17 June, 2017
Recent changes in the Investment Law classify automobile manufacturing, assembling and importing as conditional business lines. As a result, the Government is working on a draft Decree (the Draft Decree) governing the manufacture, assembly, importation, and warranty and maintenance of automobiles. It is expected that the Decree will be promulgated and will take effect this year.
Notably, the Draft Decree contains additional business conditions, licensing procedures, and requirements with respect to automobile-related businesses. Please find below the key regulations of the Decree:
1. Automobile Manufacturing and Assembling Business
The Draft Decree presents business conditions with respect to automobile manufacturers and assemblers in Vietnam, including the requirements on, among others, human resources, facilities, quality management systems (e.g., ISO 9001:2000 or TS 16949), labour safety and hygiene, fire safety, and environmental protection.
To carry out an automobile manufacturing and assembling business, a company has to apply for a certificate provided by the Ministry of Industry and Trade (the MOIT), which confirms its compliance with the requirements above. Failure to comply with regulations on automobile recall and warranty may result in revocation of this certificate, leading to disruption to the company's operation.
Additionally, automobile manufacturers and assemblers will need to report to the MOIT regarding its production on an annual basis. The MOIT will also conduct inspection on the licensed manufacturers and as
semblers, either periodically (at least once per 24 months) or occasionally (when there is a consumer's claim against the company).
2. Automobile Importation Business
According to the Draft Decree, automobile importers are required to obtain an Automobile Importing Code from the MOIT. For that purpose, the importers must own an appropriate warranty and maintenance shop and undertake to fulfill warranty and recall obligations.
The Draft Decree does not mention the authorisation letter by the offshore manufacturer for the import and distribution in Vietnam, which is required under Circular No. 20/2011/TT-BCT.
3. Warranty and Maintenance Services for Automobiles
Manufacturers, assemblers, and importers will be required to warrant the automobiles for at least two (02) years or 100,000 kilometres, whichever comes first. The warranty booklet will need to specify the scope of warranty work, the maintenance period, and the addresses of licensed warranty and maintenance centres.
Under the Draft Decree, from 01 July 2020, each business enterprise manufacturing, assembling, or importing automobiles must own at least one (01) warranty and maintenance centre. This requirement is stricter than the former regulations under Circular No. 19/2012/TT-BGTVT, which allowed the manufacturers, assemblers, and importers to lease automobile repair shops owned by other entities.
The Draft Decree also presents licensing requirements and business conditions that enterprises providing automobile warranty and maintenance services must satisfy.
4. Obligation to Collect and Handle Discarded Vehicles
The Draft Decree provides that every automobile manufacturer, assembler, and importer will be obligated to collect and handle discarded vehicles, and that they shall bear the costs of performance of such obligation. Detailed provisions on this requirement are, however, not included in the Draft Decree.
For further information, please contact:
Say Sujintaya, Partner, Baker McKenzie
say.sujintaya@bakermckenzie.com
