HANOI, Feb 26 (Reuters) - Vietnam has proposed a graduated increase in car part tariffs to a ceiling of 50 percent by 2005 in a compromise to soothe foreign auto makers' concerns about an abrupt hike in duties, car manufacturers said on Wednesday.
The companies said the rise in tariffs -- Vietnam's attempt to boost the use of more locally made parts -- would cripple a small but fast-growing sector. Sales of cars rose about 37 percent in 2002 from 2001 as incomes rose.
The Ministry of Finance has recommended that the import tax on auto components, currently at 20 percent, to rise to 30 percent by April 1, 2003, 40 percent by January 1, 2004, and 50 percent by the following year, Nguyen Van Quy, vice-director of Korean-Vietnamese venture Vidamco, told Reuters.
Previously, the tariff hike was to have taken place all at once. Officials from the ministry were not available for comment.
Vidamco, or Vietnam Daewoo Motor Co, is a member of the Vietnam Automobile Manufacturers Association (VAMA) that lobbied against the tariff increase. Other members are Germany's Mercedes-Benz and Japan's Toyota Motor Co .
The eleven foreign auto makers operating in the country have until March 1 to respond to the proposal.
Quy said the revisions were unlikely to please his fellow car manufacturers. "Some companies' representatives and even some government officials attending the meeting rejected the decision, and VAMA is going to send a proposal to government on that before 1st of March," he said.
"If the government wants to kill the industry, it should do it right now, not step-by-step like that," Quy added.
Most of Vietnam's 80 million population travel by motorcycle, which were also slapped with restrictions on imported parts last year.