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A proposed personal vehicle fee has drawn sharp criticism from business leaders and the public


Traffic congestion on a street in Hanoi. A plan to collect a "fee for limiting personal vehicles" has drawn flak from experts and local residents.

Nguyen Minh Duc earns VND150,000 (US$7.2) a day as a xe om (motorbike taxi) driver who parks from dawn till dusk waiting for fares on the sidewalk of Ho Chi Minh City's Dinh Bo Linh Street.

With his unstable earnings together with his wife's meager salary as a factory worker, the family with two young children is barely making ends meet as it is.

Their financial situation could deteriorate due to a government plan to collect a new fee which aims to limit the use of personal vehicles to reduce traffic congestion nationwide.

"It's unbelievable that I would have to pay VND500,000 per year to drive my rickety bike. It's my sole meal ticket," the 51-year-old man said about the proposed annual motorbike fee.

The Ministry of Transport is seeking the central government's approval of the fee which would be levied on all personal vehicles.

Under the proposal, motorbikes would have to pay between VND500,000-VND1 million ($23.7-47.5) per year, while cars would be asked to pay between VND20-VND50 million yearly ($951-2,370). The fees for cars are expected to increase between 5-10 percent annually.

Vietnam's 2011 per capita income is about $1,300.

Meanwhile, cars, with the exception of public transport, would also have to pay fees of between VND30,000-VND50,000 ($1.4-2.4) when entering city centers during rush hours 6 a.m. to 8:30 a.m. and 4 p.m. to 7 p.m. every weekday, except on holidays.

The proposal has grabbed headlines over the past several weeks as residents nationwide have vented their grievance. The motorbike is the most common means of transportation in Vietnam, with a total of more than 32 million registered bikes among a population of approximately 88 million.

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Meanwhile, many car owners are worried they will not be able to afford the high fees, while those who have been saving to buy car are reconsidering their dream. By 2011, the number of registered cars in Vietnam had increased to nearly 1.8 million.

Currently, car owners must pay an import tax, a special consumption tax, a value added tax (VAT), a registration fee, a license plate fee, a fuel fee, a periodical inspection fee and insurance fees.

Last year, mango farmer Diep Thanh Nien from Khanh Hoa Province bought a used car for VND110 million ($5,293).

The farmer said the car was very useful because it enabled his large family to travel to the farm together, which was more economical than using three or four motorbikes, let alone the fact that they could carry their equipment and fertilizer much more easily.

"An annual fee of VND20 million for five years is equal to the value of my car. The authorities said it was to encourage people to use public transportation, but we could not find a single bus that goes to my farm," he said.

Many farmers in the Mekong Delta were also upset with the new proposed fee because many of them say they had already contributed to building or upgrading roads in rural areas.

"My family has four motorbikes which means we have to pay VND2 million a year to be able to drive them. I wonder how we could afford such fee," said Nguyen Van Minh, a farmer in Ben Tre Province.

"It would be unfair to collect the fee equally for all residents because the farmers like us rarely drive to cities or cause traffic congestion. We have mostly used rural roads that we have either helped pay for or worked to build," he said, adding, "Is it right that we would have to pay to be able to drive on roads that we already paid to help construct?"

Many farmers in Dong Thap Province have similar concerns as they also helped fund the construction of the province's 2,000 kilometers of road.

"A fee of VND150,000 a year for a motorbike is not a big amount for some people, but it will worsen the burden for Mekong Delta farmers. The Transport Ministry said the fee will be earmarked for road constructions in each province, but we have already contributed for the work over the past years," he said.

Meanwhile, many economists said the fee would weaken the competitiveness of businesses and make Vietnam less attractive for foreign investment.

Nguyen Hong Ha, deputy director of a fishery processing company in the Mekong Delta, said the new fee will worsen the situation as local companies are already suffering from the global economic meltdown.

"We had to pay 15-20 percent more on transportation since early this year," he said.

Tran Vinh Loc, director of a tourism company in Ho Chi Minh City, said transportation fees account for a third of all costs and many fee increases plus a new fee would lead to losses for their business.

According to Tran Quoc Khai, chairman of the Noi Bai Transportation Cooperative in Hanoi, the enterprises pay taxes and there should be favored policies for them when it comes to collecting relevant transportation fees.

The Vietnam Automobile Manufacturers' Association (VAMA) on March 26 lodged a petition to the National Assembly, the central government and relevant agencies to cancel or halt the plan, saying the new proposed fees would cost Vietnam's auto industry dear.

"Otherwise, there will be a significant impact on the automobile business in Vietnam, including producers, assemblers and their workers. Meanwhile, solving traffic congestion requires improved infrastructure and the gradual development of public transport," the organization said.

According to the General Statistics Office, car imports are down for the first quarter compared to last year. Vietnam has imported about 7,000 cars so far this year, 54 percent less than during the same period year. Car imports have been steadily decreasing over recent months, from 4,000 last December to 2,800 in January and 2,000 in February.

In a recent move, Deputy Prime Minister Nguyen Xuan Phuc pledged to poll public opinions before the plan is approved by the National Assembly, Vietnam's parliament.

"An important decision affecting many people should take their opinions into account. All relevant measures are being taken to ensure the safety of the public and their property," he told the media on the sidelines of a recent conference to review traffic safety during the first quarter.

Nguyen Hoang Hiep, deputy chairman of the National Traffic Safety Committee, said it is still a proposal and the National Assembly's Standing Committee is expected to have the final say.

But "the fee will surely be applied because other countries have similar fees," he said.

While the personal vehicle fee is still under consideration, the government is set to collect a road maintenance fee from all vehicle owners this June.

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