1996;

- JV between Vietnam and Operation
South Korea;
continues;
- Type of business:
Car asembling;
4

Vina
Star
Corporation:

Motors - Operation started in
1995;

JV
between
Vietnam, Operation
Malaysia and Japan
continues;
- Type of business:
Car asembling and
CBU import;
5

Mercedes Benz Vietnam:

- Operation started in
JV
between
Vietnam, 1996;
Germany, Singapore
Operation
continues;
- Type of business:
Car asembling and
CBU import;

6

Daihatsu Vietindo (Vindaco): - Operation started in
JV between Indonesia and 1996;
Vietnam

- Operation stopped
in 2006;
- Type of business:
Car asembling;

7

Suzuki Vietnam:

- Operation started in
JV between Vietnam and 1995;
Japan
Operation
continues;
- Type of business:
Car asembling and
CBU import;

8

Ford Vietnam Ltd:

- Operation started in
1995;
13

8


JV between Vietnam and the Operation
USA
continues;
- Type of business:
Car asembling and
CBU import;
9

Chrysler Vietnam Ltd:

- Operation started in
JV between Vietnam and the 1995;
USA
- Operation stopped;
- Type of business:
Car asembling;

10

Toyota Vietnam:

- Operation started in
JV between Vietnam, Japan 1995;
and Singapore
Operation
continues;
- Type of business:
Car asembling and
CBU import;

11

Isuzu Vietnam:

- Operation started in
JV between Vietnam and 1995;
Japan
- Operation
continues;
- Type of business:
Car asembling and
CBU import;

12

Vietnam – Singapore motor - Operation started in
industrial company:
1996;
JV between Vietnam and - License withdrawn;
Singapore

13

Hino Motors Vietnam:

- Operation started in
JV between Vietnam and 1996;
Japan
- Operation
continues;
- Type of business:
Car asembling and
CBU import;

14

Nissan TCM Vietnam Co., - Operation started in
Ltd:
14

8


JV
between
Vietnam, 2008;
Denmark and Japan
- Operation
continues;
- Type of business:
Car asembling and
CBU import;
15

VINAMOTOR:

- Operation started in
100% capital invested by 2003;
Government
- Operation
continues;
- Type of business:
Car asembling;

16

Vinacomin Motor:

- Operation started in
100% capital invested by 1994;
Government
- Operation
continues;
- Type of business:
Car asembling and
CBU import;

17

VINAXUKI Motor:

- Operation started in 2004

100% capital invested by private - Operation continues;
companies
- Type
of business: Car
asembling and CBU import;
18

Truong Hai Motor:

- Operation started in 1995;

100% invested by Vietnamese
private companies

- Operation continues;
- Type of business: Car
asembling and CBU import;

Source: Ministry of Planning and InvestmentWe find that most of the
world’s leading car manufacturers from three automobile centers of USA,
Europe and Japan are present here in Vietnam. Total investment capital is
over 700 million USD, total legal capital is over 400 million USD and total
designed capacity is about 200,000 cars/year. Joint venture enterprises play
a key role in automobile industry. They turn Vietnam’s Automobile
Industry from zero into fulfilling domestic automobile demand.
State-owned enterprises such as Transinco, Veam also contribute to
development of Vietnam’s automobile industry although their contribution
is still small. We have now 52 domestic enterprises involving in assembling
15

