Thailand and Vietnam have agreed in principle to push forward a mutual recognition agreement (MRA) on automotive standards, as Thailand tries to persuade Vietnam to scrap its car import barriers.
Commerce Minister Sontirat Sontijirawong said on Friday after the third meeting of the Thailand-Vietnam Joint Trade Committee (JTC) that Vietnam had agreed in principle on the MRA for automotive standards proposed by Thailand and had pledged to forward the proposal to Vietnam's Transport Ministry.
"It's a good sign that Vietnam has agreed to the proposal," Mr Sontirat said. "The next step is to assign responsible state units to hold technical talks with Vietnam's Transport Ministry to jointly conduct the MRA."
According to Mr Sontirat, Vietnam has only one automotive testing agency, which requires roughly 30 days to clear vehicles, up from just 3-4 days previously.
Thailand, by contrast, has many agencies to test imported CBU (completely built-up) cars under the Thailand Automotive Industry and the Thai Industrial Standards Institute.
"The MRA will facilitate and help shorten the delivery process, as there is no need for repeated testing," Mr Sontirat said. "This will not only reduce delivery time but also costs for exporters."
The decree, which came into force in January, states that only companies -- not individuals -- will be considered for automobile import business licences. These companies must also have facilities for automobile warranty and maintenance either under their ownership, under lease or through their authorised dealerships.
Notably, the decree also puts forward stringent requirements for auto importers to obtain documents certifying or documenting that they are authorised to act on behalf of foreign automobile manufacturers and assemblers to recall imported cars in Vietnam.
This may spell an end to small-scale auto importers in Vietnam, as international carmakers are unlikely to let unofficial dealers conduct recalls.
Another detail within the decree is the tightening of regulations on imports of used cars. Any used cars imported into Vietnam must be registered for circulation in countries with equivalent or more stringent emissions standards than those in Vietnam.
In addition, when conducting inspections for used vehicles with quality management agencies, importers must be able to provide valid circulation registration certificates up to the date of export granted by a competent foreign agency, or papers of equivalent legal validity.
Used cars are required to have a warranty period of at least two years or 50,000 kilometres for small cars, and at least one year or 20,000km for other types of cars.
Mr Sontirat said that at the JTC meeting Thailand also proposed Vietnam use Thailand as a hub for auto parts supplies for the Vietnamese automotive industry.
The two countries at the meeting also agreed to raise bilateral trade to US$20 billion (665 billion baht) in 2020.
Vietnam is Thailand's second-largest trading partner in Asean and fifth largest in the world. Over the past five years, two-way trade between Thailand and Vietnam averaged $13.14 billion, with growth of 9.7% a year.
In 2017, bilateral trade between the countries amounted to $16.64 billion.