HANOI, Dec 19 (Reuters) - Hit by protests from foreign automakers, Vietnam may delay by three or six months the implementation of higher auto parts tariffs that have stunned the industry.
The Ministry of Finance issued a December 4 decision that would result in tariffs on imported auto parts for the small but rapidly growing auto-making sector doubling or in some cases quadrupling.
The decision, made at the direction of the prime minister, came to light just this week.
VnExpress, a state-run Web site, quoted Dang Thi Binh An, deputy general director of the General Department of Taxation as saying that tax authorities would ask the ministry to delay the January 1, 2003 effective date by three or six months.
An told Reuters the finance ministry, which gave no reason for the tariff hike that covered cars, buses and trucks, would discuss the issue with automakers on Friday. He declined further comment.
The tariff move is the second shock to foreign investors in three months. Limits on the import of motorcyle components, suddenly imposed in September, led to the suspension of some manufacturing at foreign-owned factories in Vietnam until the curbs were eased two months later.
The auto parts tariff hike would raise retail prices by at least 15 percent next year and by 35 percent in 2004, the Vietnam Automobile Manufacturers Association (VAMA) said in a December 17 letter to Prime Minister Phan Van Khai.
Late on Wednesday,Motor Vietnam Co Ltd president Mutsuhiko Ono who is also VAMA chairman, said in a statement to Reuters that automakers were not consulted and that the decision "will make Vietnam's auto industry disappear".
The auto group comprises 11 auto assemblers, owned or part-owned by foreign companies and which import many components.
Among the foreign players,Motor Corp has the biggest Vietnam market share, at 26 percent, with GM's Vietnam Daewoo Motor Co (Vidamco) at 15 percent, Motor Co at around 14 percent and DaimlerChrysler AG at 10 percent.
Vietnam imposes different tariffs on different vehicles. But the tariff on parts for a five-seat car, for example, will double on January 1 to 40 percent.