Vietnam auto industry group protests tax break for Hyundai assembler

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The Vietnam Automobile Manufacturers' Association is opposing a ministeral decision that allows local car maker Hyundai Thanh Cong to import auto frames at lower tariffs than usual.

According to the association, also known as VAMA, the Ministry of Science and Technology gave the green light to Thanh Cong to import 5,000 component sets at preferential tariffs because its factory is still in a test run period. VAMA, however, believes that 5,000 is too large a number.

It would take Hyundai Thanh Cong around two years to use all 5,000 sets, the association said.

VAMA said Hyundai Thanh Cong has so far imported 100 sets from the allowed quota. The fact that Thanh Cong's cars have been rolled out to market shows that the test run was completed well, it said.

If the government continues to give tax incentives to the remaining 4,900 sets, Hyundai Thanh Cong will enjoy an unfair advantage over other companies, the association said, adding that it is seeking intervention from the prime minister.

Vietnam offers low import tax rates of between 5 percent to 20 percent on separate auto parts as an incentive to support the local car industry. If the components have already been combined into larger sets, they are subject to tariffs of 20 percent to 37 percent.

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A representative of Truong Hai, which assembles vehicles including South Korean KIAs and Hyundais, said allowing Thanh Cong to import combined components at low tax rates is an unprecedented move that could undermine healthy market competition.

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