8


vehicles but the production is still low and the technology is still
underdeveloped. Therefore, referring to Vietnam's automobile industry,
most people only talk about the operation of 11 automobile
manufacture/assembly joint-venture enterprises.
On the other hand, production and assembly of automotive joint venture
companies in Vietnam has not shown modernity in automobile
manufacturing. A standard car factory must have at least four basic
processes, including stamping, welding, painting and assembly, whereas
the automobile joint ventures in Vietnam (except for Toyota which has
stamping process) have only 3 last processes (welding, painting and
assembly). All these 3 processes do not require high technology, thus not
improve the localization rate of products.
After this period, the joint ventures develop more car styles, pay attention
to importing cars (e.g., Mercedes, Toyota). Besides, there are some
motorcycle manufacturing joint ventures investing in automobile
production. They are VMEP and HONDA. These joint venture companies
have created a quite busy automotive market in our country
2.1.2 Development of domestic automobile manufacture/assembly
enterprises
After the appearance of the car manufacturing joint venture enterprises,
domestic automobile factories have gradually formed and developed as
Truong Hai, Vinaxuki, Cuu Long, Veam, etc.
In domestic car assembly enterprises, they focus primarily on light trucks
providing mainly for domestic market and avoiding competition with other
brands of joint venture enterprises such as Truong Hai with Proto, Force;
Xuan Kien with Vinaxuki; Cuu Long with TMT. Afterwards, some
domestic factories have begun to assemble individual cars (sedans) with
little-known and low price brands such as Xuan Kien with Chinese brands,
Truong Hai with Kia, Hyundai (Korea) and more recently, Mazda (Japan).
Overall, the domestic automobile factories are less developed, they only
specialize in car assembly, and they do not have private car brand because
of weak financial resources and automotive technology.
Currently, Vietnam’s automotive industry specializes in assembly only,
including the following types:
-

SKD (Semi Knocked Down): cars to be assembled from
components, cluster, imported unconnected details.

-

CKD (Completely Knocked Down): is a complete kit needed to
assemble a product. There are two forms of this type: CKD1 and
CKD2.
8
16


-

IKD (Inteopally Knocked Down) cars to be assembled from
components, cluster, unconnected details. Unconnected details can
be imported or made in Vietnam. Body and chassis are made in
Vietnam.

While some regional countries like Thailand, Indonesia is focusing in depth
on the type of IKD, both 11 automobile joint ventures in Vietnam have
recently moved from simple assembly (SKD) to detailed assembly (CKD) .
2.1.3 Vietnam’s domestic automobile market
In December, 2010, turnover of members of VAMA got 12,485 vehicles,
17% decrease compared to that of December, 2009. In which, sale of multipurpose vehicles fell 19%, cars 21% and commercial vehicles 13%.
Output of entire sales in 2010 reached 112,224 vehicles, 6% decrease over
the same period last year with decrease of commercial vehicles of 4%, cars
of 3% and multipurpose vehicles of 13%. (See summary table below).
Table 2.2

The sale of cars of VAMA’s members in 2010

Car
Cross-over cars
MPV cars
SUV cars
Minibus, Bus
Pick-up & Van
Others
Total
Bus chassis
Source: VAMA

North
2,336
468
607
394
1,913
5,718
7

Central
488
150
206
79
670
1,593
-

South
1,249
700
859
344
2,022
5,174
108

Total
4,073
1,318
1,672
817
4,605
12,485
115

Vehicle consumption is reduced compared to that of the previous year due
to inflation in the economy and high exchange rate between Vietnam dong
and the dollar. Also, it can also be seen that car consumption in our country
is quite low compared to that of the region and the world. The reason is:
- First, Vietnam's market is too small compared with the car industry,
per capita income is low. According to calculations by economists, a
country must achieve GDP per capita of about $ 1,000 per year to
create a large enough market for the automotive industry with stable
profit and over $ 3,000 per year to ensure a rapidly-developed
automobile industry. Whereas, Vietnam has achieved GDP of
approximately U.S. $ 800-1000 per year per person.
- Second, massive import of old cars, which are cheaper than cars
manufactured by automobile joint ventures, reduces market share of
17

8


automobile joint ventures in Vietnam. Massive import of new cars
with equivalent price also affects the market share in the same way
in one hand and in the other influences to demand side.
- Third, the price of cars produced and assembled in Vietnam is much
higher than the price in the region and in the world. The reason is
that most of the parts and components are imported.
One important reason is that the automobile industry of Vietnam is very
young, only developed in about 10 years so most plants are new with high
capital investment and long period of depreciation. These should lead to
high cost and low competitiveness.
Table 2.3. Comparing prices between domestic cars and foreign cars(brand
new cars)
Car Makers

Model

Prices in
Vietnam

Prices in
USA

Difference

TOYOTA

Corrolla

24,000

13,000

185

DaimlerBenz

Mercedes-Eseries

74,500

45,000

166

Mazda

626

31,330

20,500

153

BMW

3-series

49,000

35,000

140

BMW

5-series

78,000

15,000

173

Average

(%)

