Vietnam has cut tariffs on vehicles imported from Southeast Asia and China to 50% from 90% as part of a regional trade pact, according to Reuters.

The new tariffs were approved on 12 June and apply retroactively from January 2006 for automobile imports from China, Thailand, Singapore, the Philippines, Myanmar, Malaysia, Indonesia, Laos, Cambodia and Brunei.

Tariffs on cars imported from other countries remain at 90%.

Reuters noted that from January 2006 consumption taxes on imported vehicles were also reduced to 50% from 80%. This is similar to the rate applied to domestically-assembled vehicles.

Dealers told Reuters that the lower tariffs would benefit Chinese vehicle makers, which are preparing to launch sales in the country.

Lifan is setting up a US$30m joint venture to produce its sedan model there.

Currently around 11 global OEMs have assembly operations in Vietnam, although demand is low.

Vehicle sales in the first five months of the year were 9,418 units, down 27% on a year earlier as consumers postponed purchases in anticipation of tax reductions.