On January 4, 2024, Mr. Truong Hong Hai, Deputy Chief of the Office of the People’s Committee of Quang Nam Province, requested the Planning and Investment Department to address the proposed policies to support the recovery and development of the social and economic sector in 2024 by THACO Group Corporation.
Accordingly, Mr. Hai assigned the Planning and Investment Department to take the lead and coordinate with relevant agencies, units, and localities to study the content of the proposed policies to support the recovery and development of the economy – society in 2024 by THACO, while reviewing, inspecting, summarizing, and submitting recommendations to the Provincial People’s Committee for consideration and proposal to the Government in accordance with regulations.
Prior to that, Mr. Nguyen Quang Bao, Director of the Representative Office in Chu Lai of THACO Group Corporation, had sent a letter to the Quang Nam Provincial People’s Committee. In this letter, Mr. Bao stated that in the period from 2020 until now, the global and Vietnamese economy has encountered numerous difficulties and challenges. In 2020 and 2021, the economy was almost stagnant due to the prolonged Covid-19 pandemic. In 2022, the economy has not yet fully recovered from the pandemic and is facing a severe economic recession.
Many forecasts also indicate that the global and domestic economy may continue to decline and may not be able to recover in 2024 and 2025. This puts a strain on domestic automobile manufacturing and assembly enterprises in particular. The financial resources of these enterprises have been almost exhausted, as reflected in the high inventory of materials and finished vehicles.
THACO stated that in 2023, the difficult economic situation has had a significant impact on general purchasing demand. In particular, the domestic car market has witnessed a sharp decline, with estimated car sales in 2023 reaching only 330,026 vehicles, a 24% decrease compared to 2022, and even lower than during the pandemic in 2020 (362,628 vehicles) and 2021 (344,127 vehicles).
According to the distributors of Kia, Mazda, Peugeot, and BMW in Vietnam, if there are no stimulus policies for purchasing, the forecasted inventory is expected to continue to increase, leading to a series of costs such as storage costs, costs of preserving finished vehicles, costs of repairing/maintaining stored vehicles, making it difficult for businesses to maintain production and operations.
According to THACO, in the face of the severe impact caused by the pandemic and economic recession on automobile manufacturing and assembly enterprises, the Government and central ministries have timely issued breakthrough support policies to promote recovery and help the automotive industry overcome difficulties. These policies have provided practical support for enterprises, especially the policy of reducing registration fees by 50%. This policy has contributed to financial support for people and businesses and stimulated domestic consumption demand.
Although this policy directly supports consumers, it indirectly supports businesses by providing them with additional funds to maintain production and business operations, thereby increasing revenue for the state budget. Thanks to this policy, car sales in Vietnam in the last 6 months of 2023 are expected to increase compared to the first half of the year. Therefore, to have timely and practical solutions to promote economic and social development in 2024, THACO proposes that the Provincial Party Committee and the Provincial People’s Committee of Quang Nam consider and recommend to the Government and the Prime Minister to reduce the registration fee by 50% for domestically produced and assembled vehicles for a suitable period and extend the deadline for special consumption tax payment for domestically produced and assembled vehicles in 2024.
Given the forecast of continued economic difficulties in 2024, THACO believes that these policies need to be issued and implemented from the first quarter of 2024 in order for the new policies to fully exert their effectiveness and timely support businesses in maintaining and recovering their production and business activities.
Thaco suggests continuing the 50% reduction in registration fees for domestically-assembled vehicles.
Recently, Thaco Corporation has proposed that the government continue to support a 50% reduction in registration fees for domestically produced vehicles for an extended period of time, as well as extend the deadline for payment of special consumption tax.
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