Vietnam Investment Review reported that a localisation programme for vehicle parts manufacturing is to be submitted to the government followed by the establishment of a national committee chaired by a deputy prime minister, according to the Ministry of Industry, or MOI.

The report said Nguyen Xuan Chuan, vice minister of Industry, last week said that local enterprises producing localised vehicle parts would be supported in terms of equipment and given tax breaks on imported materials.

“Those enterprises will also be exempt from corporate tax for a certain time and have the right to extract 20% from its total revenue for technological research,” said Chuan.

He added that enterprises would be provided with support programmes for staff training as capital to develop their production.

He called for local auto enterprises to focus on vehicles such as buses and tractors. So far, the total numbers of buses in the two commercial hubs of Hanoi and Ho Chi Minh City are still far from meeting demand.

Ho Chi Minh City has around 2,300 buses in circulation, of which just 63 meet safety regulations.

Chuan said the city needed more than 1,300 new buses to meet public transport demand. The figure for Hanoi is around 500.

There is also huge demand for rubbish disposal trucks.

The market for tractors remains untapped in a country where almost 80% of the labour force works in agriculture-related sectors.

“From now to 2005, the government will issue support policies such as preferential loans for farmers to buy locally-made tractors,” Chuan said.

Vietnam has 11 locally-assembly vehicle enterprises with total designed production capacity of 140,000 units per year. However, just 15% of this capacity has been used.

The MoI estimated that by the year 2005, the country’s vehicle market would be between 65,000 to 80,000 units per year, of which from 13,000 to 17,000 would be private cars and from 47,000 to 63,000 commercial vehicles, the report said.