Vietnam makes pacts with Russia, Belarus

Vietnam has completed negotiations on bilateral agreements on automobile manufacturing and assembling with Russia and Belarus, according to the Ministry of Industry and Trade.

A protocol on automobile production cooperation was initialed by the officials from the negotiating teams of the two countries in Minsk, Belarus, on January 20.

On January 15, Vietnam also initialed the protocol with Russia in Moscow.

The ministry said the protocols would be negotiated and signed based on the priority clauses of investment projects under the free trade agreement between Vietnam and the Eurasia Economic Union (VN-EEU FTA).

Garment and textile production, one of the important export sectors of Vietnam. Photo: VNA

After initialing the above-mentioned protocols, Russia and Belarus have both informed that they would immediately conduct procedures to pass the VN-EEU FTA and put the protocols on automobile cooperation into effect at the same time.

The protocols include cooperation between Russian and Belarusian automakers and their Vietnamese partners in establishing several joint ventures for manufacturing and assembling of trucks, and vehicles with ten seats and more, pick-ups and some special-use vehicles, in Vietnam.

The vehicles assembled in Vietnam will be suitable for the Vietnam Automobile Industry Development Plan by 2020 and in the vision for 2030, which requires a localization rate of 25 percent for special-use vehicles, 30 percent for trucks and pick-ups, and 35 percent for vehicles with 10 seats and more, by 2020.

By 2025, the localization rate will be 40 percent for special-use vehicles and pick-ups, 45 percent for trucks and vehicles with ten seats and more.

Besides the domestic market, the joint ventures have been oriented to export cars to a third country, which are Southeast Asian nations where the cars with 40 percent localization rate from Vietnam will enjoy import tax exemption.

To reach the above target, Vietnam will allow the joint ventures to import free-of-duty a number of completely built up units for exploratory selling in the Vietnamese market. They will also enjoy a concrete tax exemption quota for the import of auto components and parts for domestic assembling in five years, which is the period before the import tax on auto components and parts is cut to zero percent under the VN-EEU FTA agreement.

The protocols are expected to officially be signed by the end of January or early March this year.