163

Source: The planning on development of Vietnam’s automobile industry till
2010
2.2. CONTRIBUTION OF VIETNAM’S AUTOMOBILE INDUSTRY
Being a young industry in Vietnam, Vietnam’s automobile industry has
certain contribution to Vietnam economy, as follows:
2.2.1. Contribution to economic development through investment
Vietnam’s automobile industry contributed a very big amount of investment
capital to the economy. For joint venture enterprises, till June, 2001, total
investment capital was 326,813 million USD, making up 2.39% of total
foreign investment capital. This amount of capital is equivalent to total
capital of Vietnam’s mechanical industry after 40 years of establishment.
This is a very high rate, initially confirmed the role of the automotive
industry for the economic development of Vietnam.
According to VAMA, investment capital of several members of VAMA is
as follows:
18

8


Table 2.4. Investment capital of some VAMA’s members
Total investment capital

Legal capital

(USD)

(USD)

No.

Name

1

Ford Vietnam

102,000,000

-

2

GM

32,000,000

10,000,000

3

Honda

209,252,000

62,900,000

4

Isuzu

50,000,000

-

5

Mekong Auto

35,995,000

20,000,000

6

Toyota

89,600,000

49,140,000

7

Truong Hai

90,000,000

-

8

Vietnam motor

58,000,000

-

9

Suzuki

20,000,000

-

Source: VAMA
Compared with the initial capital investment (Table 2.1), the investment
level increased significantly.
2.2.2. Contribution to state budget
In the early 2000s, the automobile production joint ventures have
contributed significantly to the state budget. The total contribution of joint
ventures to the state budget by the end date of 30/06/2001 is 154,323,000
Dollars. If calculated by the method of simple averages, the average
contribution rate in the period 1996-2000 is $ 30,864,600 per year
In 2000, the vehicle sale is increased sharply; the joint ventures have
contributed to state budget with a record amount of $ 45,467,846.
Table 2.5. Contribution to state budget from car manufacture joint venture
enterprises
1/1/200030/6/2001

Name

Year 2000

Total

Toyota

14,527,952

Vindaco

1,147,499

476,029

3,958,637

Ford VN

4,105,000

2,303,000

9,611,000

VMC

5,776,300

2,737,200

33,961,736

Hino Motors VN

26,502

103,397

646,419

Vidamco-

5,560,000

4,061,000

16,417,000

41,874,152

19

8


Daewoo
Suzuki

5,610,000

2,957,000

33,318,000

Isuzu

1,423,064

1,265,355

4,469,042

Mercedes Benz

2,403,842

2,826,035

14,467,978

Total

45,467,846

21,665,938

191,326,099

Source: Ministry of Industry
According to VAMA, only 18 members of VAMA for 6 years from 2000 to
2006 have contributed $ 1.2 billion in taxes to the state, creating stable jobs
for 8,500 employees in the automotive sector in particular and about 35,000
workers in supporting industries.
Some domestic automobile enterprises are successful in making their own
automotive brands such as Samco Vietnam, Truong Hai Auto, Vinaxuki…
Their products are more or less known to the domestic market. These
enterprises play an important part in economic development. Their products
involve in the public sector, agriculture, industry and services.
2.2.3 Creating jobs
Table 2.6. Number of employees working in car manufacture joint venture
enterprises
No.

Name

Total employees till 30/6/2002

1

Toyota

371 (9)

2

Vindaco

133 (4)

3

Ford VN

260 (3)

4

VMC

557 (14)

5

Hino Motors VN

34 (2)

6

Vidamco-Daewoo

410 (4)

7

Suzuki

166 (2)

8

Isuzu

124 (4)

9

Mercedes Benz

382 (3)

10

Mekong

304 (5)

11

VinaStar

231 (9)

Total

2,972 (59)

