Vietnam applies duty reduction for KAMAZ trucks
Russian car manufacturers KAMAZ, UAZ, GAZ and Sollers can enjoy preferential taxation. A new tax regime is available for selected carmakers from Russia and Belarus, but it does not include passenger cars. Although Vietnamese industry representatives stay pessimistic about a possible increase in the demand, the figures show a growth.
Vietnam alleviates taxation for a list of Russian and Belarusian automakers, reports Vietnam News. The Ministry of Industry and Trade of Vietnam announced a quota of 800 Russian cars for 2016, 850 vehicles for the next year and 900 vehicles for 2018. Besides KAMAZ, reduced duties will be effective for UAZ (Ulyanovsk Automobile Plant), GAZ (Gorky Automobile Plant) and Sollers. The quotas include sport utility vehicles (SUV), trucks, passenger cars with 10 or more seats and special purpose vehicles. Belarus MAZ (Minsk Automobile Plant) is given 200 units in 2016, 250 in 2017 and 300 in 2018.
The tax reduction is applied within protocols supporting engine powered transport production. The protocols took effect last Wednesday as well as Vietnam — Eurasian Economic Union Free Trade Agreement (FTA) signed in May 2015. The purpose of the preferential taxation is to assess the customers' demand. The protocols also require the Russian and Belarusian car manufacturers to initiate their collaboration with Vietnamese companies. These joint ventures can get tax reductions not only for completely built units but for car components as well.
By the way, theVietnamese industry insiders doubt the ability of the Russian manufacturers to increase the imports significantly. Terms of the protocol, which are rather difficult to be met, are the main obstacle. For example, every joint venture should be approved by The Ministry of Industry and Trade. The minimum quantity of the local content is established at 40 per cent for SUV and special purpose vehicles, 45 per cent for trucks and 50 per cent for passenger cars with 10 or more seats.
The current market situation is another matter: Vietnamese customers got used to the vehicles from South Korea, Japan, Europe and the US. Furthermore, Southeast Asian cars are expected to fall in price from 2018 when import duty for cars manufactured in the Association of Southeast Asian Nation falls to zero.
Nevertheless, the General Department of Customs of Vietnam claimed that the import volume of Russian cars keeps increasing. Almost 1,200 Russian vehicles were imported in January-August 2016, compared to 300 units in 2015 and 68 units in 2014.
KAMAZ would sell 1,000 vehicles in Vietnam this year out of 7,000 total exports in 2016, told the company's director general Sergey Kogogin during the SaintPetersburg International Economic Forum in June. 'Agreements we have signed along with practical actions of Vietnamese distributors let us be confident in the significant growth of sales in this market,' he told the international press.
Akhat Urmanov, the deputy chairman of the board of management at KAMAZ, told the local press earlier this year that the company had a long-term strategy and planned to establish assembly, trade and service complexes in Vietnam.