DECISION No. 28/2004/QD-BKHCN OF OCTOBER 1, 2004 ON METHODS OF DETERMINING THE LOCALIZATION RATES OF AUTOMOBILES

THE MINISTER OF SCIENCE AND TECHNOLOGY

Pursuant to the 1999 Ordinance on Goods Quality;

Pursuant to the Government’s Decree No. 54/2003/ND-CP of May 19, 2003 defining the functions, tasks, powers and organizational structure of the Ministry of Science and Technology and Decree No. 28/2004/ND-CP of January 16, 2004 amending and supplementing a number of articles of the Government’s Decree No. 54/2003/ND-CP of May 19, 2003 defining the functions, tasks, powers and organizational structure of the Ministry of Science and Technology;

Pursuant to the Prime Minister’s Decision No. 175/2002/QD-TTg of December 3, 2002 approving the strategy on development of Vietnam’s automobile industry till 2010, with a vision toward 2020;

Pursuant to the Prime Minister’s direction in the Government Office’s Notice No. 82/TB-VPCP of June 16, 2003, Official Dispatch No. 4659/VPCP-KG of September 24, 2003, Notice No. 63/TB-VPCP of April 2, 2004 and Official Dispatch No. 2943/VPCP-KG of June 11, 2004;

At the proposals of the General Director of the General Department for Standardization, Metrology and Quality Control and the Director of the Legal Department,

DECIDES:

Article 1.- This Decision provides for methods of determining the localization rates of automobiles, the specific points of assorted components and responsibilities of concerned agencies in determining the localization rates of automobiles.

Article 2.- Interpretation of terms

In this Decision, the following terms and phrases shall be construed as follows:

1. Components mean details, detail assemblies and parts for being assembled into complete automobiles.

2. Localized components mean components produced or manufactured at home to substitute for imported ones.

3. Automobiles’ localization rates mean the proportion of localized components’ points to the total points of complete automobiles.

Article 3.- Localization rates shall be determined for each type of automobiles’ components according to these components’ points prescribed in Appendices 1, 2, 3 and 4 to this Decision (not printed here).

Article 4.- The localization rates are prescribed for various stages as follows:

1. For general automobiles (equivalent to passenger cars and trucks defined in Vietnam Standard TCVN 7271: 2003): The localization rate shall reach 40% by 2005, 45% by 2006, 50% by 2007, 55% by 2008 and 60% by 2010.

For engines, the localization rate shall reach 30% by 2005, 35% by 2006, 40% by 2007, 45% by 2008 and 50% by 2010, and for gearbox, it shall reach 65% by 2005, 70% by 2006, 75% by 2007, 80% by 2008, 85% by 2009 and 90% by 2010.

2. For special-use automobiles (defined in Section 3.3 of Vietnam Standard TCVN 7271: 2003): The localization rate shall reach 40% by 2005, 45% by 2006, 50% by 2007, 55% by 2008 and 60% by 2010.

3. For high-class automobiles: Tourist cars manufactured by joint ventures (equivalent to cars defined in Section 3.1.1. of Vietnam Standard TCVN 7271: 2003) must reach the localization rate of 20-25% by 2005, 30-35% by 2007, and 40-45% by 2010.

For high-class buses, the localization rate shall reach 20% by 2005, 30% by 2007 and 35- 40% by 2010.

Article 5.- Determination of localization rates

1. Enterprises shall declare and register localization rates by themselves according to Appendices 1, 2, 3 and 4 to this Decision for the Ministry of Science and Technology to consider and grant certificates thereof.

The Ministry of Science and Technology shall set up an inter-branch task force to inspect and determine the localizations rates of automobile components.

2. For automobile components purchased from other enterprises, which are manufactured at home, the localization rates shall also be calculated like for those domestically produced by enterprises themselves.

3. For enterprises, which import semi-finished details, detail assemblies or parts for one or more processing stages, the localization rates shall be calculated according to the added value percentages of such details, detail assemblies or parts.

4. Automobile components purchased from importing enterprises shall not be calculated as localized ones.

5. Enterprises that commit acts of violation or fraudulence in the declaration of localization rates shall be handled according to law provisions.

Article 6.- This Decision replaces Decision No. 20/2003/QD-BKHCN of July 31, 2003 of the Minister of Science and Technology promulgating the Regulation on automobile manufacture and assembly classification and takes effect 15 days after its publication in the Official Gazette.

Article 7.- The General Director of the General Department for Standardization, Metrology and Quality Control, the Director of the Department for Technological Appraisal, Evaluation and Expertise, the Director of the Department for Sciences and Technologies of Economic-Technical Branches, the Director of the Legal Department, the Director of the Ministry’s Office and concerned organizations and individuals shall have to implement this Decision.