Source: Ministry of Industry.
8
20


For Truong Hai Company, till 2010, number of employees was up to 1,500
persons.
2.2.4 Technology transfer
Most production lines contributed by the foreign partners of the joint
venture enterprises were made in the early of the 90s in leading
industrialized countries. Therefore, these lines are still in good condition
with high performance and enable the production of modern products.
However 100% of these production lines are only for assembly form of
CKD2 (some components have not been assembled into the frame), IKD1
(localization ratio below 10%) will not stimulate the production of parts
and accessories in Vietnam, but mainly develop assembly technology. In
addition, all the R& D are conducted in foreign firms, not Vietnam, so
Vietnamese engineers just follow all the instructions from the foreign side
and they do not have condition to develop their professional ability.
2.3

FACTORS AFFECTING THE DEVELOPMENT
VIETNAM’S AUTOMOBILE INDUSTRY

OF

2.3.1 Internal factors
In general, according to development strategy of Vietnam’s automobile
industry in period of 2001-2010, goal of protection of domestic automobile
industry was got basically. Otherwise, prices were too high compared to
world’s price level and the goal of development of Vietnam’s automobile
industry failed. There are many reasons for that but one important reason is
we have regulated the industry with a single tool in more than 10 past
years. It is tax. Whereas, we ignored many other factors such as new
technology, quality control, etc.
Another reason for that is ability of management levels. They do not
distinguish between domestic manufactured cars and domestic assembled
cars.
Hereafter, we consider some internal factors affecting the automotive
industry as follows:
Low income:
People's income remains very modest compared to other countries in the
region and the world. Therefore, most people are using less expensive
vehicles, such as buses, motorcycles, bicycles. In a past few years, although
the number of people belonging to the middle class in Vietnam has
increased but the number of people buying cars is still low.
Table 2.7
countries

Comparing income of employees in Vietnam and in other
8
21


Name

GDP per capita

Difference

(USD/year)

(times)

Japan

23,480

13,4

Hong Kong

21,830

12,4

Singapore

27,740

15,8

Malaysia

7,370

4,2

Thailand

6,020

3,4

Philippines

3,380

1,9

Indonesia

2,940

1,7

Vietnam

1,755

1,0

Inconsistency and frequent change of policy:
According to feedback from the domestic automobile enterprises,
production and business environment in Vietnam still lacks the conditions
for them to focus on long-term plans such as investment in manufacturing
components and parts, investment in production of heavy-duty vehicles,
multiple-seat buses. They said that government policies, particularly tax
policy, often change and are unreasonable causing many troubles. At
present, we only have two tax levels (CKD1 and CKD2) for CKD tariff,
one tax level for spare parts. For example, tax level for importing spare
parts of under 5 seat cars is 60% of CIF value. Therefore, fewer than 5 seat
cars assembled in Vietnam are protected by tariffs and excise taxes of
320% of CIF value. Whereas the imported components for assembly in the
form CKD2 pay only 20% import duty and VAT of 5%. The lack of
uniformity was one of the causes of fraud and tax evasion of opportunists.
Within about tariffs for imported components, the Ministry of Trade and
Industry and Ministry of Finance has not yet agreed. Therefore, they can
not support domestic production.
Poor infrastructure:
Currently, many Asian countries have quite good high-speed road system
like Singapore, Malaysia, Korea, China, etc., in which the ratio of the
length of the highway and the total length of road network is relatively high
(for example, 4.4% for Singapore and 2.5% for Korea). Whereas Vietnam
does not have a highway in the true sense of the word though Trung LuongHo Chi Minh highway has just been put into operation. 602 communes
throughout the country also has no motor roads to the center. Furthermore,
Vietnam is still in a serious lack of parking lots and garages which are
considered as indispensable static traffic system for transportation by car.
22

8


Poor management and technology:
Vietnam is ranked as country with backward technology level. Technology
level of Vietnam lagged far behind the general technical level of the world
from 50 years to 100 years. Obsolete technology should account for 60 to
70% per product unit with high energy consumption, high production costs
and low quality.
Level of the workforce currently can not meet diversified and growing
needs of the economy. In the labor force, skilled team makes up only 10 to
15%, a low rate in comparison with that of the region and the world. The
general level of knowledge and skills of the workforce are still restricted
leading to low efficiency in using equipment.
2.3.2 External factors
Imported vehicles:
One of great difficulties that automobile businesses face is amount of
imported automobiles continue to rise.
In the period up to early 2002, the number of imported cars increased every
year and this adversely affected significantly the automotive industry in the
country
Table 2.8

