Suitable incentives are essential to enhance the competitiveness of enterprises in the support industry to develop the domestic automotive sector, according to Chairman of the Vietnam Federation of Civil Engineering Association Do Huu Hao.

Hao, who is also former Deputy Minister of Industry and Trade, highlighted the potential to expand the domestic automotive market with its 90 million people.

He stressed the need for the domestic automobile industry to enhance its competitiveness as integration encourages importing assembled vehicles in the regional countries with zero percent tariffs.

The most efficient way for local businesses to join the global production chain is to connect with renowned international brands in the support industry, Hao said.

President of the Xuan Kien Automobile Joint Stock Company (Vinaxuki) Bui Ngoc Huyen called for more specific tax and financial incentives. He confidently stated that with right tax incentives and credit from the State, Vinaxuki can raise the domestic manufacturing rate to 50 percent and build “Made-in-Vietnam” passenger cars and trucks for export.

The company has invested more than 600 billion VND (28 million USD) in a number of projects to produce automobile spare parts, Huyen said.

They are expected to enhance the competitiveness of Vinaxuki products in a number of product lines by 2018, including pick-up trucks, cars, taxis and up to 28-seat public vehicles, he added.

Huyen also expressed his hope that incentives would be provided to domestic manufacturers targeting low-income consumers.

In August last year, the Ministry of Industry and Trade introduced a new strategy and plan for the automotive industry, but many of the relevant policies and mechanism are still pending.

At the same time, foreign-invested enterprises in the automobile industry are concerned about their future operation once import tariffs in Southeast Asia reduce to zero percent in 2018.

Toyota has said it may stop manufacturing and assembling in Vietnam and instead import finished products from regional countries.

Many FDI businesses may withdraw from the industry if Vietnam cannot issue suitable and specific assistance.

According to Vietnam Customs, more than 71,000 vehicles were imported in 2014, up 102 percent year on year and the highest ever.-VNA