Vietnam Releases Draft Circular on Auto Imports
Vietnam’s Ministry of Trade and Investment has released text from a draft circular which proposes to regulate the import of cars to Vietnam. Coming on the heels of regulatory repeal during the summer aimed at cutting down on barriers to trade and improving conditions for local business, new regulations are being crafted with the hope of toeing the line between safety and competitiveness.
Areas Covered by the Proposal
The circular, in its current draft form, details changes for the following areas of compliance that companies importing autos must be aware of as they plan for the coming months:
- technological inspections
- safety checks
- quality assurance
- environmental protection standards
To forgo the checks mentioned above and to minimize import compliance costs, those importing to the Vietnamese market will be required to present an the original certificate of quality or a roll-out quality certification. Alternatively, importers unable to provide these details for their goods will be permitted to undergo additional inspections upon entry to Vietnam that will independently verify compliance with vietnamese standards. These are to be carried out by the Vietnam Register (VR) at the cost of the importing party.
Implications for Investment and Trade
The draft circular, with its stringent quality measures, is in many ways similar to past Circular no.2/2011/TT-BCT. Under this circular, Vietnam’s regulatory infrastructure heavily favored large auto manufactures, leaving many of Vietnam’s domestic producers and importers, as well as small and medium sized international players, at a disadvantage.
If the current regulations come into effect in their current form, it is likely that the experiences of Circular 20 could be repeated. Key areas of concern which exemplify possible constraints for smaller companies are the issues of inspections and certification. Within the draft, requirements for importing parties to present original certificates of quality or undergo additional inspections presents a significant cost. Although larger companies directly importing to the Vietnamese market will be able to meet these requirements, and thus forgo additional inspections, smaller importers reselling within Vietnam will be forced to undergo additional inspections at their own cost. These added costs will make it difficult to compete on price within the country.
As the circular is in the drafting stage, it is likely that additional adjustments will be made. Nonetheless, it will be of critical importance for relevant parties to monitor the situation closely and to consider their operational exposure to possible regulation. For more information on the draft circular or for general assistance in monitoring regulatory developments within Vietnam, please contact email@example.com or visit us online at www.dezshira.com
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