Number of annual exported cars

Year
1997

1998

1999

2000

2001

2002 (first
9 months)

Kind of cars
Carrying people
cars

3,356

2,762

2,437

2,870

3,056

2,580

Freight cars

10,619 14,440 14,892 18,986 19,170

15,769

Total

13,975 17,202 21,076 21,856 22,226

18,349

Source: Directorate for Metrology and Quality
Actual figures from the General Customs Department showed that, in first
quarter of 2009, the number of imported cars rose from 1,300 units to 7,790
units, worth $ 149 million.
According to official data of GSO, in December, 2009, there were 11,000
CBU cars imported into Vietnam, an increase of 4,000 units compared with
a forecast of 7,000 the agency launched in late December 2009. Therefore,
in 2009, there were 80,300 new cars and second hand cars imported. This
23

8


number was equivalent to 2/3 of total number of vehicles assembled in the
country in the same period (119,460 units in 2009).
In 2010, the total number of imported cars reached 53,100 units. Compared
with 2009, the number of cars imported decreased 34%. For imported
motorcycles, total turnover also decreased 14.4%.
A significant proportion of imported vehicles were used vehicles. However,
market still accepted them due to low price. This is one of the major
challenges for the automobile industry in the country.
Multinational competition
More and more international car manufacturers co-operate with each other
to use the same facilities in manufacturing many different car styles. As in
our country, Chevrolet, Daewoo cars are assembled by Peace Company and
Civic, CR-4 are assembled by Honda on the same line. This helps to reduce
investment in car manufacture technology.
Regarding brands, for purpose of rapid capital recovery, joint venture
enterprises invested only very little for the line and only assemble 1 or 2
car brands (usually a sedan or a multi purpose vehicle). For example,
Toyota only assembles Vios, Camry, Innova and Mitsubishi with Lancer
and Jolie, Mercedes with E-class, etc. These policies have reduced positive
impact to our automotive technology.
Protection policies of foreign car manufacturers and supporting
manufacturers which are ahead of others reduce development of supporting
industry.
Direct competition from China
Growth, quality improvement and lower cost make China become a strong
competitor in the world automobile market. China’s automobile industry
now can compete with famous car makers in the world and can threaten our
automotive industry.
Automobile industry of China has gradually set foot in Vietnam market
with an important advantage of cheap price. The carmaker Lifan has also
penetrated the automobile market of Vietnam through Bao Toan distributor.
This car brand penetrated Vietnam's market methodically, conquering
customers with both quality and price. Selling price of Lifan car with
cylinder of 1.6 is $ 16,000, and is 13.000 USD for car with cylinder of 1.3,
by half compared to Korean cars and by one third compared to Japanese
vehicles.
Car Company Cheyry also appeared in the Vietnam market with brand
QQ3. With selling price of 179 million VND, this is the cheapest car now
8
24


and quickly attracted the attention of customers who have above average
incomes.
To continue to thrive in Vietnam, some Chinese auto companies have
started to make joint ventures with other automobile companies in our
country. In 2009, Duc Phuong car Company and The Great Wall (China)
signed a cooperation agreement to produce two models, Hover and Cowry.
Great Wall Company will transfer technology and experience for Duc
Phuong.
In a near future, Vietnam Motor Corp- VMC will make joint venture with a
Chinese partner to launch a "luxury" car Riich M1 in Vietnam market. In
China, a Riich M1 costs about $ 6,000. In Vietnam market, Riich M1 will
be a competitor with BYD F0 (China), and with three Japanese rivals
Suzuki Swift, Honda Fit, and Toyota Yaris.
Thus, with the arrival of Chinese cars through distributors and joint
ventures, with the advantage of quality, advanced technology and cheap
price, Chinese vehicles will be a weighty rival in Vietnam's automobile
market.

8
25


Tài liệu bạn tìm kiếm đã sẵn sàng tải về

Tải bản đầy đủ ngay

×