Ho Chi Minh City-based
Truong Hai Automobile JSC will cooperate with South Korea's Hyundai Motor Corporation to invest in the first car engine factory in Vietnam, according to a contract signed Thursday.
The project will be launched this October at Chu Lai Open Economic Zone in the central region's Quang Nam Province.
The factory will produce several major parts of a car engine, including the engine's body, and later transfer the manufacturing technologies to local producers.
Choi Han Young, Hyundai's Vice President in charge of commercial automobile trading, said that the factory will serve the production of a four-liter diesel engine made by the Korean company.
The engine is used for light-weight cars as also for several industrial purposes, Young said.
Starting at the end of 2012, the first phase of the US$165 million project is expected to produce 25,000 products a year.
Tran Ba Duong, General Director of Truong Hai, said that the company plans to "participate deeply and strongly in the global production chain of automobiles for Vietnam and ASEAN markets."
From 2018, car products from Vietnam that are imported by other Southeast Asian markets will attract no tariffs.
Duong said the company aims at producing hi-tech products with a high rate of local inputs to benefit from tax exemptions under the Asian Free Trade agreement (AFTA).