On 22 March of this year, Decree No. 17/2020/ND-CP (“Decree 17”) will come into effect. Among other things, there will be a revision of Decree No. 116/2017/ND-CP (“Decree 116”) which applies new relaxed technical requirements of imported motor vehicles.

Under Decree 17, Vietnam will no longer require National Vehicle Type Approval Certificate (“NVTAC”) from exporting countries in conducting inspection. This condition might create a huge obstacle for car importers. In fact, many countries have not granted this kind of certificate for importers, thus they were unable to import cars to Vietnam.

Thailand and Indonesia were among the countries who declined to grant NVTAC for importers, but the Thai and Indonesian Governments did not intend to lose the Vietnamese market of automobile industry to other countries or even local manufacturers. After grappling with the NVTAC issue, now both ASEAN countries are already two of Vietnam’s largest import markets, accounting for more than 50% of total cars imported to Vietnam in 2019.

In addition to the NVTAC, the second requirement of imported motor vehicles is technical inspection which has also changed under Decree 17. Vietnam is set to move from current technical inspection that imported brand-new motor vehicles that needed to be inspected for each shipment to each representative model. In particular, the quality management authority shall inspect the type of imported motor vehicles based on the results of the testing of quality, technical safety and environmental protection of each representative model in accordance with Decree 17.

The new legal framework is expected to make the technical inspection of imported automobiles easier, reducing the time needed for the clearance process from 45 to 7 days and cutting the cost for inspection by half.

Vietnam prepares for EVFTA’s obligation

The European Parliament reached consensus by voting on February 12 to accept the new free trade agreement with Vietnam (“EVFTA”), recognizing the country as one of EU’s important economic partners in Southeast Asia. There is no doubt the trade deal will be beneficial for both sides because the EVFTA will gradually reduce most tariffs, as well as regulatory barriers.

The EVFTA also set forth Vietnam’s obligations on motor vehicles, including the compromise of Vietnam to apply new technical requirements that are included in the United Nations Economic Commission of Europe (“UNECE”) for motor vehicles. Vietnam will also not require any additional technical requirements in the area regulated by UNECE.

By this notable FTA and other significant agreements in the automobile industry, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – CPTPP, ASEAN Trade in Goods Agreement – ATIGA, Vietnam has shown a willingness to balance domestically manufactured vehicles and imported vehicles. In other words, Vietnam is likely to increase competitiveness between domestic and imported vehicles, and thoroughly help Vietnam’s automobile industry to actively join the global supply chain. Therefore, if domestic automobile manufacturers do not promptly attempt to improve quality and lower production cost, it would be the loser in competing with imported vehicles.

In fact, the automobile importation sector is now growing impressively. In 2017, the number of domestically manufactured motor vehicles was 2.5 times higher than imported ones; the figure was 3.72 times in 2018. However in 2019, it decreased to 1.74 times. It is estimated that 142,000 cars were imported last year, with a total value of US $ 3.1 billion, mostly from Thailand and Indonesia, an increased 71% in total volume and 69.4% in total value, compared with the same period in 2018.


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