Prices of automobiles will decrease at least five percent since January 2007 due to lower import taxes, according to local newspaper Saigon Liberation Wednesday.

According to commitments, Vietnam has made for entry to the World Trade Organization (WTO), the country will, on Jan. 1, 2007, lower import tax levied on automobiles used for transporting people to 80 percent from current 90 percent, which will axe prices of imported vehicles as well as make automakers in Vietnam to slash selling prices of their products, the newspaper quoted Vietnamese Deputy Finance Minister Truong Chi Trung as saying.

Now, the ministry is considering the possibility of reducing tariffs on second-hand cars, he said, noting that the new import taxes will be applied on Jan. 1, 2007.

The Vietnamese government abolished, in January, a ban on imported second-hand cars, effective from May 1, with tariffs on used cars of two to five seats ranging from 3,000 dollars to 25, 000 dollars depending on engine size.

Besides the import tax, used cars are to bear special consumption tax valued at 2,000-17,500 dollars, and value added tax worth 600-5,250 dollars, depending on engine size.

After the WTO accession, many automobile producers and assemblers in Vietnam will still thrive because the local automobile industry is well developed in terms of the production of light trucks, buses and vehicles used for agriculture, the deputy finance minister said, noting that only car producers and assemblers which have low ratio of domestically-made components to foreign-made ones in their finished products will have to stop production and act as distributors of foreign carmakers.

Vietnam currently houses 13 automobile joint ventures between foreign firms and local ones with total registered capital of nearly 700 million U.S. dollars and combined annual capacity of 173,000 units. Besides, the country has dozens of local enterprises specializing in producing automobile parts and assembling simple vehicles.

Early this year, Vietnam with a population of more than 83 million had some 700,000 private-owned cars compared with 17 million motorbikes, according to statistics from the country's Transport Ministry.

Source: Xinhua