After stopping car exports to Việt Nam for more than a month, Japanese auto giant Honda Motor suddenly decided to import around 2,000 vehicles from Thailand in early March.
This is the first batch of automobiles exempt from import tax under the ASEAN Trade in Goods Agreement (ATIGA) to be imported into Việt Nam.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Việt Nam.
Lý Thanh Bình, head of customs at HCM City’s Hiệp Phước Port, confirmed that Honda cars including Jazz, Accord, CR-V and Civic were unloaded at the port on March 1. The vehicles will be sold in one or two months after they undergo several mandatory tests as part of the customs clearance process.
In January, Toyota Motor and Honda decided to suspend exports to Việt Nam saying they are unable to meet Việt Nam’s stringent checks of imported vehicles under the new Decree 116.
The decree on the production, assembly, import and warranty of automobiles was issued just as Việt Nam eliminated tariffs on automobiles imported from ASEAN members.
It requires all models of imported vehicles to obtain a Vehicle Type Approval certificate from authorities in the exporting countries.
The new rule also requires emission and safety tests to be done on every batch of automobiles imported. In the past, only the first shipment of a model was tested.
Many auto giants from Japan and the US have expressed concern, saying it would be difficult to meet the requirements.
Some also said the new requirements would cause a huge waste of time and money for importers since one emission test could take two months and cost up to US$10,000.
The decree is aimed at strengthening quality checks and protecting the local industry.
The fact that Honda resumed exports to Việt Nam proves that car importers can remove the biggest obstacles like the above-said things that they were facing as they want to import the vehicles under the new regulations.
Honda had Vehicle Type Approval certificates granted by Thailand where the cars were produced.
Analysts said Honda’s decision to resume exports to Việt Nam should be considered a big factor for the Vietnamese auto market. This was because after Honda, other companies would also be able to receive similar certificates like Honda to bring their cars back to Việt Nam.
Because of this, car imports from other countries such as Indonesia and Malaysia are also expected to soon come to Việt Nam.
The return of Honda and other companies including Ford and Toyota in the near future is expected to drag prices significantly lower, thus fulfilling Vietnamese consumers’ dream of buying cars at lower prices.
According to an official announcement from Honda Vietnam, its compact SUV Honda CR-V is now listed at VNĐ958 million ($42,076) to VNĐ1.068 billion ($46,907), depending on the model and specifications.
Compared to their earlier prices, when a 30 per cent tax was in place, the 1.5E and 1.5G models are cheaper by VNĐ178 million ($7,818) and VNĐ188 million ($8,257).
However, market observers said though tariffs on automobiles imported from ASEAN were eliminated over two months ago, car prices have shown no signs of coming down.
Some have even seen their prices rise.
They blamed this on not only a shortage of vehicles on the market but also the increasing cost of importing cars under the new rules.
The shortage is understandable since only Honda of those that do not assemble in the country have gone through the new import rigmarole. Meanwhile, the number of assembled cars has also decreased because of lack of components imported from abroad, meaning supply has been unable to meet demand.
Trường Hải Auto Joint Stock Company has hiked the prices of many models after making some cuts before Tết (Vietnam Lunar New Year) in mid-February.
Consequently, the prices of its Mazda cars are up by VNĐ30-50 million. The Nissan Navara saw its prices cut by VNĐ10-20 million before Tết, but is now back to its earlier rates.
Housing allure remains for overseas Vietnamese
According to statistics from the World Bank, overseas remittances to the country last year were worth at $13.8 billion, up 20 per cent from 2016.
This year, they are expected to go up by 5-7 per cent.
Analysts said overseas remittances would continue to provide a vital impetus to the economy, especially to the property sector.
The State Bank of Việt Nam said around 71 per cent of remittances went into business, and 21-22 per cent into the real estate sector.
This means that on average every year, the sector gets an infusion of around $2.5 billion.
Experts said the remittances are a reliable and steady source of foreign currency, and help keep foreign reserves buoyant.
An executive at Savills Vietnam’s international residential sales department pointed out that by nature remittances are a “one-way” source of funding and could match or exceed foreign direct investment and foreign portfolio investment.
Now they play an important role in economic growth. There are millions of Vietnamese living in the US, Europe and Asia, and a growing number of them are finding their way home to work, invest or retire.
A thriving economy, constantly improving business environment and laws that allow overseas Vietnamese to own houses in Việt Nam are the reasons why they are investing in the housing sector.
Experts said the housing market now offers favourable conditions for overseas Vietnamese to make profits.
It has a wide range of products of high quality and reasonable prices, meeting overseas Vietnamese investors’ every demand, whether investment, settling down in the country or working.
According to Savills Vietnam, safety, security and after-sales services are also factors that overseas Vietnamese and other foreign customers consider when buying a house in addition to location, price, convenience, architecture and design.
It is undeniable that the attractiveness of the housing market has contributed to increasing remittances to Việt Nam in the last few years.
According to the State Bank of Việt Nam’s HCM City branch, around 50 per cent of remittances to Việt Nam are to the southern metropolis.
Around 22 per cent of the remittances to the city of $5.2 billion went into the housing market.
Experts said to stabilise the flow of remittances into the country and into the real estate sector, the Government should offer incentives like low fees.
They also stressed the need to make the housing market more transparent and efficiently provide market information to overseas Vietnamese.
They wanted the Government to have tough measures to prevent the frequent occurrence of price “fever” in the housing market.
They also called on real estate developers to carefully study overseas Vietnamese and foreigners’ housing needs and improve the quality of their products and services.
