Trade ministry to change calculation method for localization rate in automobile industry
Vietnam’s calculation of the localization rate should be consistent with international practices, which are based on the proportion of domestically generated value rather than the parts produced within the country.
Vietnam’s current calculation method of localization rate in the automobile industry is no longer suitable to the actual practice and clauses stated in free trade agreements (FTAs) that the country is a part of.
|Car production at Hyundai Thanh Cong plant. Photo: Viet Dung|
Deputy Minister of Industry and Trade (MoIT) Do Thang Hai gave the remarks in the ministry’s monthly press conference held on January 12.
“The calculation of localization rate based on auto parts and accessories produced in Vietnam, which was introduced in 2004, has now become obsolete, and required adjustment,” Hai said, noting the MoIT would cooperate with the Ministry of Science and Technology to make the necessary changes.
According to Hai, the current method does not fully reflect the value and technological contents of auto parts in a final product, adding different technologies and materials would result in a vast difference in value for the same type of car parts.
The deputy minister noted Vietnam has been a member of new-generation trade agreements, including the ATIGA, CPTPP, EVFTA, or RCEP, in which all parties pledged to gradually reduce the tariff to 0% for imported car parts.
“In order to enjoy the 0% tariff and meet the required localization rate stipulated in each FTA, Vietnam’s calculation of such a rate should be consistent with regional and international practices, that is to base on the proportion of value generated domestically rather than the parts produced within the country,” he continued.
The Vietnamese Government targets the localization rate for cars of 30% in 2005 and 60% in 2010. However, the current rate remains modest at 10% for passenger cars, 40-50% for trucks, and 55% for buses.
- Jeju Air to resume service to Vietnam from April 20
- Hanoi to spearhead the nation’s industrialization efforts until 2030
- ASEAN boosts tourism promotion for strong recovery
- Vietnam prioritizes macroeconomic stability in 2023: PM
- Digital technology to spearhead Vietnam’s drive for Industry 4.0
- Business confidence in Vietnam improves to a three-month high: S&P Global
- Hanoi leaders call for high productivity after Tet break
- Hanoi's businesses resume operation after Tet
- Arrivals to Hanoi surge by over 300% during Tet holiday
- Foreign investors remain confident about Vietnam's business environment
Vietnam, Singapore eye green economy and digitalization
Hanoi to boost relationships with Dutch partners
Vietnamese ethnic groups’ cultural quintessence showcased in Hanoi
Investors cautious in stock market in Year of the Cat
Hanoi takes drastic action to handle solid waste
Biggest northern Vietnam festival attracts tens of thousands visitors
Hanoians show passion for flowers
Vietnam’s tourism forecast to strongly rebound in five years
Admiring 2,023 feline statuettes made by Hanoi artist