One of the Peugeot models that the Truong Hai Auto Corporation cooperates to produce and assemble in Vietnam (Photo: VNA)

Hanoi (VNA) - The Ministry of Industry and Trade is crafting a new strategy to protect the auto industry with tax policies at its centre, Sai Gon Times Weekly reported.

In a draft, the ministry suggests three solutions to rev up the local auto industry, which has remained sluggish despite a slew of tax incentives.

The first is to make sure there is a large enough domestic market so that policies can be framed to encourage consumers to choose locally-made vehicles.

Then, technical barriers will be put up and controls tightened to check imports and fight fraud so to create favourable conditions for the growth of the auto industry.

[MoIT pursues dream of auto industry]

The second solution is to have policies supportive of local automakers, especially those with popular products, so that they can compete with imported vehicles when import tariffs are slashed to zero next year.

The third solution focuses on changing special consumption tax on autos. This tax will be cut to zero for autos with high local content, with income tax also being revised downward for large auto projects.

If the auto protection strategy is approved, it is expected to give a strong boost to local auto assemblers and encourage them to increase local content, which currently ranges between 7 percent and 10 percent.

The ministry also suggests hiking the taxes on pick-ups to the same levels as sedans.-VNA